FORM 10-K--ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [No Fee Required]
For the fiscal year ended December 31, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [No Fee Required]
For the transition period from to
Commission file number 0-11002
CONSOLIDATED CAPITAL PROPERTIES IV
(Exact name of registrant as specified in its charter)
California 94-2768742
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (864) 239-1000
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Units
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Sec. 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ] (Amended by Exch Act Rel No.
28869, eff. 5/1/91.)
State the aggregate market value of the voting partnership interests held by
non-affiliates of the registrant. The aggregate market value shall be computed
by reference to the price at which the partnership interests were sold, or the
average bid and asked prices of such partnership interests, as of a specified
date within 60 days prior to the date of filing. No market exists for the
limited partnership interests of the Registrant, and therefore, no aggregate
market value can be determined.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Consolidated Capital Properties IV (the "Partnership" or "Registrant") was
organized on September 22, 1981, as a limited partnership under the California
Uniform Limited Partnership Act. On December 18, 1981, the Partnership
commenced a public offering for the sale of $100,000,000 of Units with the
general partner's right to increase the offering to $200,000,000. The Units
represent equity interests in the Partnership and entitle the holders thereof to
participate in certain allocations and distributions of the Partnership. The
sale of Units closed on December 14, 1983, with 343,106 Units sold at $500 each,
or gross proceeds of $171,553,000 to the Partnership. Since its initial
offering, the Partnership has not received, nor are limited partners required to
make, additional capital contributions.
By the end of fiscal year 1985, approximately 73% of the proceeds raised had
been invested in 48 properties. Of the remaining 27%, 11% was required for
organizational and offering expenses, sales commissions and acquisition fees,
and 16% was retained in Partnership reserves for project improvements and
working capital as required by the Partnership Agreement.
The general partner of the Partnership is ConCap Equities, Inc., a Delaware
corporation (the "General Partner" or "CEI"). The General Partner is a
subsidiary of Apartment Investment and Management Company ("AIMCO"). The
directors and officers of the General Partner also serve as executive officers
of AIMCO. The Partnership Agreement provides that the Partnership is to
terminate on December 31, 2011 unless terminated prior to that date.
The Partnership's primary business and only industry segment is real estate
related operations. The Partnership is engaged in the business of operating and
holding real properties for investment. As of the close of fiscal year 1985,
the Partnership had completed its property acquisition stage and had acquired 48
properties. At December 31, 1998, the Partnership owned 17 income-producing
properties (or interests therein), which range in age from 21 to 27 years old,
principally located in the midwest, southeastern and southwestern United States.
Prior to 1996, the Partnership had disposed of 30 properties originally owned by
the Partnership. In February of 1996, the Partnership lost an additional
property through foreclosure.
The real estate business in which the Partnership is engaged is highly
competitive. There are other residential properties within the market area of
the Partnership's properties. The number and quality of competitive properties,
including those which may be managed by an affiliate of the General Partner, in
such market area could have a material effect on the rental market for the
apartments at the Partnership's properties and the rents that may be charged for
such apartments. While the General Partner and its affiliates are a significant
factor in the United States in the apartment industry, competition for
apartments is local. In addition, various limited partnerships have been formed
by the General Partner and/or affiliates to engage in business which may be
competitive with the Partnership.
Both the income and expenses of operating the remaining properties owned by the
Partnership are subject to factors outside of the Partnership's control, such as
an oversupply of similar properties resulting from overbuilding, increases in
unemployment or population shifts, reduced availability of permanent mortgage
financing, changes in zoning laws, or changes in patterns or needs of users. In
addition, there are risks inherent in owning and operating residential
properties because such properties are susceptible to the impact of economic and
other conditions outside of the control of the Partnership.
The Registrant has no employees. Property management and administrative
services are provided by the General Partner and by agents retained by the
General Partner. The property manager is responsible for the day-to-day
operations of each property. The General Partner has also selected an affiliate
to provide real estate advisory and asset management services to the
Partnership. As advisor, such affiliate provides all partnership accounting and
administrative services, investment management, and supervisory services over
property management and leasing.
There have been, and it is possible there may be other, Federal, state and local
legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.
The Partnership monitors its properties for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain
cases environmental testing has been performed, which resulted in no material
adverse conditions or liabilities. In no case has the Partnership received
notice that it is a potentially responsible party with respect to an
environmental clean up site.
Transfer of Control
Upon the Partnership's formation in 1981, Consolidated Capital Equities
Corporation ("CCEC"), a Colorado corporation, was the corporate general partner
and Consolidated Capital Management Company ("CCMC"), a California general
partnership, was the non-corporate general partner. In 1988, through a series
of transactions, Southmark Corporation ("Southmark") acquired a controlling
interest in CCEC. In December 1988, CCEC filed for reorganization under Chapter
11 of the United States Bankruptcy Code. In 1990, as part of its reorganization
plan, CEI acquired CCEC's general partner interests in the Partnership and in 15
other affiliated public limited partnerships (the "Affiliated Partnerships") and
CEI replaced CCEC as managing general partner in all 16 partnerships. The
selection of CEI as the sole managing general partner was approved by a majority
of the Limited Partners in the Partnership and in each of the affiliated
partnerships pursuant to a solicitation of the Limited Partners dated August 10,
1990. As part of this solicitation, the Limited Partners also approved an
amendment to the Partnership Agreement to limit changes of control of the
Partnership, and the conversion of CCMC from a general partner to a special
limited partner, thereby leaving CEI as the sole general partner of the
Partnership. On November 14, 1990, CCMC was dissolved and its special limited
partnership interest was divided among its former partners. All of CEI's
outstanding stock is owned by Insignia Properties Trust ("IPT").
In December 1994, the parent of GII Realty, Inc., entered into a transaction
(the "Insignia Transaction") in which an affiliate of Insignia Financial Group,
Inc. ("Insignia") (see discussion below) acquired an option (exercisable in
whole or in part from time to time) to purchase all of the stock of GII Realty,
Inc. and, pursuant to a partial exercise of such option, acquired 50.5% of that
stock. As a part of the Insignia Transaction, the affiliate also acquired all
of the outstanding stock of Partnership Services, Inc., an asset management
entity, and a subsidiary acquired all of the outstanding stock of Coventry
Properties, Inc., a property management entity. In addition, confidentiality,
non-competition, and standstill arrangements were entered into between certain
of the parties. Those arrangements, among other things, prohibit GII Realty's
former sole shareholder from purchasing Partnership Units for a period of three
years. On October 24, 1995, the affiliate exercised the remaining portion of
its option to purchase all of the remaining outstanding capital stock of GII
Realty, Inc.
On August 28, 1997, an affiliate of the General Partner commenced a tender offer
for limited partnership interests in the Partnership. The Purchaser offered to
purchase up to 85,000 of the outstanding units of limited partnership interest
in the Partnership, at $140.00 per Unit, net to the seller in cash. As a result
of the tender offer, the Purchaser acquired 29,618 of the outstanding limited
partner units of the Partnership, or 8.64%.
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia and IPT merged into AIMCO, a publicly traded real
estate investment trust, with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result, AIMCO ultimately acquired a 100% ownership
interest in IPT, the sole shareholder of the General Partner. The General
Partner does not believe that this transaction will have a material effect on
the affairs and operations of the Partnership.
Segments
Segment data for the years ended December 31, 1998, 1997 and 1996 is included in
"Item 8. Financial Statements and Supplementary Data - Note M" and is an
integral part of the Form 10-K.
ITEM 2. DESCRIPTION OF PROPERTY
The Partnership originally acquired 48 properties of which eleven (11) were
sold, ten (10) were conveyed to lenders in lieu of foreclosure, and ten (10)
were foreclosed upon by the lenders in fiscal years prior to 1996. As of
December 31, 1998, the Partnership owned seventeen (17) apartment complexes.
Additional information about the properties is found in "Item 8. Financial
Statements and Supplementary Data".
Date of
Property Purchase Type of Ownership Use
The Apartments (1) 04/84 Fee ownership subject Residential Apartments
Omaha, Nebraska to first mortgage 204 units
Arbours of Hermitage Apartments (1) 09/83 Fee ownership subject Residential Apartments
Nashville, Tennessee to first mortgage 350 units
Briar Bay Racquet Club Apartments (2) 09/82 Fee ownership subject Residential Apartments
Miami, Florida to first mortgage 194 units
Chimney Hill Apartments (2) 08/82 Fee ownership subject Residential Apartments
Marietta, Georgia to first mortgage 326 units
Citadel Apartments (1) 05/83 Fee ownership subject Residential Apartments
El Paso, Texas to first mortgage 261 units
Citadel Village Apartments (1) 12/82 Fee ownership subject Residential Apartments
Colorado Springs, Colorado to first mortgage 122 units
Foothill Place Apartments (2) 08/85 Fee ownership subject Residential Apartments
Salt Lake City, Utah to first mortgage 450 units
Knollwood Apartments (1) 07/82 Fee ownership subject Residential Apartments
Nashville, Tennessee to first mortgage 326 units
Lake Forest Apartments 04/84 Fee ownership subject Residential Apartments
Omaha, Nebraska to first mortgage 312 units
Nob Hill Villa Apartments (1) 04/83 Fee ownership subject Residential Apartments
Nashville, Tennessee to first mortgage 472 units
Overlook Apartments (1) 11/85 Fee ownership subject Residential Apartments
Memphis, Tennessee to first mortgage 252 units
Point West Apartments (1) 11/85 Fee ownership Residential Apartments
Charleston, South Carolina 120 units
Post Ridge Apartments (2) 07/82 Fee ownership subject Residential Apartments
Nashville, Tennessee to first mortgage 150 units
Rivers Edge Apartments(2) 04/83 Fee ownership subject Residential Apartments
Auburn, Washington to first mortgage 120 units
South Port Apartments (3) 11/83 Fee ownership subject Residential Apartments
Tulsa, Oklahoma to first mortgage 240 units
Stratford Place Apartments (2) 08/85 Fee ownership subject Residential Apartments
Austin, Texas to first mortgage 223 units
Village East Apartments (1) 12/82 Fee ownership subject Residential Apartments
Cimarron Hills, Colorado to first mortgage 137 units
(1) Property is held by a limited partnership and/or limited liability
corporation in which the Partnership owns a 100% interest.
(2) Property is held by a limited partnership in which the Partnership owns a
99% interest.
(3) Property is held by a limited partnership in which the Partnership owns a
50% interest.
SCHEDULE OF PROPERTIES:
Set forth below for each of the Registrant's properties is the gross carrying
value, accumulated depreciation, depreciable life, method of depreciation and
Federal tax basis.
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
(in thousands) (in thousands)
The Apartments $ 8,703 $ 6,339 5-18 yr S/L $ 2,414
Arbours of Hermitage Apartments 12,679 10,646 5-18 yr S/L 2,528
Briar Bay Racquet Club Apartments 7,724 6,377 5-18 yr S/L 1,950
Chimney Hill Apartments 11,027 9,462 5-18 yr S/L 2,537
Citadel Apartments 7,577 6,429 5-18 yr S/L 1,111
Citadel Village Apartments 4,045 3,364 5-18 yr S/L 1,218
Foothill Place Apartments 15,170 8,893 5-18 yr S/L 7,732
Knollwood Apartments 10,865 9,279 5-18 yr S/L 2,115
Lake Forest Apartments 9,096 6,156 5-18 yr S/L 2,432
Nob Hill Villa Apartments 12,889 10,984 5-18 yr S/L 1,991
Overlook Apartments 4,640 3,288 5-15 yr S/L 1,679
Point West Apartments 3,031 2,204 5-40 yr S/L 1,329
Post Ridge Apartments 4,551 3,734 5-18 yr S/L 971
Rivers Edge Apartments 3,342 2,580 5-18 yr S/L 939
South Port Apartments 7,935 6,321 5-18 yr S/L 1,782
Stratford Place Apartments 7,497 4,196 5-20 yr S/L 2,652
Village East Apartments 3,461 2,998 5-18 yr S/L 604
Totals $134,232 $103,250 $ 35,984
See "Note A" in "Item 8. Financial Statements and Supplementary Data" for a
description of the Partnership's depreciation policy.
SCHEDULE OF PROPERTY INDEBTEDNESS:
The following table sets forth certain information relating to the loans
encumbering the Registrant's properties.
Principal Principal
Balance At Stated Balance
December 31, Interest Period Maturity Due At
Property 1998 Rate Amortized Date Maturity (2)
The Apartments $ 3,364 8.34% 25 years 09/00 $ 3,244
Arbours of Hermitage Apartments 5,650 6.95% (1) 12/05 5,650
Briar Bay Racquet Club Apartments 3,500 6.95% (1) 12/05 3,500
Chimney Hill Apartments 5,400 6.95% (1) 12/05 5,400
Citadel Apartments 4,661 8.38% 25 years 10/00 4,488
Citadel Village Apartments 2,450 6.95% (1) 12/05 2,450
Foothill Place Apartments 10,100 6.95% (1) 12/05 10,100
Knollwood Apartments 6,780 6.95% (1) 12/05 6,780
Lake Forest Apartments 4,700 7.33% (1) 11/03 4,700
Nob Hill Villa Apartments 7,163 9.20% 25 years 04/05 6,250
Overlook Apartments 1,819 10.50% 25 years (3) 1,820
Post Ridge Apartments 4,050 7.33% (1) 11/03 4,050
Rivers Edge Apartments 1,965 8.40% 25 years 09/00 1,895
South Port Apartments 4,456 7.19% 30 years 12/04 4,119
Stratford Place Apartments 2,567 8.65% 25 years 09/00 2,478
Village East Apartments 2,150 6.95% (1) 12/05 2,150
$70,775 $69,074
(1) Monthly payments of interest only at the stated rate until maturity.
(2) See "Item 8. Financial Statements and Supplementary Data - Note D" for
information with respect to the Partnership's ability to prepay these loans
and other specific details about the loans.
(3) The mortgage note payable on Overlook Apartments matured in March 1999.
The Partnership is currently negotiating for an extension on the note.
Should the Partnership not be able to refinance the mortgage or obtain an
extension, the lender may choose to foreclose on the property. Since the
note is non-recourse and the mortgage balance exceeds the book value of the
property, no loss is expected.
See "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations" for information relating to the refinancing of the
mortgage encumbering South Port Apartments in the fourth quarter of 1997.
RENTAL RATES AND OCCUPANCY:
Average annual rental rate and occupancy for 1998 and 1997 for each property:
Average Annual Average Annual
Rental Rates Occupancy
Per Unit
1998 1997 1998 1997
The Apartments $ 6,733 $ 6,338 94% 96%
Arbours of Hermitage Apartments 7,166 7,052 95% 95%
Briar Bay Racquet Club Apartments 8,648 8,372 97% 94%
Chimney Hill Apartments 8,025 7,886 91% 88%
Citadel Apartments 6,779 6,753 96% 93%
Citadel Village Apartments 8,556 8,189 96% 96%
Foothill Place Apartments 7,893 7,696 94% 95%
Knollwood Apartments 7,821 7,582 95% 96%
Lake Forest Apartments 7,160 6,605 92% 95%
Nob Hill Villa Apartments 6,074 5,883 92% 94%
Overlook Apartments 4,100 3,990 88% 90%
Point West Apartments 5,606 5,238 98% 97%
Post Ridge Apartments 9,261 8,965 96% 96%
Rivers Edge Apartments 7,068 6,638 96% 97%
South Port Apartments 5,874 5,551 97% 94%
Stratford Place Apartments 7,185 6,900 92% 91%
Village East Apartments 7,182 6,678 96% 98%
The increase in occupancy at Briar Bay Racquet Club Apartments is due in part to
an overall decrease in turnover at the property. In addition, the exterior
appearance of the property has favorably impacted occupancy. Exterior repairs
and painting were completed in 1997 in an attempt to improve the curb appeal of
this property. The increase in occupancy at Chimney Hill Apartments is
attributable to the completion of several capital improvement projects coupled
with increased marketing efforts in 1998. The increase in occupancy at The
Citadel is attributable to a more aggressive marketing program at the property
in 1998. The decrease in occupancy at Lake Forest Apartments is due to
increased home ownership combined with vacancies caused by competitive market
rents. The increase in occupancy at South Port Apartments is due to exterior
building improvements that increased unit appeal and overall improvement in the
strength of the local market.
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. All of the properties of the Partnership are subject to
competition from other residential apartment complexes in the areas in which
they operate. The General Partner believes that all of the properties are
adequately insured and are in good physical condition, subject to normal
depreciation and deterioration as is typical for assets of this type and age.
Each property is an apartment complex which leases units for lease terms of one
year or less. No tenant leases 10% or more of the available rental space.
SCHEDULE OF REAL ESTATE TAXES AND RATES:
Real estate taxes and rates in 1998 for each property were:
1998 1998
Billing Rate
(in thousands)
The Apartments $121 2.4%
Arbours of Hermitage Apartments 149 1.4%
Briar Bay Racquet Club Apartments 157 2.3%
Chimney Hill Apartments 124 3.2%
Citadel Apartments 152 3.0%
Citadel Village Apartments 21 0.6%
Foothill Place Apartments 172 1.4%
Knollwood Apartments 163 1.4%
Lake Forest Apartments 166 2.4%
Nob Hill Villa Apartments 205 1.7%
Overlook Apartments 32 2.8%
Point West Apartments 34 2.1%
Post Ridge Apartments 91 1.4%
Rivers Edge Apartments 55 1.5%
South Port Apartments 58 1.5%
Stratford Place Apartments 134 2.6%
Village East Apartments 19 0.6%
CAPITAL IMPROVEMENTS:
The Apartments
During 1998, the Partnership completed approximately $195,000 of capital
improvements at the property, consisting primarily of roof replacement, carpet
and vinyl replacement, other building improvements, and air conditioning units.
These improvements were funded from the Partnership's reserves and operating
cash flow. Based on a report received from an independent third party consultant
analyzing necessary exterior improvements and estimates made by the General
Partner on interior improvements, it is estimated that the property requires
approximately $260,000 of capital improvements over the near term. Capital
improvements planned for 1999 include, but are not limited to, carpet and vinyl
replacement, air conditioning units, landscaping, roof replacement, and other
building improvements. These improvements are expected to cost approximately
$313,000.
Arbours of Hermitage Apartments
During 1998, the Partnership completed approximately $526,000 of capital
improvements at the property, consisting primarily of roof replacement, carpet
replacement, other building improvements, parking area repairs, siding,
appliance replacement, and air conditioning units. These improvements were
funded from the Partnership's reserves and operating cash flow. Based on a
report received from an independent third party consultant analyzing necessary
exterior improvements and estimates made by the General Partner on interior
improvements, it is estimated that the property requires approximately $516,000
of capital improvements over the near term. Capital improvements planned for
1999 include, but are not limited to, carpet and vinyl replacement, air
conditioning units, landscaping, roof replacement, swimming pool repairs,
painting, structural and other building improvements. These improvements are
expected to cost approximately $560,000.
Briar Bay Racquet Club Apartments
During 1998, the Partnership completed approximately $40,000 of capital
improvements at the property, consisting primarily of carpet replacement,
landscaping, and signage improvements. These improvements were funded from
Partnership reserves. Based on a report received from an independent third
party consultant analyzing necessary exterior improvements and estimates made by
the General Partner on interior improvements, it is estimated that the property
requires approximately $114,000 of capital improvements over the near term.
Capital improvements planned for 1999 include, but are not limited to, carpet
and vinyl replacement, electrical upgrades, landscaping, and parking lot
improvements. These improvements are expected to cost approximately $139,000.
Chimney Hill Apartments
During 1998, the Partnership completed approximately $422,000 of capital
improvements at the property, consisting primarily of carpet replacement, other
building improvements, and parking area and balcony improvements. These
improvements were funded from the Partnership's reserves and operating cash
flow. Based on a report received from an independent third party consultant
analyzing necessary exterior improvements and estimates made by the General
Partner on interior improvements, it is estimated that the property requires
approximately $180,000 of capital improvements over the near term. Capital
improvements planned for 1999 include, but are not limited to, interior and
exterior building improvements. These improvements are expected to cost
approximately $252,000.
Citadel Apartments
During 1998, the Partnership completed approximately $83,000 of capital
improvements at the property, consisting primarily of carpet and appliance
replacements. These improvements were funded from the Partnership's reserves and
operating cash flow. Based on a report received from an independent third party
consultant analyzing necessary exterior improvements and estimates made by the
General Partner on interior improvements, it is estimated that the property
requires approximately $227,000 of capital improvements over the near term.
Capital improvements planned for 1999 include, but are not limited to, carpet
and vinyl replacement, air conditioning units, electrical upgrades, landscaping,
roof replacement, and parking lot improvements. These improvements are expected
to cost approximately $256,000.
Citadel Village Apartments
During 1998, the Partnership completed approximately $187,000 of capital
improvements at the property, consisting primarily of carpet replacement,
parking area repairs, roof replacement, and other building improvements. These
improvements were funded from the Partnership's reserves and operating cash
flow. Based on a report received from an independent third party consultant
analyzing necessary exterior improvements and estimates made by the General
Partner on interior improvements, it is estimated that the property requires
approximately $301,000 of capital improvements over the near term. Capital
improvements planned for 1999 include, but are not limited to, carpet and vinyl
replacement, roof replacement, landscaping, and other improvements. These
improvements are expected to cost approximately $216,000.
Foothill Place Apartments
During 1998, the Partnership completed approximately $170,000 of capital
improvements at the property, consisting primarily of carpet and vinyl
replacement, appliance replacement, and clubhouse renovations. These
improvements were funded from the Partnership's operating cash flow. Based on a
report received from an independent third party consultant analyzing necessary
exterior improvements and estimates made by the General Partner on interior
improvements, it is estimated that the property requires approximately $273,000
of capital improvements over the near term. Capital improvements planned for
1999 include, but are not limited to, carpet and vinyl replacement, electrical
upgrades, landscaping, parking lot repairs, roof replacement, appliance
replacement, and structural improvements. These improvements are expected to
cost approximately $362,000.
Knollwood Apartments
During 1998, the Partnership completed approximately $426,000 of capital
improvements at the property, consisting primarily of carpet and vinyl
replacement, parking area repairs, balcony upgrades, cabinets and countertops,
roof replacement, air conditioning units, and other building improvements.
These improvements were funded from the Partnership's reserves and operating
cash flow. Based on a report received from an independent third party
consultant analyzing necessary exterior improvements and estimates made by the
General Partner on interior improvements, it is estimated that the property
requires approximately $584,000 of capital improvements over the near term.
Capital improvements planned for 1999 include, but are not limited to, carpet
and vinyl replacement, electrical upgrades, parking lot repairs, roof
replacement, and structural and other building improvements. These improvements
are expected to cost approximately $626,000.
Lake Forest Apartments
During 1998, the Partnership completed approximately $149,000 of capital
improvements at the property, consisting primarily of carpet and vinyl
replacement, appliance replacement, and perimeter fencing upgrades. These
improvements were primarily funded from the Partnership replacement and capital
reserves. Based on a report received from an independent third party consultant
analyzing necessary exterior improvements and estimates made by the General
Partner on interior improvements, it is estimated that the property requires
approximately $267,000 of capital improvements over the near term. Capital
improvements planned for 1999 include, but are not limited to, carpet and vinyl
replacement, air conditioning units, landscaping, parking lot repairs, and other
improvements. These improvements are expected to cost approximately $522,000.
Nob Hill Villa Apartments
During 1998, the Partnership completed approximately $557,000 of capital
improvements at the property, consisting primarily of carpet and vinyl
replacement, roof replacement, parking lot and swimming pool repairs, perimeter
fencing upgrades, and other building improvements. These improvements were
primarily funded from the Partnership's operating cash flow. Based on a report
received from an independent third party consultant analyzing necessary exterior
improvements and estimates made by the General Partner on interior improvements,
it is estimated that the property requires approximately $275,000 of capital
improvements over the near term. Capital improvements planned for 1999 include,
but are not limited to, carpet and vinyl replacement, air conditioning units,
electrical upgrades, roof replacement, and other improvements. These
improvements are expected to cost approximately $292,000.
Overlook Apartments
During 1998, the Partnership completed approximately $349,000 of capital
improvements at the property, consisting primarily of carpet and vinyl
replacement, appliance replacement, building improvements, air conditioning
units, and major sewer replacement. These improvements were funded from the
Partnership's operating cash flow. Based on a report received from an
independent third party consultant analyzing necessary exterior improvements and
estimates made by the General Partner on interior improvements, it is estimated
that the property requires approximately $557,000 of capital improvements over
the near term. Capital improvements planned for 1999 include, but are not
limited to, carpet and vinyl replacement, roof replacement, and other
improvements. These improvements are expected to cost approximately $238,000.
Point West Apartments
During 1998, the Partnership completed approximately $55,000 of capital
improvements at the property, consisting primarily of carpet and vinyl
replacement, appliance replacement, signage improvements, air conditioning
units, and clubhouse furniture replacement. These improvements were funded from
the Partnership's operating cash flow. Based on a report received from an
independent third party consultant analyzing necessary exterior improvements and
estimates made by the General Partner on interior improvements, it is estimated
that the property requires approximately $132,000 of capital improvements over
the near term. Capital improvements planned for 1999 include, but are not
limited to carpet replacement and landscaping. These improvements are expected
to cost approximately $119,000.
Post Ridge Apartments
During 1998, the Partnership completed approximately $185,000 of capital
improvements at the property, consisting primarily of carpet and vinyl
replacement, parking area repairs, air conditioning units, and roof replacement.
These improvements were primarily funded from Partnership reserves. Based on a
report received from an independent third party consultant analyzing necessary
exterior improvements and estimates made by the General Partner on interior
improvements, it is estimated that the property requires approximately $345,000
of capital improvements over the near term. Capital improvements planned for
1999 include, but are not limited to, carpet and vinyl replacement, roof
replacement, and parking lot repairs. These improvements are expected to cost
approximately $347,000.
Rivers Edge Apartments
During 1998, the Partnership completed approximately $102,000 of capital
improvements at the property, consisting primarily of carpet and vinyl
replacement, appliance replacement, swimming pool repairs, and roof replacement.
These improvements were funded from the Partnership's reserves and operating
cash flow. Based on a report received from an independent third party
consultant analyzing necessary exterior improvements and estimates made by the
General Partner on interior improvements, it is estimated that the property
requires approximately $115,000 of capital improvements over the near term.
Capital improvements planned for 1999 include, but are not limited to, carpet
replacement, appliance replacements, and landscaping. These improvements are
expected to cost approximately $129,000.
South Port Apartments
During 1998, the Partnership completed approximately $75,000 of capital
improvements at the property, consisting primarily of carpet and vinyl
replacement. These improvements were funded from operating cash flow. Based on
a report received from an independent third party consultant analyzing necessary
exterior improvements and estimates made by the General Partner on interior
improvements, it is estimated that the property requires approximately $222,000
of capital improvements over the near term. Capital improvements planned for
1999 include, but are not limited to, carpet and vinyl replacement, appliance
replacements, landscaping, other structural improvements, and fencing upgrades.
These improvements are expected to cost approximately $231,000.
Stratford Place Apartments
During 1998, the Partnership completed approximately $97,000 of capital
improvements at the property, consisting primarily of carpet replacement,
appliance replacement, air conditioning units, and clubhouse renovations. These
improvements were funded from the Partnership's operating cash flow. Based on a
report received from an independent third party consultant analyzing necessary
exterior improvements and estimates made by the General Partner on interior
improvements, it is estimated that the property requires approximately
$1,077,000 of capital improvements over the near term. Capital improvements
planned for 1999 include, but are not limited to, landscaping, plumbing
upgrades, and other structural improvements. These improvements are expected to
cost approximately $579,000.
Village East Apartments
During 1998, the Partnership completed approximately $99,000 of capital
improvements at the property, consisting primarily of carpet and vinyl
replacement, air conditioning units, roof replacement, and other building
improvements. These improvements were funded from the Partnership's operating
cash flow. Based on a report received from an independent third party
consultant analyzing necessary exterior improvements and estimates made by the
General Partner on interior improvements, it is estimated that the property
requires approximately $156,000 of capital improvements over the near term.
Capital improvements planned for 1999 include, but are not limited to, carpet
and vinyl replacement, parking lot repairs, and roof replacement. These
improvements are expected to cost approximately $181,000.
The capital improvements planned for 1999 at the Partnership's properties will
be made only to the extent of cash available from operations and Partnership
reserves.
ITEM 3. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the General Partner and several of their affiliated
partnerships and corporate entities. The complaint purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc. and
entities which were, at the time, affiliates of Insignia ("Insignia Affiliates")
of interests in certain general partner entities, past tender offers by Insignia
Affiliates to acquire limited partnership units, the management of partnerships
by Insignia Affiliates as well as a recently announced agreement between
Insignia and AIMCO. The complaint seeks monetary damages and equitable relief,
including judicial dissolution of the Partnership. On June 25, 1998, the General
Partner filed a motion seeking dismissal of the action. In lieu of responding
to the motion, plaintiffs have recently filed an amended complaint. The General
Partner filed demurrers to the amended complaint which were heard during
February 1999. No ruling on such demurrers has been received. The General
Partner does not anticipate that costs associated with this case, if any, will
be material to the Partnership's overall operations.
On July 30, 1998 certain entities claiming to own limited partnership interests
in certain limited partnerships whose general partners were, at the time,
affiliates of Insignia filed a complaint in the Superior Court of the State of
California, County of Los Angeles. The action, entitled Everest Properties LLC
v. Insignia Financial Group, Inc., involves 44 real estate limited partnerships
(including the Partnership) in which the plaintiffs allegedly own interests and
which Insignia Affiliates allegedly manage or control (the "Subject
Partnerships"). This case was settled on March 3, 1999. The Partnership is
responsible for a portion of the settlement costs. The expense will not have a
material effect on the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Unit holders of the Partnership did not vote on any matter during the fourth
quarter of the fiscal year covered by this report.
PART II
ITEM 5.MARKET FOR THE REGISTRANT'S UNITS OF LIMITED PARTNERSHIP AND RELATED
SECURITY HOLDER MATTERS
(A) No established trading market for the Partnership's Units exists, nor is
one expected to develop.
(B) Title of Class Number of Unitholders of Record
Limited Partnership Units 12,055 as of December 31, 1998
There were 342,773 Units outstanding at December 31, 1998, of which
affiliates of the General Partner owned 106,118 Units or 30.97%.
(C) During the year ended December 31, 1998, the Partnership paid
distributions attributable to cash flow from operations of approximately
$3,951,000 ($11.07 per Limited Partnership Unit). During the year ended
December 31, 1997, the Partnership paid distributions attributable to
cash flow from operations of approximately $1,600,000 ($4.48 per Limited
Partnership Unit) and approximately $903,000 ($2.53 per Limited
Partnership Unit) representing a return of capital. During 1996, the
Partnership paid distributions attributable to cash flow from operations
of approximately $4,538,000 ($12.71 per Limited Partnership Unit) and
approximately $71,000 ($0.20 per Limited Partnership Unit) representing
a return of capital. Cumulative distributions to the Limited Partners
since the inception of the Partnership totaled approximately $34,196,000
at December 31, 1998. In conjunction with the transfer of funds from
certain majority-owned sub-tier limited partnerships to the Partnership,
approximately $36,000 was distributed to the general partners of the
majority-owned sub-tier limited partnerships during the year ended
December 31, 1997. Subsequent to December 31, 1998, the Partnership
paid a distribution from operations of approximately $6,423,000 ($17.99
per Limited Partnership Unit) and approximately $2,722,000 ($7.62 per
Limited Partnership Unit) representing a return of capital. Future cash
distributions will depend on the levels of net cash generated from
operations, refinancings and/or property sales, and the availability of
cash reserves. The Partnership's distribution policy will be reviewed
on a quarterly basis. There can be no assurance, however, that the
Partnership will generate sufficient funds from operations after
required capital expenditures to permit further distributions to its
partners in 1999 or subsequent periods.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth a summary of certain financial data for the
Partnership. Certain reclassifications have been made to the 1994 through 1997
information to conform to the 1998 presentation. This summary should be read in
conjunction with the Partnership's consolidated financial statements and notes
thereto appearing in "Item 8. Financial Statements and Supplementary Data."
Years Ended December 31,
(in thousands, except per unit data)
Consolidated Statements 1998 1997 1996 1995 1994
of Operations
Total revenues $ 30,093 $ 28,710 $ 27,907 $ 27,195 $ 27,905
Total expenses (26,164) (28,296) (28,780) (28,435) (32,325)
Income (loss) from operations 3,929 414 (873) (1,240) (4,420)
Gain on dispositions
of investment property -- -- -- -- 9,523
Income (loss) before extraordinary
items 3,929 414 (873) (1,240) 5,103
Extraordinary items (5) (47) 2,909 43 6,614
Net income (loss) $ 3,924 $ 367 $ 2,036 $ (1,197)$ 11,717
Net income (loss) per
Limited Partnership Unit:
Income (loss) from operations $ 11.00 $ 1.15 $ (2.45) $ (3.47)$ (12.38)
Gain on dispositions
of investment property -- -- -- -- 26.67
Income (loss) before
extraordinary items 11.00 1.15 (2.45) (3.47) 14.29
Extraordinary items (.01) (.12) 8.15 .12 18.52
Net income (loss) $ 10.99 $ 1.03 $ 5.70 $ (3.35)$ 32.81
Distributions per Limited
Partnership Unit $ 11.07 $ 7.01 $ 12.91 $ 2.58 $ --
Limited Partnership Units
outstanding 342,773 342,773 342,783 342,783 342,819
Consolidated Balance Sheets
Total assets $ 50,671 $ 52,381 $ 53,844 $ 61,146 $ 56,812
Mortgage notes payable $ 70,775 $ 72,439 $ 71,763 $ 76,336 $ 70,825
ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
INTRODUCTION
The matters discussed in this Form 10-K contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the disclosure
contained in this Form 10-K and the other filings with the Securities and
Exchange Commission made by the Registrant from time to time. The discussion of
the Registrant's business and results of operations, including forward-looking
statements pertaining to such matters, does not take into account the effects of
any changes to the Registrant's business and results of operation. Accordingly,
actual results could differ materially from those projected in the forward-
looking statements as a result of a number of factors, including those
identified herein.
The operations of the Partnership primarily include operating and holding
income-producing real properties for the benefit of its partners. Therefore, the
following discussion of operations, liquidity and capital resources will focus
on these activities and should be read in conjunction with "Item 8. Financial
Statements and Supplementary Data" and the notes related thereto included
elsewhere in this report.
RESULTS OF OPERATIONS
The Partnership's net income before extraordinary items totaled approximately
$3,929,000 for the year ended December 31, 1998, as compared to approximately
$414,000 for the year ended December 31, 1997 and a net loss before
extraordinary items of approximately $873,000 for the year ended December 31,
1996. For the year ended December 31, 1998, an increase in revenues and an
overall decrease in expenses resulted in an increase in income before
extraordinary items as compared to 1997.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of each of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expenses. As part of
this plan, the General Partner attempts to protect the Partnership from the
burden of inflation-related increases in expenses by increasing rents and
maintaining a high overall occupancy level. However, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions, there is no guarantee that the
General Partner will be able to sustain such a plan.
1998 COMPARED TO 1997
Revenues:
The increase in revenues is primarily attributable to increased rental income
for the year ended December 31, 1998, as compared to the year ended December 31,
1997. These increases are due to increased rental rates at the Partnership's
investment properties accompanied by increased occupancy levels at some of the
properties which more than offset occupancy decreases at other properties. An
increase in other income due to higher cash balances being held, as well as the
casualty gain of approximately $363,000 recognized in 1998 also contributed to
the increase in total revenues.
Expenses:
Expenses decreased primarily due to reductions in operating, depreciation, and,
to a lesser extent, reductions in property tax expenses. Operating expenses
decreased due to the completion of repair projects at a number of the
Partnership's investment properties, including exterior building repairs,
parking lot repairs, and exterior painting, as well as decreases in expenses
related to the casualties which occurred in 1997 at some of the Partnership's
properties. Depreciation expense decreased due to major assets at several of the
Partnership's investment properties becoming fully depreciated during 1997.
Property tax expense decreased due to tax reductions received in 1998 for
billings under appeal at December 31, 1997 at several of the Partnership's
investment properties. Partially offsetting these decreases in expenses is an
increase in general and administrative expenses. General and administrative
expenses increased primarily due to an increase in the special 9% management fee
on distributions from operating cash flows. Distributions from operations
increased by approximately $2,351,000 during 1998 as compared to 1997. Included
in general and administrative expenses at both December 31, 1998 and 1997, are
reimbursements to the General Partner allowed under the Partnership Agreement
associated with its management of the Partnership. In addition, costs
associated with the quarterly and annual communications with investors and
regulatory agencies and the annual audit required by the Partnership Agreement
are also included.
During 1998, the two mortgages secured by the Denbigh Woods property were paid
in full. Approximately $5,000 in prepayment penalties was paid in connection
with these repayments. Such amount is included on the consolidated statements
of operations as extraordinary loss on retirement of debt, which caused a slight
decrease in net income for 1998. See "Item 8. Financial Statements and
Supplementary Data - Note G" for additional information on these mortgages.
During 1998, a net casualty gain of approximately $192,000 resulted from fire
and smoke damage to Overlook Apartments suffered in November 1997. In March
1998, Nob Hill Apartments sustained damages from a fire in one of the property's
buildings, resulting in a net casualty gain of approximately $204,000. Other
minor damage claims less related insurance proceeds resulted in a net casualty
loss of approximately $6,000. Additionally in 1998, Foothill Place Apartments
suffered windstorm damage resulting in a net casualty loss of approximately
$27,000. The net result of all of the above was the recognition of a casualty
gain of $363,000 in 1998.
1997 COMPARED TO 1996
Income before extraordinary items increased in 1997 as compared to 1996 due to
an increase in revenues and a decrease in expenses in 1997. Revenues increased
due to an increase in rental income which was partially offset by a decrease in
other income.
Revenues:
Rental income increased for the year ended December 31 1997, compared to the
year ended December 31, 1996, due to increased rental rates at all of the
Partnership's investment properties, except the Citadel Apartments, accompanied
by overall consistent occupancy levels.
Expenses:
Expenses decreased due to a reduction in general and administrative expenses,
depreciation, and interest expense, which was partially offset by an increase in
operating and property tax expenses.
General and administrative expenses decreased for the year ended December 31,
1997, compared to the year ended December 31, 1996, due primarily to a decrease
in the special 9% management fees on distributions from operating cash flows.
The Partnership distributed approximately $1,600,000 and $4,538,000,
respectively, from operating cash flow for the year ended December 31, 1997 and
1996. Operating expenses increased primarily due to increased utility costs at
several properties due to an increase in rates. An increase in maintenance
expense, which also contributes to increased operating costs, is due to parking
lot repairs and improvements and interior and exterior painting projects at
Chimney Hill Apartments, Post Ridge Apartments and Foothill Place Apartments.
There was also a door and window replacement project at Arbors of Hermitage
Apartments, as well as, an interior repair project on some of the units at
Knollwood Apartments and South Port Apartments. Interest expense decreased
primarily due to the refinancing in late 1996 of the mortgage encumbering Post
Ridge Apartments, which resulted in a lower interest rate. This decrease was
partially offset by an increase in interest expense at Lake Forest Apartments
due to a refinancing of its mortgage in November 1996. Although the new loan
bears a lower interest rate, the principal balance increased from approximately
$4,100,000 to approximately $4,700,000. Property tax expense increased for the
year ended December 31, 1997, as compared to the year ended December 31, 1996,
due to increased assessments at several of the Partnership's investment
properties.
On November 18, 1997, the Partnership refinanced the mortgage encumbering the
South Port Apartments. The refinancing replaced indebtedness of $3,432,000,
including accrued interest of approximately $18,000, with a new mortgage in the
amount of $4,500,000. The mortgage was refinanced at a rate equal to 7.19%,
compared to the prior rate of 10.85% and matures on December 1, 2004. Total
loan costs paid during 1997 were approximately $120,000, with an additional
$17,000 paid in 1998. These costs have been capitalized and are being amortized
over the life of the loan. The Partnership paid approximately $34,000 in
prepayment penalties and wrote off $13,000 in unamortized loan costs, resulting
in an extraordinary loss on extinguishment of debt in the amount of
approximately $47,000, which caused a decrease in net income of $47,000.
During 1997, several storms caused damage to the Foothill Place Apartments. In
addition, minor fire damage occurred at the Foothill Place Apartments and the
Arbours of Hermitage Apartments. The insurance proceeds received less the cost
of repairs plus the write-off of assets that were replaced as a result of these
casualties resulted in a net casualty loss for these events of $46,000, which is
included in operating expenses for the year ended December 31, 1997.
LIQUIDITY AND CAPITAL RESOURCES
1998 COMPARED TO 1997
At December 31, 1998, the Partnership held cash and cash equivalents of
approximately $13,241,000 as compared to approximately $12,090,000 at December
31, 1997. The increase in cash and cash equivalents is due to approximately
$8,474,000 of cash provided by operating activities, which was partially offset
by approximately $2,751,000 and $4,572,000 of cash used in investing and
financing activities, respectively. Cash used in investing activities consisted
of capital improvements, which was partially offset by note receivable
collections, net withdrawals from restricted escrows and insurance proceeds from
casualty losses. Cash used in financing activities consisted primarily of
distributions to partners and, to a lesser extent, payments of principal on the
mortgages encumbering the Partnership's properties, payoff of the Denbigh Woods
mortgages, and payment of loan costs. The Partnership invests its working
capital reserves in money market accounts.
1997 COMPARED TO 1996
At December 31, 1997, the Partnership held cash and cash equivalents of
approximately $12,090,000 compared to $9,239,000 at December 31, 1996. The
increase in cash and cash equivalents is due to approximately $7,149,000 of cash
provided by operating activities, which was partially offset by approximately
$2,317,000 and $1,981,000 of cash used in investing and financing activities,
respectively. Cash used in investing activities primarily consisted of capital
improvements and, to a lesser extent, net deposits to restricted escrows
partially offset by proceeds from the sale of investments. Cash used in
financing activities primarily consisted of payments and repayments of mortgage
notes payable, payment of loan costs, and distributions to partners partially
offset by proceeds from mortgage notes payable.
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 Partnership has
budgeted approximately $5,053,000 in capital improvements for all of the
Partnership's properties in 1999. Budgeted capital expenditures at The
Apartments include carpet and vinyl replacement, air conditioning units,
landscaping, roof replacement, and other building improvements. Budgeted
capital expenditures at Arbours of Hermitage include carpet and vinyl
replacement, air conditioning units, landscaping, roof replacement, swimming
pool repairs, painting, structural and other building improvements. Budgeted
capital expenditures at Briar Bay Racquet Club include carpet and vinyl
replacement, electrical upgrades, landscaping, and parking lot improvements.
Budgeted capital expenditures at Chimney Hill Apartments include, but are not
limited to, interior and exterior building improvements. Budgeted capital
expenditures at Citadel Apartments include carpet and vinyl replacement, air
conditioning units, landscaping, roof replacements, and parking lot
improvements. Budgeted capital expenditures at Citadel Village Apartments
include carpet and vinyl replacement, roof replacement, landscaping, and other
improvements. Budgeted capital expenditures at Foothill Place Apartments
include carpet and vinyl replacement, electrical upgrades, landscaping, parking
lot repairs, roof replacement, appliance replacement, and structural
improvements. Budgeted capital expenditures at Knollwood Apartments include
carpet and vinyl replacement, electrical upgrades, parking lot repairs, roof
replacement, and structural and other building improvements. Budgeted capital
expenditures at Lake Forest Apartments include carpet and vinyl replacement, air
conditioning units, landscaping, parking lot repairs, and other improvements.
Budgeted capital expenditures at Nob Hill Villa Apartments include carpet and
vinyl replacement, air conditioning units, electrical upgrades, roof
replacement, and other improvements. Budgeted capital expenditures at Overlook
Apartments include carpet and vinyl replacement, roof replacement, and other
improvements. Budgeted capital expenditures at Point West Apartments include
carpet replacement and landscaping. Budgeted capital expenditures at Post Ridge
Apartments include carpet and vinyl replacement, roof replacement, and parking
lot repairs. Budgeted capital expenditures at Rivers Edge Apartments include
carpet replacement, appliance replacements, and landscaping. Budgeted capital
expenditures at South Port Apartments include carpet and vinyl replacement,
appliance replacements, landscaping, other structural improvements, and fencing
upgrades. Budgeted capital expenditures at Stratford Place Apartments include
landscaping, plumbing upgrades, and other structural improvements. Budgeted
capital expenditures at Village East Apartments include carpet and vinyl
replacement, parking lot repairs, and roof replacement. The capital
expenditures will be incurred only if cash is available from operations or from
Partnership reserves. To the extent that such budgeted capital improvements are
completed, the Partnership's distributable cash flow, if any, may be adversely
affected at least in the short term.
The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Partnership. The mortgage
indebtedness of approximately $70,775,000 matures at various dates between 1999
and 2005. The mortgage note payable on Overlook Apartments matured in March
1999. The Partnership is currently negotiating for an extension on the note.
Should the Partnership not be able to refinance the mortgage or obtain an
extension, the lender may choose to foreclose on the property. Since the note
is non-recourse and the mortgage balance exceeds the book value of the property,
no loss is expected. The General Partner will attempt to refinance such
remaining 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 will risk losing such properties through foreclosure.
Cash distributions from operations of approximately $3,951,000 and $1,600,000
were made during the years ended December 31, 1998 and 1997, respectively.
Additionally in 1997, the Partnership paid distributions of approximately
$903,000 to partners representing a return of capital. Subsequent to December
31, 1998, the Partnership paid a distribution from operations of approximately
$6,423,000 and approximately $2,722,000 representing a return of capital. The
Partnership's distribution policy will be reviewed on a quarterly basis. There
can be no assurance, however, that the Partnership will generate sufficient
funds from operations after required capital expenditures to permit further
distributions to its partners in 1999 or subsequent periods.
The Partnership is required by the Partnership Agreement to maintain working
capital reserves for contingencies. On September 25, 1995, the partners were
proxied and approved a reduction of the capital reserve requirements to $500 per
apartment unit and $1.00 per square foot of gross leasable commercial space
owned by the Partnership, or approximately $2,200,000. During 1996, the Metro
Centre Office Building was foreclosed on by the lender thereby lowering reserve
requirements further. The replacement reserve requirement at the remaining
residential properties is approximately $2,100,000. In the event expenditures
are made from these reserves, operating revenue shall be allocated to such
reserves to the extent necessary to maintain the foregoing level. Reserves,
including cash and cash equivalents, totaling approximately $13,241,000 at
December 31, 1998, exceeded the Partnership's reserve requirements of
approximately $2,100,000.
YEAR 2000 COMPLIANCE
General Description of the Year 2000 Issue and the Nature and Effects of the
Year 2000 on Information Technology (IT) and Non-IT Systems
The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. The Partnership
is dependent upon the Managing General Partner and its affiliates for management
and administrative services ("Managing Agent"). Any of the computer programs or
hardware that have date-sensitive software or embedded chips may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result
in a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities.
Over the past two years, the Managing Agent has determined that it will be
required to modify or replace significant portions of its software and certain
hardware so that those systems will properly utilize dates beyond December 31,
1999. The Managing Agent presently believes that with modifications or
replacements of existing software and certain hardware, the Year 2000 issue can
be mitigated. However, if such modifications and replacements are not made or
not completed in time, the Year 2000 issue could have a material impact on the
operations of the Partnership.
The Managing Agent's plan to resolve Year 2000 issues involves four Phases:
assessment, remediation, testing, and implementation. To date, the Managing
Agent has fully completed its assessment of all the information systems that
could be significantly affected by the Year 2000, and has begun the remediation,
testing and implementation phases on both hardware and software systems.
Assessments are continuing in regards to embedded systems. The status of each
is detailed below.
Status of Progress in Becoming Year 2000 Compliant, Including Timetable for
Completion of Each Remaining Phase
Computer Hardware:
During 1997 and 1998, the Managing Agent identified all of the computer systems
at risk and formulated a plan to repair or replace each of the affected systems.
In August 1998, the mainframe system used by the Managing Agent became fully
functional. In addition to the mainframe, PC-based network servers and routers
and desktop PCs were analyzed for compliance. The Managing Agent has begun to
replace each of the non-compliant network connections and desktop PCs and, as of
December 31, 1998, had completed approximately 75% of this effort.
The total cost to the Managing Agent to replace the PC-based network servers,
routers and desktop PCs is expected to be approximately $1.5 million of which
$1.3 million has been incurred to date. The remaining network connections and
desktop PCs are expected to be upgraded to Year 2000 compliant systems by March
31, 1999.
Computer software:
The Managing Agent utilizes a combination of off-the-shelf, commercially
available software programs as well as custom-written programs that are designed
to fit specific needs. Both of these types of programs were studied, and
implementation plans written and executed with the intent of repairing or
replacing any non-compliant software programs.
During 1998, the Managing Agent began converting the existing property
management and rent collection systems to its management properties Year 2000
compliant systems. The estimated additional costs to convert such systems at
all properties, is $200,000, and the implementation and the testing process is
expected to be completed by March 31, 1999.
The final software area is the office software and server operating systems.
The Managing Agent has upgraded all non-compliant office software systems on
each PC and has upgraded 80% of the server operating systems. The remaining
server operating systems are planned to be upgraded to be Year 2000 compliant by
March 31, 1999.
Operating Equipment:
The Managing Agent has operating equipment, primarily at the property sites,
which needed to be evaluated for Year 2000 compliance. In September 1997, the
Managing Agent began taking a census and inventory of embedded systems
(including those devices that use time to control systems and machines at
specific properties, for example elevators, heating, ventilating, and air
conditioning systems, security and alarm systems, etc.).
The Managing Agent has chosen to focus its attention mainly upon security
systems, elevators, heating, ventilating and air conditioning systems, telephone
systems and switches, and sprinkler systems. While this area is the most
difficult to fully research adequately, management has not yet found any major
non-compliance issues that put the Managing Agent at risk financially or
operationally. The Managing Agent intends to have a third-party conduct an
audit of these systems and report their findings by March 31, 1999.
Any of the above operating equipment that has been found to be non-compliant to
date has been replaced or repaired. To date, these have consisted only of
security systems and phone systems. As of December 31, 1998 the Managing Agent
has evaluated approximately 86% of the operating equipment for the Year 2000
compliance.
The total cost incurred for all properties managed by the Managing Agent as of
December 31, 1998 to replace or repair the operating equipment was approximately
$400,000. The Managing Agent estimates the cost to replace or repair any
remaining operating equipment is approximately $325,000, which is expected to be
completed by April 30, 1999.
The Managing Agent continues to have "awareness campaigns" throughout the
organization designed to raise awareness and report any possible compliance
issues regarding operating equipment within our enterprise.
Nature and Level of Importance of Third Parties and Their Exposure to the Year
2000
The Managing Agent continues to conduct surveys of its banking and other vendor
relationships to assess risks regarding their Year 2000 readiness. The Managing
Agent has banking relationships with three major financial institutions, all of
which have indicated their compliance efforts will be complete before May 1999.
The Managing Agent has updated data transmission standards with two of the three
financial institutions. The Managing Agent's contingency plan in this regard is
to move accounts from any institution that cannot be certified Year 2000
compliant by June 1, 1999.
The Partnership does not rely heavily on any single vendor for goods and
services, and does not have significant suppliers and subcontractors who share
information systems (external agent). To date the Partnership is not aware of
any external agent with a Year 2000 compliance issue that would materially
impact the Partnership's results of operations, liquidity, or capital resources.
However, the Partnership has no means of ensuring that external agents will be
Year 2000 compliant.
The Managing Agent does not believe that the inability of external agents to
complete their Year 2000 remediation process in a timely manner will have a
material impact on the financial position or results of operations of the
Partnership. However, the effect of non-compliance by external agents is not
readily determinable.
Costs to Address Year 2000
The total cost of the Year 2000 project to the Managing Agent is estimated at
$3.5 million and is being funded from operating cash flows. To date, the
Managing Agent has incurred approximately $2.8 million ($0.6 million expensed
and $2.2 million capitalized for new systems and equipment) related to all
phases of the Year 2000 project. Of the total remaining project costs,
approximately $0.5 million is attributable to the purchase of new software and
operating equipment, which will be capitalized. The remaining $0.2 million
relates to repair of hardware and software and will be expensed as incurred.
The Partnership's portion of these costs are not material.
Risks Associated with the Year 2000
The Managing Agent believes it has an effective program in place to resolve the
Year 2000 issue in a timely manner. As noted above, the Managing Agent has not
yet completed all necessary phases of the Year 2000 program. In the event that
the Managing Agent does not complete any additional phases, certain worst case
scenarios could occur. The worst case scenarios could include elevators,
security and heating, ventilating and air conditioning systems that read
incorrect dates and operate with incorrect schedules (e.g., elevators will
operate on Monday as if it were Sunday). Although such a change would be
annoying to residents, it is not business critical.
In addition, disruptions in the economy generally resulting from Year 2000
issues could also adversely affect the Partnership. The Partnership could be
subject to litigation for, among other things, computer system failures,
equipment shutdowns or failure to properly date business records. The amount of
potential liability and lost revenue cannot be reasonably estimated at this
time.
Contingency Plans Associated with the Year 2000
The Managing Agent has contingency plans for certain critical applications and
is working on such plans for others. These contingency plans involve, among
other actions, manual workarounds and selecting new relationships for such
activities as banking relationships and elevator operating systems.
ITEM 7A. MARKET RISK FACTORS
The Partnership is exposed to market risks from adverse changes in interest
rates. In this regard, changes in U.S. interest rates affect the interest
earned on the Partnership's cash and cash equivalents as well as interest paid
on its indebtedness. As a policy, the Partnership does not engage in speculative
or leveraged transactions, nor does it hold or issue financial instruments for
trading purposes. The Partnership is exposed to changes in interest rates
primarily as a result of its borrowing activities used to maintain liquidity and
fund business operations. To mitigate the impact of fluctuations in U.S.
interest rates, the Partnership maintains its debt as fixed rate in nature by
borrowing on a long-term basis. Based on interest rates at December 31, 1998, a
1% increase or decrease in market interest rate would not have a material impact
on the Partnership.
The following table summarizes the Partnership's debt obligations at December
31, 1998. The interest rates represent the weighted-average rates. The fair
value of the debt obligations approximated the recorded value as of December 31,
1998.
Long-term Debt
Principal amount by expected maturity: Fixed Rate Debt Average Interest Rate
(in thousands)
1999 $ 2,238 7.75%
2000 12,474 7.56%
2001 191 7.25%
2002 208 7.25%
2003 8,976 7.25%
Thereafter 46,688 7.23%
Total $70,775
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED CAPITAL PROPERTIES IV
LIST OF FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Auditors
Consolidated Balance Sheets - December 31, 1998 and 1997
Consolidated Statements of Operations - Years ended December 31, 1998, 1997 and
1996
Consolidated Statements of Changes in Partners' Deficit - Years ended December
31, 1998, 1997 and 1996
Consolidated Statements of Cash Flows - Years ended December 31, 1998, 1997 and
1996
Notes to Consolidated Financial Statements
Report of Ernst & Young LLP, Independent Auditors
The Partners
Consolidated Capital Properties IV
We have audited the accompanying consolidated balance sheets of Consolidated
Capital Properties IV as of December 31, 1998 and 1997, and the related
consolidated statements of operations, changes in partners' deficit and cash
flows for each of the three years in the period ended December 31, 1998. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
Partnership's management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Consolidated
Capital Properties IV at December 31, 1998 and 1997, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1998, in conformity with generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
Greenville, South Carolina
March 3, 1999
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
December 31,
1998 1997
Assets
Cash and cash equivalents $ 13,241 $ 12,090
Receivables and deposits 2,246 1,999
Note and interest receivable -- 1,081
Restricted escrows 2,743 3,174
Other assets 1,459 1,874
Investment properties (Notes D and J):
Land 12,491 12,491
Buildings and personal property 121,741 118,162
134,232 130,653
Less accumulated depreciation (103,250) (98,490)
30,982 32,163
$ 50,671 $ 52,381
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 379 $ 526
Tenant security deposit liabilities 568 580
Accrued property taxes 1,309 1,312
Other liabilities 1,045 902
Mortgage notes payable (Note D) 70,775 72,439
74,076 75,759
Partners' Deficit
General partner's (6,175) (6,174)
Limited partners' (342,773 units issued
and outstanding) (17,230) (17,204)
(23,405) (23,378)
$ 50,671 $ 52,381
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended December 31,
1998 1997 1996
Revenues:
Rental income $ 27,620 $ 26,769 $ 25,872
Other income 2,110 1,941 2,035
Casualty gain 363 -- --
Total revenues 30,093 28,710 27,907
Expenses:
Operating 12,449 12,985 12,627
General and administrative 1,188 990 1,317
Depreciation 4,871 6,558 7,048
Interest 5,840 5,868 6,052
Property taxes 1,816 1,895 1,736
Total expenses 26,164 28,296 28,780
Income (loss) before extraordinary items 3,929 414 (873)
Extraordinary loss on refinancing -- (47) (85)
Extraordinary loss on retirement of debt (5) -- (5)
Extraordinary gain on forgiveness of debt -- -- 2,999
Net income $ 3,924 $ 367 $ 2,036
Net income allocated to general partner (4%) $ 157 $ 15 $ 81
Net income allocated to limited partners (96%) 3,767 352 1,955
$ 3,924 $ 367 $ 2,036
Net income per limited partnership unit:
Income (loss) before extraordinary items $ 11.00 $ 1.15 $ (2.45)
Extraordinary loss on refinance -- (.12) (.24)
Extraordinary loss on retirement of debt (.01) -- (.01)
Extraordinary gain on forgiveness of debt -- -- 8.40
Net income per limited partnership unit $ 10.99 $ 1.03 $ 5.70
Distributions per limited partnership unit $ 11.07 $ 7.01 $ 12.91
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
(in thousands, except unit data)
Limited Total
Partnership General Limited Partners'
Units Partner Partners Deficit
Original capital contributions 343,106 $ 1 $171,553 $171,554
Partners' deficit at
December 31, 1995 342,783 $ (5,951) $(12,682) $(18,633)
Net income for the year ended
December 31, 1996 -- 81 1,955 2,036
Distributions paid -- (219) (4,426) (4,645)
Partners' deficit at
December 31, 1996 342,783 (6,089) (15,153) (21,242)
Net income for the year ended
December 31, 1997 -- 15 352 367
Distributions paid -- (100) (2,403) (2,503)
Abandonment of limited
partnership units (10) -- -- --
Partners' deficit at
December 31, 1997 342,773 (6,174) (17,204) (23,378)
Net income for the year ended
December 31, 1998 -- 157 3,767 3,924
Distributions paid -- (158) (3,793) (3,951)
Partners' deficit at
December 31, 1998 342,773 $ (6,175) $(17,230) $(23,405)
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1998 1997 1996
Cash flows from operating activities:
Net income $ 3,924 $ 367 $ 2,036
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 4,871 6,558 7,048
Amortization of loan costs 317 284 279
Loss on disposition of investment property -- -- 101
Casualty (gain) loss (363) 46 --
Extraordinary loss on refinancing -- 47 85
Extraordinary loss on retirement of debt 5 -- 5
Extraordinary gain on forgiveness of debt -- -- (2,999)
Change in accounts:
Receivables and deposits (344) (128) 670
Other assets 115 (22) 84
Accounts payable (147) (118) (308)
Tenant security deposit liabilities (12) (79) (14)
Accrued property taxes (3) 207 144
Other liabilities 111 (13) (321)
Net cash provided by operating activities 8,474 7,149 6,810
Cash flows from investing activities:
Property improvements and replacements (3,717) (2,559) (4,945)
Proceeds from sale of investments -- 492 2,122
Collections on notes receivable 48 43 39
Net withdrawals from (deposits to) restricted escrows 431 (264) (144)
Net insurance proceeds from casualty 487 (29) --
Net cash used in investing activities (2,751) (2,317) (2,928)
Cash flows from financing activities:
Payments on mortgage notes payable (437) (409) (497)
Repayment of mortgage notes payable (194) (3,415) (12,878)
Proceeds from mortgage notes payable -- 4,500 12,800
Prepayment penalties (5) (34) (9)
Loan costs paid (17) (120) (279)
Distributions to partners (3,919) (2,503) (4,645)
Net cash used in financing activities (4,572) (1,981) (5,508)
Net increase (decrease) in cash and cash equivalents 1,151 2,851 (1,626)
Cash and cash equivalents at beginning of year 12,090 9,239 10,865
Cash and cash equivalents at end of year $ 13,241 $ 12,090 $ 9,239
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(in thousands)
Supplemental Disclosures of Cash Flow Information and Non-Cash Activities:
At December 31, 1998, notes and interest receivable and mortgage notes payable
were adjusted by approximately $1,033,000 related to Denbigh Wood Apartments
(see "Note G"), and distributions were adjusted by approximately $32,000,
respectively, for non-cash activity.
At December 31, 1997, accounts receivable and accounts payable were adjusted by
$64,000 and $49,000, respectively, for non-cash activity.
Cash paid for interest was approximately $5,528,000, $5,596,000 and $5,750,000
for the years ended December 31, 1998, 1997, and 1996, respectively.
Foreclosure
In February of 1996, Metro Centre Office Building was foreclosed upon by the
lender. In connection with this foreclosure, the following accounts were
adjusted by the amounts noted below (in thousands).
1996
Tenant security deposits remitted to the lender $ (12)
Prepaid expenses and other assets (5)
Buildings and personal property (1,605)
Accumulated depreciation 1,079
Accounts payable and accrued expenses 24
Interest payable 1,021
Notes payable 2,497
Extraordinary gain on forgiveness of debt (2,999)
The net book value of the property approximated its fair value at the date of
foreclosure.
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Consolidated Capital Properties IV (the "Partnership" or "Registrant"), a
California limited partnership, was formed on September 22, 1981, to operate and
hold commercial and residential properties. The general partner of the
Partnership is ConCap Equities, Inc. ("CEI" or the "General Partner"), a
Delaware corporation. Additionally, the General Partner is a subsidiary of
Apartment Investment and Management Company ("AIMCO"). The directors and
officers of the General Partner also serve as executive officers of AIMCO. The
Partnership Agreement provides that the Partnership is to terminate on December
31, 2011 unless terminated prior to that date. As of December 31, 1998, the
Partnership operates 17 residential properties located in or near major urban
areas in the United States.
Upon the Partnership's formation in 1981, Consolidated Capital Equities
Corporation ("CCEC"), a Colorado corporation, was the corporate general partner
and Consolidated Capital Management Company ("CCMC"), a California general
partnership, was the non-corporate general partner. In 1988, through a series
of transactions, Southmark Corporation ("Southmark") acquired controlling
interest in CCEC. In December 1988, CCEC filed for reorganization under Chapter
11 of the United States Bankruptcy Code. In 1990, as part of CCEC's
reorganization plan, CEI acquired CCEC's general partner interests in the
Partnership and in 15 other affiliated public limited partnerships (the
"Affiliated Partnerships") and CEI replaced CCEC as managing general partner in
all 16 partnerships. The selection of CEI as the sole managing general partner
was approved by a majority of the limited partners in the Partnership and in
each of the Affiliated Partnerships pursuant to a solicitation of the Limited
Partners dated August 10, 1990. As part of this solicitation, the Limited
Partners also approved an amendment to the Partnership Agreement to limit
changes of control of the Partnership, and the conversion of CCMC from a general
partner to a Special Limited Partner, thereby leaving CEI as the sole general
partner of the Partnership. On November 14, 1990, CCMC was dissolved and its
Special Limited Partnership interest was divided among its former partners.
All of CEI's outstanding stock is owned by Insignia Properties Trust, which is
an affiliate of AIMCO. In December 1994, the parent of GII Realty, Inc.,
entered into a transaction (the "Insignia Transaction") in which an affiliate of
Insignia acquired an option (exercisable in whole or in part from time to time)
to purchase all of the stock of GII Realty, Inc. and, pursuant to a partial
exercise of such option, acquired 50.5% of that stock. As a part of the
Insignia Transaction, the Insignia affiliate also acquired all of the
outstanding stock of Partnership Services, Inc., an asset management entity, and
a subsidiary of Insignia acquired all of the outstanding stock of Coventry
Properties, Inc., a property management entity. In addition, confidentiality,
non-competition, and standstill arrangements were entered into between certain
of the parties. Those arrangements, among other things, prohibit GII Realty's
former sole shareholder from purchasing Partnership Units for a period of three
years. On October 24, 1995, the Insignia affiliate exercised the remaining
portion of its option to purchase all of the remaining outstanding capital stock
of GII Realty, Inc.
Consolidation
The consolidated financial statements include the Partnership's majority
interest in a joint venture which owns South Port Apartments. The Partnership
has the ability to control the major operating and financial policies of the
joint venture. No minority interest has been reflected for the joint venture
because minority interests are limited to the extent of their equity capital,
and losses in excess of the minority interest equity capital are charged against
the Partnership's interest. Should the losses reverse, the Partnership would be
credited with the amount of minority interest losses previously absorbed.
The Partnership's consolidated financial statements include the accounts of the
Partnership, its wholly-owned partnerships, its 99% limited partnership interest
in Briar Bay Apartments Associates, Ltd., Post Ridge Associates, Ltd., Concap
River's Edge Associates, Ltd, Foothill Chimney Associates, L.P., Concap Metro
Centre Associates, Ltd., and Concap Stratford Associates, Ltd. and its 50%
interest in South Port Apartments limited partnership. The Partnership may
remove the general partner of its 99% owned partnerships; therefore, the
partnerships are deemed controlled and therefore consolidated by the
Partnership. All significant interpartnership balances have been eliminated.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and in banks, money market funds,
and certificates of deposits with original maturities of less than ninety days.
At certain times, the amount of cash deposited at a bank may exceed the limit on
insured deposits.
Security Deposits
The Partnership requires security deposits from lessees for the duration of the
lease and such deposits are included in receivables and deposits. Deposits are
refunded when the tenant vacates the apartment, provided the tenant has not
damaged its space and is current on its rental payments.
Restricted Escrows
Capital Improvement Reserves: At the time of the refinancing of the mortgage
note payable encumbering Nob Hill Villa, $219,000 of the proceeds were
designated for certain capital improvements. At the time of the refinancing of
the mortgage notes payable encumbering the Arbours of Hermitage, Briar Bay,
Chimney Hill, Citadel Village, Foothill Place, Knollwood, and Village East,
approximately $1,145,000 was designated for certain capital improvements. At
the time of the refinancing of the mortgage note payable encumbering Lake
Forest, $555,000 of the proceeds were designated for certain capital
improvements. At the time of the refinancing of the mortgage note payable
encumbering South Port, $283,000 of the proceeds were designated for certain
capital improvements. At December 31, 1998, the total remaining escrow balance
is approximately $643,000.
Replacement Reserve Accounts: At the time of the refinancing of the mortgage
notes payable encumbering the Arbours of Hermitage, Briar Bay, Chimney Hill,
Citadel Village, Foothill Place, Knollwood, and Village East, $507,000 of the
proceeds, ranging from $191 to $325 per unit, were designated for replacement
reserves. At the time of the refinancing of the mortgage note payable
encumbering Post Ridge, $384,000 of the proceeds were designated for replacement
reserves. These funds were established to cover necessary repairs and
replacements of existing improvements. At December 31, 1998, the total
remaining reserve balance is approximately $1,069,000.
Investments in Real Estate
Investment properties consist of seventeen apartment complexes, which are stated
at cost. Acquisition fees are capitalized as a cost of real estate. The
Partnership records impairment losses on long-lived assets used in operations
when events and circumstances indicate that the assets might be impaired and the
undiscounted cash flows estimated to be generated by those assets are less than
the carrying amounts of those assets. The impairment loss is measured by
comparing the fair value of the asset to its carrying amount. Costs of
apartment properties that have been permanently impaired have been written down
to appraisal value. No adjustments for impairment of value were recorded in
either of the years ended December 31, 1998, 1997, or 1996.
Depreciation
Buildings, improvements and furniture and fixtures are depreciated using the
straight-line method over the estimated useful lives of the assets, ranging from
5 to 40 years.
Leases
The Partnership generally leases apartment units for twelve-month terms or less.
The Partnership recognizes income as earned on its leases. In addition, the
General Partner's policy is to offer rental concessions during particularly slow
months or in response to heavy competition from other similar complexes in the
area. Concessions are charged against rental income as incurred.
Loan Costs
Loan costs, net of accumulated amortization, of $1,377,000 and $1,677,000 at
December 31, 1998 and 1997, respectively, are amortized using the straight-line
method over the lives of the related mortgage notes. Unamortized loan costs are
included in other assets. Amortization of loan costs is included in interest
expense.
Fair Value
The Partnership believes that the carrying amount of its financial instruments
(except long term debt) approximates their fair value due to the short term
maturity of these instruments. The fair value of the Partnership's long term
debt, after discounting the scheduled loan payments to maturity based on
estimated borrowing rates currently available to the Partnership, approximates
its carrying amount.
Allocation of Net Income and Net Loss
The Partnership Agreement provides for net losses and distributions of
distributable cash from operations to be allocated, generally 96% to the Limited
Partners and 4% to the General Partner.
Net Income (Loss) Per Limited Partnership Unit
Net income (loss) per Limited Partnership Unit is computed by dividing net
income (loss) allocated to the Limited Partners by the number of Units
outstanding. Per Unit information has been computed based on the number of
Units outstanding at the beginning of each year.
Segment Reporting
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosure about Segments of an
Enterprise and Related Information" ("Statement 131"), which is effective for
years beginning after December 15, 1997. Statement 131 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 establishes standards for related disclosures about products
and services, geographic areas, and major customers (See "Note M" for required
disclosures).
Reclassifications
Certain reclassifications have been made to the 1997 and 1996 information to
conform to the 1998 presentation.
Advertising Costs
Advertising costs of approximately $482,000, $441,000, and $375,000 in 1998,
1997 and 1996, respectively, are charged to expense as incurred and are included
in operating expenses.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
NOTE B - TRANSFER OF CONTROL
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment Investment and Management Company, a publicly traded real
estate investment trust, with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result, AIMCO ultimately acquired a 100% ownership
interest in Insignia Properties Trust ("IPT"), the sole shareholder of the
General Partner. The General Partner does not believe that this transaction
will have a material effect on the affairs and operations of the Partnership.
NOTE C - TRANSACTIONS WITH AFFILIATED PARTIES
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all of the partnership
activities. The Partnership Agreement provides for certain payments to
affiliates for services and as reimbursements of certain expenses incurred by
affiliates on behalf of the Partnership. The following transactions with the
General Partner and/or its affiliates were charged to expense in 1998, 1997 and
1996:
1998 1997 1996
(in thousands)
Property management fees (included
in operating expense) $1,478 $1,413 $1,316
Reimbursements for services of affiliates
(included in investment property and
general and administrative and operating
expenses) (1) 627 608 605
Partnership management fee 341 138 392
(1) Included in "Reimbursements for services of affiliates" for the years ended
December 31, 1998, 1997 and 1996 is approximately $64,000, $65,000 and
$32,000, respectively, in reimbursements for construction oversight costs.
During the years ended December 31, 1998, 1997 and 1996, affiliates of the
General Partner were entitled to receive 5% of gross receipts from all of the
Partnership's properties as compensation for providing property management
services. The Partnership paid to such affiliates approximately $1,478,000,
$1,413,000 and $1,316,000 for the years ended December 31, 1998, 1997 and 1996,
respectively.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $627,000, $608,000 and
$605,000, for the years ended December 31, 1998, 1997 and 1996, respectively.
The Limited Partnership Agreement ("Partnership Agreement") provides for a
special management fee equal to 9% of the total distributions made to the
limited partners from cash flow provided by operations to be paid to the General
Partner for executive and administrative management services. The Partnership
paid approximately $341,000, $138,000, and $392,000 under this provision of the
Partnership Agreement to affiliates of the General Partner for the years ended
December 31, 1998, 1997, and 1996, respectively. These fees are included in
general and administrative expenses.
In addition to reimbursement for services of affiliates, the Partnership paid an
affiliate of the General Partner approximately $7,000, $13,000 and $22,000 in
1998, 1997, and 1996, respectively, for loan costs which are capitalized and
included in other assets on the consolidated balance sheets. These loan costs
were associated with the refinancing of one of the Partnership's properties in
1997 and two in 1996 (See "Note D").
For the period January 1, 1996, to August 31, 1997, the Partnership insured its
properties under a master policy through an agency affiliated with the General
Partner with an insurer unaffiliated with the General Partner. An affiliate of
the General Partner acquired, in the acquisition of a business, certain
financial obligations from an insurance agency which was later acquired by the
agent who placed the master policy. The agent assumed the financial obligations
to the affiliate of the General Partner who received payment on these
obligations from the agent. The amount of the Partnership's insurance premiums
that accrued to the benefit of the affiliate of the General Partner by virtue of
the agent's obligations was not significant.
On August 28, 1997, an affiliate of the General Partner commenced a tender offer
for limited partnership interests in the Partnership. The Purchaser offered to
purchase up to 85,000 of the outstanding units of limited partnership interest
in the Partnership, at $140.00 per Unit, net to the seller in cash. As a result
of the tender offer, the Purchaser acquired 29,618 of the outstanding limited
partner units of the Partnership.
AIMCO and its affiliates currently own a total of 106,118 limited partnership
units or 30.97%. Consequently, AIMCO could be in a position to significantly
influence all voting decisions with respect to the Partnership. Under the
Partnership Agreement, unitholders holding a majority of the Units are entitled
to take action with respect to a variety of matters. When voting on matters,
AIMCO would in all likelihood vote the Units it acquired in a manner favorable
to the interest of the General Partner because of their affiliation with the
General Partner.
NOTE D - MORTGAGE NOTES PAYABLE
The principle terms of mortgage notes payable are as follows:
Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Including Interest Maturity Due At
Property 1998 Interest Rate Date Maturity
(in thousands) (in thousands)
The Apartments $ 3,364 $ 29 8.34% 09/00 $ 3,244
Arbours of Hermitage 5,650 33(a) 6.95% 12/05 5,650
Briar Bay Racquet Club 3,500 20(a) 6.95% 12/05 3,500
Chimney Hill Apartments 5,400 31(a) 6.95% 12/05 5,400
Citadel Apartments 4,661 40 8.38% 10/00 4,488
Citadel Village Apartments 2,450 14(a) 6.95% 12/05 2,450
Foothill Place Apartments 10,100 58(a) 6.95% 12/05 10,100
Knollwood Apartments 6,780 39(a) 6.95% 12/05 6,780
Lake Forest Apartments 4,700 29(a) 7.33% 11/03 4,700
Nob Hill Villa Apartments 7,163 64 9.20% 04/05 6,250
Overlook Apartments 1,819 19 10.50% (b) 1,820
Post Ridge Apartments 4,050 25(a) 7.33% 11/03 4,050
Rivers Edge Apartments 1,965 17 8.40% 09/00 1,895
South Port Apartments 4,456 31 7.19% 12/04 4,119
Stratford Place Apartments 2,567 23 8.65% 09/00 2,478
Village East Apartments 2,150 12(a) 6.95% 12/05 2,150
$70,775 $ 484 $69,074
(a) Monthly payments of interest only at the stated rate until maturity.
(b) The mortgage note payable on Overlook Apartments matured in March 1999.
The Partnership is currently negotiating for an extension on the note.
Should the Partnership not be able to refinance the mortgage or obtain an
extension, the lender may choose to foreclose on the property. Since the
note is non-recourse and the mortgage balance exceeds the book value of the
property, no loss is expected.
The notes payable represent borrowings on the properties purchased by the
Partnership. The notes are non-recourse, and are collateralized by deeds of
trust on the investment properties. The notes mature between 1999 and 2005 and
bear interest at rates ranging from 6.95% to 10.50%. Various mortgages require
prepayment penalties if repaid prior to maturity. Further, the properties may
not be sold subject to existing indebtedness.
Future annual principal payments required under the terms of the mortgage notes
payable subsequent to December 31, 1998, are as follows (in thousands):
1999 $ 2,238
2000 12,474
2001 191
2002 208
2003 8,976
Thereafter 46,688
Total $70,775
Approximately $2,500,000 of non-recourse mortgage debt secured by the Metro
Centre Office Building, located in Southern California, matured July 1, 1995.
The property historically had difficulty making its scheduled debt service
payments and, since 1985, the property had made quarterly cash flow payments
pursuant to a modified and restructured loan agreement, however, no payments
were made in 1995. Given existing economic conditions in Southern California,
property operations were not expected to improve sufficiently to enable the
Partnership to refinance the existing indebtedness under prevailing market
conditions. In September 1995, a Notice of Default and Election to Sell Under
Deed of Trust was filed by the lender. The Partnership did not contest this
foreclosure action and the property was foreclosed upon on February 7, 1996,
resulting in an extraordinary gain on forgiveness of debt of approximately
$2,999,000 to the Partnership.
In February of 1996, the $484,000 balance of the first-lien note secured by the
Point West Apartments, with an original maturity of May 2001, was paid off to
retire debt with interest rates higher than the current market rate. As a
result of the note payoff, the Partnership paid approximately $5,000 in
prepayment penalties which resulted in an extraordinary loss on refinancing.
In September of 1996, the Partnership entered into an interim financing
arrangement and refinanced the non-recourse mortgage note of approximately
$4,200,000 which was secured by Post Ridge Apartments. Under the terms of the
interim financing arrangement, the new $4,100,000 mortgage note bore interest at
8% through October 31, 1996, and from November 1, 1996, through the maturity
date of November 15, 1996, the note bore interest at a rate equal to 2.5% plus
the average one month LIBOR (7.875%). As a result of this refinancing, the
Partnership realized a $16,000 gain on the forgiveness of accrued interest, a
$61,000 gain on the forgiveness of advances from prior years, and a $158,000
loss on the write-off of loan costs which resulted in a net extraordinary loss
on refinancing of $81,000. In November 1996, the General Partner obtained
permanent financing by securing a new mortgage note of approximately $4,100,000
collateralized by Post Ridge. Under the terms of the agreement this mortgage
note bears interest at 7.33% and matures in November 2003. Total capitalized
loan costs incurred in 1996 for Post Ridge totaled approximately $122,000 and
are being amortized over the life of the loan.
Prior to November 1996, Lake Forest Apartments ("Lake Forest") secured a
mortgage note guaranteed by the U.S. Department of Housing and Urban Development
("HUD") totaling approximately $4,100,000. In November 1996, the Partnership
refinanced this mortgage note by obtaining a new mortgage note of approximately
$4,700,000 secured by Lake Forest. Under the terms of the refinancing agreement,
the new mortgage note bears interest at 7.33% and matures in November 2003. As
a result of the refinancing, the Partnership paid approximately $4,000 in
prepayment penalties which resulted in an extraordinary loss on refinancing.
Total capitalized loan costs incurred in 1996 for Lake Forest totaled
approximately $133,000 and are being amortized over the life of the loan.
On November 18, 1997, the Partnership refinanced the mortgage encumbering the
South Port Apartments. The refinancing replaced indebtedness of $3,432,000,
including accrued interest of approximately $18,000, with a new mortgage in the
amount of $4,500,000. The mortgage was refinanced at a rate equal to 7.19%,
compared to the prior rate of 10.85% and matures on December 1, 2004.
Capitalized loan costs incurred for the refinancing were approximately $120,000
during the year ended December 31, 1997. In 1998, approximately $17,000 of
additional loan costs were paid in connection with the South Port refinancing.
The Partnership paid approximately $34,000 in prepayment penalties and wrote off
$13,000 in unamortized loan costs, resulting in an extraordinary loss on
extinguishment of debt in the amount of approximately $47,000.
NOTE E - CONTINGENCIES
The Partnership is required by the Partnership Agreement to maintain working
capital reserves for contingencies. On September 25, 1995, the partners were
proxied and approved a reduction of the capital reserve requirements to $500 per
apartment unit and $1.00 per square foot of gross leasable commercial space
owned by the Partnership, or approximately $2,200,000. During 1996, the Metro
Centre Office Building was foreclosed on by the lender thereby lowering reserve
requirements further. The replacement reserve requirement at the remaining
residential properties was reduced to approximately $2,100,000. In the event
expenditures are made from these reserves, operating revenue shall be allocated
to such reserves to the extent necessary to maintain the foregoing level.
Reserves, including cash and cash equivalents, totaling approximately
$13,241,000 at December 31, 1998, exceeded the Partnership's reserve
requirements of approximately $2,100,000.
NOTE F - ABANDONED LIMITED PARTNERSHIP UNITS
In 1997, the number of Limited Partnership Units decreased by 10 units due to
Limited Partners abandoning their Limited Partnership Units. In abandoning his
or her Limited Partnership Units, a Limited Partner relinquishes all right,
title and interest in the Partnership as of the date of abandonment. However,
the Limited Partner is allocated his or her share of income (loss) for that
year. The income (loss) per Limited Partnership Unit in the accompanying
consolidated statements of operations is calculated based on the number of units
outstanding at the beginning of the year.
NOTE G - SALE OF REAL ESTATE
In August 1994, the Partnership sold the Denbigh Woods Apartments. In
connection with the sale, the Partnership accepted a $1,200,000 wrap-note
receivable and received net sales proceeds of $881,000. The wrap-note
receivable accrued interest at an annual rate of 9%, required monthly payments
of principal and interest totaling $11,814, and matured in March 1996. The
Partnership negotiated with the purchaser to extend the note on a number of
occasions, at the same interest rate, ultimately until December 31, 1998. All
other terms of the note remain unchanged. Since the wrap-around promissory note
was subordinate and inferior to the first-lien mortgages, the Partnership
remained obligated under two underlying first-lien mortgages totaling
approximately $1,248,000 which were secured by the Denbigh Woods Apartments.
Pursuant to the sale contract, the Partnership received, from the purchaser, a
capital improvement escrow totaling $150,000. After completion in 1997 of
certain repairs and capital improvements at the property, the Partnership fully
reimbursed the purchaser the balance remaining in the escrow account. The two
mortgages, as well as the note and any accrued interest receivable, were repaid
in full on December 31, 1998. Approximately $5,000 of prepayment penalties were
paid in connection with repayment of one of the mortgage notes payable.
NOTE H - DISPOSITION OF REAL ESTATE
In February 1996, Metro Centre Office Building was foreclosed upon by the
lender. The 1996 results of operations for Metro Centre Office Building are
summarized in the following table (in thousands):
For the Period
From January 1 to
February 7, 1996
Revenues $ 22
Loss from continuing operations (8)
Net income 2,991
Income per Limited Partnership Unit $ 8.38
NOTE I - DISTRIBUTIONS
During 1998, the Partnership declared and paid distributions attributable to
cash flow from operations totaling approximately $3,951,000. Subsequent to
December 31, 1998, the Partnership declared and paid a distribution from
operations of approximately $6,423,000 and approximately $2,722,000 representing
a return of capital.
During 1997, the Partnership declared and paid distributions attributable to
cash flow from operations totaling approximately $1,600,000 and approximately
$903,000 representing a return of capital. In conjunction with the transfer of
funds from certain majority-owned sub-tier limited partnerships to the
Partnership, approximately $2,000 was distributed to the general partners of the
majority-owned sub-tier limited partnerships.
NOTE J - REAL ESTATE AND ACCUMULATED DEPRECIATION
Initial Cost
To Partnership
(in thousands)
Net Cost
Buildings Capitalized
and (Written-Down)
Personal Subsequent to
Description Encumbrances Land Property Acquisition
(in thousands) (in thousands)
The Apartments $ 3,364 $ 438 $ 6,218 $ 2,047
Arbours of Hermitage Apartments 5,650 547 8,574 3,558
Briar Bay Racquet Club Apartments 3,500 1,084 5,271 1,369
Chimney Hill Apartments 5,400 659 7,188 3,180
Citadel Apartments 4,661 695 5,619 1,263
Citadel Village Apartments 2,450 337 3,334 374
Foothill Place Apartments 10,100 3,492 9,435 2,243
Knollwood Apartments 6,780 345 7,065 3,455
Lake Forest Apartments 4,700 692 5,811 2,593
Nob Hill Villa Apartments 7,163 490 8,922 3,477
Overlook Apartments 1,819 397 3,573 670
Point West Apartments -- 285 2,919 (173)
Post Ridge Apartments 4,050 143 2,498 1,910
Rivers Edge Apartments 1,965 512 2,160 670
South Port Apartments 4,456 1,175 6,496 264
Stratford Place Apartments 2,567 1,186 4,628 1,683
Village East Apartments 2,150 184 2,236 1,041
Totals $70,775 $12,661 $91,947 $29,624
Gross Amount At Which Carried
At December 31, 1998
(in thousands)
Buildings
And
Related
Personal Accumulated Date of Date Depreciable
Description Land Property Total Depreciation Construction Acquired Life-Years
(in thousands)
The Apartments $ 438 $ 8,265 $ 8,703 $ 6,339 1973 4/84 5-18
Arbours of Hermitage Apts. 547 12,132 12,679 10,646 1973 9/83 5-18
Briar Bay Racquet Club Apts. 1,084 6,640 7,724 6,377 1975 9/82 5-18
Chimney Hill Apts. 659 10,368 11,027 9,462 1973 8/82 5-18
Citadel Apts. 695 6,882 7,577 6,429 1973 5/83 5-18
Citadel Village Apts. 337 3,708 4,045 3,364 1974 12/82 5-18
Foothill Place Apts. 3,402 11,768 15,170 8,893 1973 8/85 5-18
Knollwood Apts. 345 10,520 10,865 9,279 1972 7/82 5-18
Lake Forest Apts. 692 8,404 9,096 6,156 1971 4/84 5-18
Nob Hill Villa Apts. 490 12,399 12,889 10,984 1971 4/83 5-18
Overlook Apts. 397 4,243 4,640 3,288 1970 11/85 5-15
Point West Apts. 205 2,826 3,031 2,204 1973 11/85 5-40
Post Ridge Apts. 143 4,408 4,551 3,734 1972 7/82 5-18
Rivers Edge Apts. 512 2,830 3,342 2,580 1976 4/83 5-18
South Port Apts. 1,175 6,760 7,935 6,321 -- 11/83 5-18
Stratford Place Apts. 1,186 6,311 7,497 4,196 1975 8/85 5-20
Village East Apts. 184 3,277 3,461 2,998 1973 12/82 5-18
Totals $ 12,491 $121,741 $134,232 $103,250
Reconciliation of "Real Estate and Accumulated Depreciation":
Years Ended December 31,
1998 1997 1996
(in thousands)
Real Estate
Balance at beginning of year $130,653 $128,128 $125,218
Additions 3,717 2,559 4,945
Dispositions through foreclosure -- -- (1,605)
Property dispositions - other (138) (34) (430)
Balance at end of year $134,232 $130,653 $128,128
Accumulated Depreciation
Balance at beginning of year $ 98,490 $ 91,934 $ 86,294
Additions charged to expense 4,871 6,558 7,048
Dispositions through foreclosure -- -- (1,079)
Property dispositions - other (111) (2) (329)
Balance at end of year $103,250 $ 98,490 $ 91,934
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1998 and 1997, is approximately $151,943,000 and $148,650,000. The
accumulated depreciation taken for Federal income tax purposes at December 31,
1998 and 1997, is approximately $115,959,000 and $111,953,000, respectively.
NOTE K - CASUALTY LOSSES
In the third quarter of 1998, Foothill Place Apartments sustained windstorm
damage. The Partnership has incurred expenses to date of approximately $27,000
and is in the process of negotiating a settlement with the insurance carrier.
These costs are included in net casualty gain for the year ended December 31,
1998.
In March 1998, Nob Hill Apartments had a fire that destroyed one apartment unit
in a section of a 24-unit building. Additionally, the remaining units in this
section of the building, as well as the laundry room, sustained water and smoke
damage which eventually caused mold and mildew. The Partnership anticipates
that insurance proceeds will approximate the estimated cost of replacement,
resulting in a minimal effect on its operations. Work on the project was
substantially completed at September 30, 1998. Approximately $204,000 of net
insurance proceeds have been received to date with such amount included in net
casualty gain for the year ended December 31, 1998.
In November 1997, Overlook Apartments had a fire which destroyed one apartment
unit and caused water and smoke damage in the remaining apartment units in the
affected building. Insurance proceeds of approximately $239,000 were received
during the year ended December 31, 1998. Repair efforts were completed in July
1998 and the related costs have been capitalized as a part of the investment
property. Total insurance proceeds anticipated to be received less the cost of
repairs and the write off of assets replaced, resulted in a net casualty of
approximately $192,000 for the year ended December 31, 1998.
In January 1997, Foothill Place Apartments sustained extensive wind and flood
damage from severe storms. Additionally, in February 1997, a fire occurred at
Foothill Place Apartments resulting in minor damage to one of its balconies
including the immediately surrounding area. The insurance proceeds received
less the costs to repair Foothill Place Apartments and the write-off of assets
that were replaced, resulted in a net casualty gain for these events of
approximately $46,000 which is included in operating expense for the year ended
December 31, 1997. All repairs and replacements related to these casualties
were completed in the second quarter of 1997.
NOTE L - INCOME TAXES
The Partnership is classified as a partnership for Federal income tax purposes.
Accordingly, no provision for income taxes is made in the consolidated financial
statements of the Partnership. Taxable income or loss of the Partnership is
reported in the income tax returns of its partners.
The following is a reconciliation between net income as reported in the
consolidated financial statements and Federal taxable income allocated to the
partners in the Partnership's information return for the years ended December
31, 1998, 1997 and 1996 (in thousands, except per unit data):
1998 1997 1996
Net income as reported $ 3,924 $ 367 $ 2,036
Add (deduct):
Deferred revenue and other
liabilities 408 359 (166)
Depreciation differences 864 917 978
Accrued expenses 15 7 94
Other 78 15 (1)
(Loss) gain on casualty/disposition/
Foreclosure (396) 32 (1,542)
Federal taxable income $ 4,893 $ 1,697 $ 1,399
Federal taxable income per Limited
Partnership Unit $ 13.70 $ 4.75 $ 3.92
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):
Net deficit as reported $(23,405)
Land and buildings 17,712
Accumulated depreciation (12,709)
Syndication fees 18,871
Other 5,856
Net assets - Federal tax basis $ 6,325
NOTE M - SEGMENT INFORMATION
Description of the types of products and services from which the reportable
segment derives its revenues:
As defined by SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information" the Partnership has one reportable segment: residential
properties. The Partnership's residential property segment consists of
seventeen apartment complexes in ten states in the United States. The
Partnership rents apartment units to people for terms that are typically twelve
months or less.
Measurement of segment profit or loss:
The Partnership evaluates performance based on net income. The accounting
policies of the reportable segment are the same as those described in the
summary of significant accounting policies.
Factors management used to identify the Partnership's reportable segments:
The Partnership's reportable segment consists of investment properties that
offer similar products and services. Although each of the investment properties
are managed separately, they have been aggregated into one segment as they
provide services with similar types of products and customers.
Segment information for 1998, 1997 and 1996 is shown in the tables below. The
"Other" column includes partnership administration related items and income and
expense not allocated to the reportable segment.
1998
Residential Other Totals
Rental income $27,620 $ -- $27,620
Other income 1,573 537 2,110
Interest expense 5,717 123 5,840
Depreciation 4,871 -- 4,871
General and administrative expense -- 1,188 1,188
Loss on extraordinary item (5) -- (5)
Segment profit (loss) 4,698 (774) 3,924
Total assets 37,123 13,548 50,671
Capital expenditures for investment
properties 3,717 -- 3,717
1997
Residential Other Totals
(in thousands)
Rental income $26,769 $ -- $26,769
Other income 1,442 499 1,941
Interest expense 5,749 119 5,868
Depreciation 6,558 -- 6,558
General and administrative expense -- 990 990
Loss on extraordinary item (47) -- (47)
Segment profit (loss) 977 (610) 367
Total assets 40,933 11,448 52,381
Capital expenditures for investment
properties 2,559 -- 2,559
1996
Residential Other Totals
(in thousands)
Rental income $25,872 $ -- $25,872
Other income 1,448 587 2,035
Interest expense 5,931 121 6,052
Depreciation 7,048 -- 7,048
General and administrative expense -- 1,317 1,317
Gain on extraordinary items 2,909 -- 2,909
Segment profit (loss) 2,887 (851) 2,036
Total assets 44,997 8,847 53,844
Capital expenditures for investment
properties 4,945 -- 4,945
NOTE N - 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. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the General Partner and several of their affiliated
partnerships and corporate entities. The complaint purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc. and
entities which were, at the time, affiliates of Insignia ("Insignia Affiliates")
of interests in certain general partner entities, past tender offers by Insignia
Affiliates to acquire limited partnership units, the management of partnerships
by Insignia Affiliates as well as a recently announced agreement between
Insignia and AIMCO. The complaint seeks monetary damages and equitable relief,
including judicial dissolution of the Partnership. On June 25, 1998, the General
Partner filed a motion seeking dismissal of the action. In lieu of responding
to the motion, plaintiffs have recently filed an amended complaint. The General
Partner filed demurrers to the amended complaint which were heard during
February 1999. No ruling on such demurrers has been received. The General
Partner does not anticipate that costs associated with this case, if any, will
be material to the Partnership's overall operations.
On July 30, 1998 certain entities claiming to own limited partnership interests
in certain limited partnerships whose general partners were, at the time,
affiliates of Insignia filed a complaint in the Superior Court of the State of
California, County of Los Angeles. The action, entitled Everest Properties LLC
v. Insignia Financial Group, Inc., involves 44 real estate limited partnerships
(including the Partnership) in which the plaintiffs allegedly own interests and
which Insignia Affiliates allegedly manage or control (the "Subject
Partnerships"). This case was settled on March 3, 1999. The Partnership is
responsible for a portion of the settlement costs. The expense will not have a
material effect on the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE GENERAL PARTNER OF THE
REGISTRANT
Consolidated Capital Properties IV (the "Registrant" or "Partnership") has no
officers or directors. ConCap Equities, Inc. ("CEI" or the "General Partner")
manages and controls the Partnership and has general responsibility and
authority in all matters affecting its business.
The names of the directors, and executive officers of the General Partner, their
ages and the nature of all positions presently held by them are set forth below.
Name Age Position
Patrick J. Foye 41 Executive Vice President and Director
Timothy R. Garrick 42 Vice President - Accounting and Director
Patrick J. Foye has been Executive Vice President and Director of the General
Partner since October 1, 1998. Mr. Foye has served as Executive Vice President
of AIMCO since May 1998. Prior to joining AIMCO, Mr. Foye was a partner in the
law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to 1998 and was
Managing Partner of the firm's Brussels, Budapest and Moscow offices from 1992
through 1994. Mr. Foye is also Deputy Chairman of the Long Island Power
Authority and serves as a member of the New York State Privatization Council.
He received a B.A. from Fordham College and a J.D. from Fordham University Law
School.
Timothy R. Garrick has served as Vice President-Accounting of AIMCO and Vice
President-Accounting and Director of the General Partner since October 1, 1998.
Prior to that date, Mr. Garrick served as Vice President-Accounting Services of
Insignia Financial Group since June of 1997. From 1992 until June of 1997, Mr.
Garrick served as Vice President of Partnership Accounting and from 1990 to 1992
as an Asset Manager for Insignia Financial Group. From 1984 to 1990, Mr.
Garrick served in various capacities with U.S. Shelter Corporation. From 1979
to 1984, Mr. Garrick worked on the audit staff of Ernst & Whinney. Mr. Garrick
received his B.S. Degree from the University of South Carolina and is a
Certified Public Accountant.
Market Ventures, L.L.C. ("Ventures"), Liquidity Assistance, L.L.C. ("Liquidity")
and Insignia CCP IV Acquisition L.L.C. ("Acquisition") delinquently reported 31
transactions (17, 5 and 9 transactions, respectively) as of December 31, 1996 on
a Form 5 filed in January 1997, with respect to the entities' purchases of Units
of Limited Partner Interest of the Partnership. Each of Insignia Financial
Group, Inc., Insignia Commercial Group, Inc. and Andrew L. Farkas also
delinquently reported the same transactions on a Form 5 by virtue of their
status as affiliates of Ventures, Liquidity and Acquisition, through which they
may be deemed to be beneficial owners of the securities owned by such entities.
ITEM 11. EXECUTIVE COMPENSATION
No direct compensation was paid or payable by the Partnership to directors or
officers for the years ended December 31, 1998 or 1997, nor was any direct
compensation paid or payable by the Partnership to directors or officers of the
General Partner for the years ended December 31, 1998 or 1997. The Partnership
has no plans to pay any such remuneration to any directors or officers of the
General Partner in the future.
See "Item 13. Certain Relationships and Related Transactions" for amounts of
compensation and reimbursement paid by the Partnership to the General Partner
and its affiliates.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners
Except as provided below, as of December 31, 1998, no person or group was
known to CEI to own of record or beneficially own more than five percent of
the Units of the Partnership:
Entity Number of Units Percent of Total
Insignia Properties, L.P. (1) 66,789.5 19.49%
IPLP Acquisition I, LLC (1) 29,612.5 8.64%
AIMCO Properties, L.P. (2) 9,716.0 2.84%
(1)Entity is indirectly, ultimately owned by AIMCO. Its business address
is 55 Beattie Place, Greenville, SC 29601.
(2)Entity is directly owned by AIMCO. Its business address is 1873 South
Bellaire Street, 17th Floor, Denver, CO 80222.
As of December 31, 1998, no other person was known to CEI to own of record
or beneficially own more than 5 percent (5%) of the Units of the
Partnership.
(b) Beneficial Owners of Management
Except as provided below, neither CEI nor any of the directors or officers
or associates of CEI own any Units of the Partnership of record or
beneficially.
(c) Changes in Control
Beneficial Owners of CEI
As of December 31, 1998, the following persons were known to CEI to be the
beneficial owners of more than 5 percent (5%) of its common stock:
Number of Percent
Name and Address CEI Shares Of Total
Insignia Properties Trust ("IPT") 100,000 100%
55 Beattie Place, Greenville, SC 29601
Effective February 26, 1999, IPT was merged with and into AIMCO. As of December
31, 1998, AIMCO owns 51% of the outstanding common shares of beneficial interest
of IPT.
On October 1, 1998, Insignia Financial Group, Inc. merged into AIMCO, a real
estate investment trust, whose Class A Common Shares are listed on the New York
Stock Exchange. As a result of such merger, AIMCO and AIMCO Properties, L.P., a
Delaware limited partnership and the operating partnership of AIMCO ("AIMCO OP")
acquired indirect control of the General Partner. AIMCO and its affiliates
currently own approximately 30.97% of the limited partnership interests in the
Partnership. AIMCO is presently considering whether it will engage in an
exchange offer for additional limited partnership interests in the Partnership.
There is a substantial likelihood that, within a short period of time, AIMCO OP
will offer to acquire limited partnership interests in the Partnership for cash
or preferred units or common units of limited partnership interests in AIMCO OP.
While such an exchange offer is possible, no definite plans exist as to when or
whether to commence such an exchange offer, or as to the terms of any such
exchange offer, and it is possible that none will occur.
A registration statement relating to these securities has been filed with the
Securities and Exchange Commission but has not yet become effective. These
securities may not be sold nor may offers to buy be accepted prior to the time
the registration statement becomes effective. This Form 10-K shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any state in which such offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such state.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all of the partnership
activities. The Partnership Agreement provides for certain payments to
affiliates for services and as reimbursements of certain expenses incurred by
affiliates on behalf of the Partnership. The following transactions with the
General Partner and/or its affiliates were charged to expense in 1998, 1997 and
1996:
1998 1997 1996
(in thousands)
Property management fees $1,478 $1,413 $1,316
Reimbursements for services of affiliates (1) 627 608 605
Partnership management fees 341 138 392
(1) Included in "Reimbursements for services of affiliates" for the years ended
December 31, 1998, 1997 and 1996 is approximately $64,000, $65,000 and
$32,000, respectively, in reimbursements for construction oversight costs.
During the years ended December 31, 1998, 1997 and 1996, affiliates of the
General Partner were entitled to receive 5% of gross receipts from all of the
Partnership's properties as compensation for providing property management
services. The Partnership paid to such affiliates approximately $1,478,000,
$1,413,000 and $1,316,000 for the years ended December 31, 1998, 1997 and 1996,
respectively.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $627,000, $608,000 and
$605,000 for the years ended December 31, 1998, 1997, and 1996, respectively.
The Limited Partnership Agreement ("Partnership Agreement") provides for a
special management fee equal to 9% of the total distributions made to the
limited partners from cash flow provided by operations to be paid to the General
Partner for executive and administrative management services. The Partnership
paid approximately $341,000, $138,000, and $392,000 under this provision of the
Partnership Agreement to affiliates of the General Partner for the years ended
December 31, 1998, 1997, and 1996, respectively. These fees are included in
general and administrative expenses.
In addition to reimbursements for services of affiliates, the Partnership paid
an affiliate of the General Partner approximately $7,000, $13,000 and $22,000 in
1998, 1997 and 1996, respectively, for loan costs which are capitalized and
included in other assets on the consolidated balance sheets. These loan costs
related to the refinancing of one of the Partnership's properties in 1997 and
two in 1996.
For the period January 1, 1996, to August 31, 1997, the Partnership insured its
properties under a master policy through an agency affiliated with the General
Partner with an insurer unaffiliated with the General Partner. An affiliate of
the General Partner acquired, in the acquisition of a business, certain
financial obligations from an insurance agency which was later acquired by the
agent who placed the master policy. The agent assumed the financial obligations
to the affiliate of the General Partner who received payment on these
obligations from the agent. The amount of the Partnership's insurance premiums
that accrued to the benefit of the affiliate of the General Partner by virtue of
the agent's obligations was not significant.
On August 28, 1997, an affiliate of the General Partner commenced a tender offer
for limited partnership interests in the Partnership. The Purchaser offered to
purchase up to 85,000 of the outstanding units of limited partnership interest
in the Partnership, at $140.00 per Unit, net to the seller in cash. As a result
of the tender offer, the Purchaser acquired 29,618 of the outstanding limited
partner units of the Partnership.
AIMCO and its affiliates currently own a total of 106,118 limited partnership
units or 30.97%. Consequently, AIMCO could be in a position to significantly
influence all voting decisions with respect to the Partnership. Under the
Partnership Agreement, unitholders holding a majority of the Units are entitled
to take action with respect to a variety of matters. When voting on matters,
AIMCO would in all likelihood vote the Units it acquired in a manner favorable
to the interest of the General Partner because of their affiliation with the
General Partner.
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements
Consolidated Balance Sheets - December 31, 1998 and 1997
Consolidated Statements of Operations - Years Ended December 31, 1998,
1997 and 1996
Consolidated Statements of Changes in Partners' Deficit - Years Ended
December 31, 1998, 1997 and 1996
Consolidated Statements of Cash Flows - Years Ended December 31, 1998,
1997 and 1996
Notes to Consolidated Financial Statements
2. Schedules
All schedules are omitted because either they are not required, are not
applicable or the financial information is included in the financial
statements or notes thereto.
3. Exhibits
S-K REFERENCE
NUMBER DOCUMENT DESCRIPTION
2.1 Agreement and Plan of Merger, dated as of October 1, 1998, by and
between AIMCO and IPT; incorporated by reference to Registrant's
Current Report on Form 8-K dated October 1, 1998.
3 Certificate of Limited Partnership, as amended to date.
10.1 Property Management Agreement No. 105 dated October 23, 1990, by and
between the Partnership and CCEC (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended September 30,
1990).
10.2 Property Management Agreement No. 106 dated October 23, 1990, by and
between the LeTourneau Associates, Ltd. and CCEC (Incorporated by
reference to the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.3 Property Management Agreement No. 107 dated October 23, 1990, by and
between Overlook Associates, Ltd. and CCEC (Incorporated by
reference to the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.4 Property Management Agreement No. 108 dated October 23, 1990, by and
between Park 77 Associates, Ltd. and CCEC (Incorporated by reference
to the Quarterly Report on Form 10-Q for the quarter ended September
30, 1990).
10.5 Property Management Agreement No. 205 dated October 23, 1990, by and
between the Partnership and CCEC (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended September 30,
1990).
10.6 Property Management Agreement No. 306 dated October 23, 1990, by and
between the Partnership and CCEC (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended September 30,
1990).
10.7 Property Management Agreement No. 307 dated October 23, 1990, by and
between Point West Associates, Ltd. and CCEC (Incorporated by
reference to the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.8 Property Management Agreement No. 403 dated October 23, 1990, by and
between the Partnership and CCEC (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended September 30,
1990).
10.9 Property Management Agreement No. 404 dated October 23, 1990, by and
between Denbigh Village Associates, Ltd. and CCEC (Incorporated by
reference to the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.10 Property Management Agreement No. 405 dated October 23, 1990, by and
between Stratford Place Associates, Ltd. and CCEC (Incorporated by
reference to the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.11 Bill of Sale and Assignment dated October 23, 1990, by and between
CCEC and ConCap Services Company (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended September 30,
1990).
10.12 Assignment and Assumption Agreement dated October 23, 1990, by and
between CCEC and ConCap Management Limited Partnership ("CCMLP")
(Incorporated by reference to the Quarterly Report on Form 10-Q for
the quarter ended September 30, 1990).
10.13 Assignment and Assumption Agreement as to Certain Property
Management Services dated October 23, 1990, by and between CCMLP and
ConCap Capital Company (Incorporated by reference to the Quarterly
Report on Form 10-Q for the quarter ended September 30, 1990).
10.14 Assignment and Assumption Agreement dated October 23, 1990, by and
between CCMLP and The Hayman Company (100 Series of Property
Management Contracts) (Incorporated by reference to the Quarterly
Report on Form 10-Q for the quarter ended September 30, 1990).
10.15 Assignment and Assumption Agreement dated October 23, 1990, by and
between CCMLP and Horn-Barlow Companies (200 Series of Property
Management Contracts) (Incorporated by reference to the Quarterly
Report on Form 10-Q for the quarter ended September 30, 1990).
10.16 Assignment and Assumption Agreement dated October 23, 1990, by and
between CCMLP and Metro ConCap, Inc. (300 Series of Property
Management Contracts) (Incorporated by reference to the Quarterly
Report on Form 10-Q for the quarter ended September 30, 1990).
10.17 Assignment and Assumption Agreement dated October 23, 1990, by and
between CCMLP and R&B Realty Group (400 Series of Property
Management Contracts) (Incorporated by reference to the Quarterly
Report on Form 10-Q for the quarter ended September 30, 1990).
10.18 Assignment and Assumption Agreement dated February 21, 1991, by and
between the Partnership and Greenbriar Apartments Associates Limited
Partnership (Property Management Agreement No. 403). (Incorporated
by reference to the Annual Report on Form 10-K for the year ended
December 31, 1991).
10.19 Assignment and Assumption Agreement dated April 1, 1991, by and
between the Partnership and ConCap Village East Apartments
Associates, L.P. (Property Management Agreement No. 205).
(Incorporated by reference to the Annual Report on Form 10-K for the
year ended December 31, 1991).
10.20 Assignment and Assumption Agreement dated April 1, 1991, by and
between the Partnership and Nob Hill Villa Apartments Associates,
L.P. (Property Management Agreement No. 306). (Incorporated by
reference to the Annual Report on Form 10-K for the year ended
December 31, 1991).
10.21 Assignment and Assumption Agreement dated April 1, 1991, by and
between the Partnership and Barnett Regency Tower Associates Limited
Partnership (Property Management Agreement No. 105). (Incorporated
by reference to the Annual Report on Form 10-K for the year ended
December 31, 1991).
10.22 Assignment and Assumption of Property Management Agreement dated
August 1, 1991, by and between R & B Realty Group and R & B
Apartment Management Company, Inc. (Property Management Agreement
with Denbigh Village Associates, Ltd.) (Incorporated by reference to
the Annual Report on Form 10-K for the year ended December 31,
1991).
10.23 Assignment and Assumption of Property Management Agreement dated
August 1, 1991, by and between R & B Realty Group and R & B
Apartment Management Company, Inc. (Property Management Agreement
with Greenbriar Apartments Associates Limited Partnership).
(Incorporated by reference to the Annual Report on Form 10-K for the
year ended December 31, 1991).
10.24 Assignment and Assumption of Property Management Agreement dated
August 1, 1991, by and between R & B Realty Group and R & B
Apartment Management Company, Inc. (Property Management Agreement
with the Partnership concerning Briar Bay Racquet Club).
(Incorporated by reference to the Annual Report on Form 10-K for the
year ended December 31, 1991).
10.25 Assignment and Assumption of Property Management Agreement dated
August 1, 1991, by and between R & B Realty Group and R & B
Apartment Management Company, Inc. (Property Management Agreement
with Stratford Place Associates, Ltd.). (Incorporated by reference
to the Annual Report on Form 10-K for the year ended December 31,
1991).
10.26 Assignment and Assumption Agreement dated September 1, 1991, by and
between the Partnership and CCP IV Associates, Ltd. (Property
Management Agreement No. 306). (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31, 1991).
10.27 Assignment and Assumption Agreement dated September 1, 1991, by and
between the Partnership and CCP IV Associates, Ltd. (Property
Management Agreement No. 205). (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31, 1991).
10.28 Assignment and Assumption Agreement dated September 1, 1991, by and
between ConCap Village East Apartments Associates, L.P. and CCP IV
Associates, Ltd. (Property Management Agreement No. 205).
(Incorporated by reference to the Annual Report on Form 10-K for the
year ended December 31, 1991).
10.29 Assignment and Assumption Agreement dated September 15, 1991, by and
between the Partnership and Foothill Chimney Associates Limited
Partnership (Property Management Agreement No. 105). (Incorporated
by reference to the Annual Report on Form 10-K for the year ended
December 31, 1991).
10.30 Assignment and Assumption Agreement dated September 15, 1991, by and
between the Partnership and Foothill Chimney Associates Limited
Partnership (Property Management Agreement No. 205). (Incorporated
by reference to the Annual Report on Form 10-K for the year ended
December 31, 1991).
10.31 Construction Management Cost Reimbursement Agreement dated January
1, 1991, by and between the Partnership and Horn-Barlow Companies
(the "Horn-Barlow Construction Management Agreement").
(Incorporated by reference to the Annual Report on Form 10-K for the
year ended December 31, 1991).
10.33 Assignment and Assumption Agreement dated September 15, 1991, by and
between the Partnership and Foothill Chimney Associates Limited
Partnership (Horn-Barlow Construction Management Agreement
Concerning Chimney Hill Apartments). (Incorporated by reference to
the Annual Report on Form 10-K for the year ended December 31,
1991).
10.34 Assignment and Assumption Agreement dated September 1, 1991, by and
between ConCap Village East Apartments Associates, L.P. and CCP IV
Associates, Ltd. (Village East Construction Agreement).
(Incorporated by reference to the Annual Report on Form 10-K for the
year ended December 31, 1991).
10.35 Construction Management Cost Reimbursement Agreement dated January
1, 1991, by and between the Partnership and Metro ConCap, Inc. (the
"Metro Construction Management Agreement"). (Incorporated by
reference to the Annual Report on Form 10-K for the year ended
December 31, 1991).
10.36 Assignment and Assumption Agreement dated September 1, 1991, by and
between the Partnership and CCP IV Associates, Ltd. (Metro
Construction Management Agreement concerning Arbour East and
Knollwood apartments). (Incorporated by reference to the Annual
Report on Form 10-K for the year ended December 31, 1991).
10.37 Construction Management Cost Reimbursement Agreement dated January
1, 1991, by and between the Partnership and The Hayman Company (the
"Hayman Construction Management Agreement"). (Incorporated by
reference to the Annual Report on Form 10-K for the year ended
December 31, 1991).
10.38 Assignment and Assumption Agreement dated September 15, 1991, by and
between the Partnership and Foothill Chimney Associates Limited
Partnership (Hayman Construction management Agreement concerning
Chimney Hill Apartments). (Incorporated by reference to the Annual
Report on Form 10-K for the year ended December 31, 1991).
10.39 Construction Management Cost Reimbursement Agreement dated January
1, 1991, by and between the Partnership and R & B Apartment
Management Company, Inc. (Incorporated by reference to the Annual
Report on Form 10-K for the year ended December 31, 1991).
10.40 Construction Management Cost Reimbursement Agreement dated January 1,
1991, by and between ConCap Metro Centre Associates, L.P. and R & B
Commercial Management Company, Inc. (Incorporated by reference to
the Annual Report on Form 10-K for the year ended December 31,
1991).
10.41 Investor Services Agreement dated October 23, 1990, by and between
the Partnership and CCEC (Incorporated by reference to the Quarterly
Report on Form 10-Q for the quarter ended September 30, 1990).
(Incorporated by reference to the Annual Report on Form 10-K for the
year ended December 31, 1991).
10.42 Assignment and Assumption Agreement (Investor Services Agreement)
dated October 23, 1990, by and between CCEC and ConCap Services
Company (Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1990).
10.43 Letter of Notice dated December 20, 1991, from Partnership Services,
Inc. ("PSI") to the Partnership regarding the change in ownership
and dissolution of ConCap Services Company whereby PSI assumed the
Investor Services Agreement. (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31, 1991).
10.44 Financial Services Agreement dated October 23, 1990, by and between
the Partnership and CCEC (Incorporated by reference to the Quarterly
Report on Form 10-Q for the quarter ended September 30, 1990).
10.45 Assignment and Assumption Agreement (Financial Service Agreement)
dated October 23, 1990, by and between CCEC and ConCap Capital
Company (Incorporated by reference to the Quarterly Report on Form
10-Q for the quarter ended September 30, 1990).
10.46 Letter of Notice dated December 20, 1991, from PSI to the Partnership
regarding the change in ownership and dissolution of ConCap Capital
Company whereby PSI (Incorporated by reference to the Annual Report
on Form 10-K for the year ended December 31, 1991).
10.47 Property Management Agreement No. 419 dated May 13, 1993, by and
between the Partnership and Coventry Properties, Inc. (Incorporated
by reference to the Quarterly Report on Form 10-Q for the quarter
ended September 30, 1993).
10.48 Assignment and Assumption Agreement (Property Management Agreement
No. 419) dated May 13, 1993, by and between Coventry Properties,
Inc., R&B Apartment Management Company, Inc. and Partnership
Services, Inc. (Incorporated by reference to the Quarterly Report on
Form 10-Q for the quarter ended September 30, 1993).
10.49 Assignment and Agreement as to Certain Property Management Services
dated May 13, 1993, by and between Coventry Properties, Inc. and
Partnership Services, Inc. (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended September 30,
1993).
10.50 Property Management Agreement No. 419A dated October 11, 1993, by
and between ConCap Stratford Associates, Ltd. and Coventry
Properties, Inc. (Incorporated by reference to the Quarterly Report
on Form 10-Q for the quarter ended September 30, 1993).
10.51 Assignment and Assumption Agreement (Property Management Agreement
No. 491A)dated October 11, 1993, by and between Coventry Properties,
Inc., R&B Apartment Management Company, Inc. and Partnership
Services, Inc. (Incorporated by reference to the Quarterly Report
on Form 10-Q for the quarter ended September 30, 1993).
10.52 Assignment and Agreement as to Certain Property Management Services
dated October 11, 1993, by and between Coventry Properties, Inc. and
Partnership Services, Inc. (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended September 30,
1993).
10.53 Property Management Agreement No. 427A dated October 11, 1993, by
and between ConCap River's Edge Associates, Ltd. and Coventry
Properties, Inc. (Incorporated by reference to the Quarterly Report
on Form 10-Q for the quarter ended September 30, 1993).
10.54 Assignment and Assumption Agreement (Property Management Agreement
No. 427A) dated October 11, 1993, by and between Coventry
Properties, Inc., R&B Apartment Management Company, Inc. and
Partnership Services, Inc. (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended September 30,
1993).
10.55 Assignment and Agreement as to Certain Property Management Services
dated October 11, 1993, by and between Coventry Properties, Inc. and
Partnership Services, Inc. (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended September 30,
1993).
10.56 Property Management Agreement No. 513A dated August 18, 1993, by and
between ConCap Citadel Associates, Ltd. and Coventry Properties,
Inc.
10.57 Assignment and Agreement as to Certain Property Management Services
dated November 17, 1993, by and between Coventry Properties, Inc.
and Partnership Services, Inc.
10.58 Property Management Agreement No. 514 dated June 1, 1993, by and
between the Partnership and Coventry Properties, Inc.
10.59 Assignment and Agreement as to Certain Property Management Services
dated November 17, 1993, by and between Coventry Properties, Inc.
and Partnership Services, Inc.
10.60 Stock and Asset Purchase Agreement, dated December 8, 1994 (the
"Gordon Agreement"), among MAE-ICC, Inc. ("MAE-ICC"), Gordon Realty
Inc. ("Gordon"), GII Realty, Inc. ("GII Realty"), and certain other
parties. (Incorporated by reference to form 8-K dated December 8,
1994).
10.61 Exercise of the Option (as defined in the Gordon Agreement), dated
December 8, 1994, between MAE-ICC and Gordon. (Incorporated by
reference to Form 8-K dated December 8, 1994).
10.62 Contracts related to refinancing of debt
(a)Deed of Trust and Security Agreement dated March 27, 1995 between
Nob Hill Villa Apartment Associates, L.P., a Tennessee limited
partnership, and First Union National Bank of North Carolina, a
North Carolina Corporation.
(b)Promissory Note dated March 27, 1995 between Nob Hill Villa
Apartments Associates, L.P., a Tennessee limited partnership, and
First Union National Bank of North Carolina, a North Carolina
corporation.
(c)Assignment of leases and Rents dated March 27, 1995 between Nob
Hill Villa Apartments Associates, L.P., a Tennessee limited
partnership, and First Union National Bank of North Carolina, a North
Carolina Corporation.
10.63 Multifamily Note dated November 30, 1995 between Briar Bay
Apartments Associates, LTD., a Texas limited partnership, and Lehman
Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman
Brothers Holdings Inc..
10.64 Multifamily Note dated November 30, 1995 between CCP IV Associates,
LTD., a Texas limited partnership, and Lehman Brothers Holdings Inc.
d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc..
10.65 Multifamily Note dated November 30, 1995 between CCP IV Associates,
LTD., a Texas limited partnership, and Lehman Brothers Holdings Inc.
d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc..
10.66 Multifamily Note dated November 30, 1995 between CCP IV Associates,
LTD., a Texas limited partnership, and Lehman Brothers Holdings Inc.
d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc..
10.67 Multifamily Note dated November 30, 1995 between CCP IV Associates,
LTD., a Texas limited partnership, and Lehman Brothers Holdings Inc.
d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc..
10.68 Multifamily Note dated November 30, 1995 between Foothill Chimney
Associates Limited Partnership, a Georgia limited partnership, and
Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A Division of
Lehman Brothers Holdings Inc..
10.69 Multifamily Note dated November 30, 1995 between Foothill Chimney
Associates Limited Partnership, a Georgia limited partnership, and
Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A Division of
Lehman Brothers Holdings Inc..
10.70 Multifamily note dated September 30, 1996, between Post Ridge
Associates, Ltd., Limited Partnership, a Tennessee Limited
Partnership and Lehman Brothers Holdings, Inc. d/b/a Lehman Capitol,
a division of Lehman Brothers Holdings, Inc.
10.71 Exercise of the remaining portion of the option (as defined in the
Gordon Agreement), dated December 8, 1994 between MAE-ICC and
Gordon. (Incorporated by reference to Form 8-K dated October 24,
1995).
10.72 Multifamily note dated November 1, 1996, between Post Ridge
Associates, Ltd., Limited Partnership, a Tennessee Limited
Partnership and Lehman Brothers Holdings, Inc. d/b/a Lehman Capitol,
a division of Lehman Brothers Holdings, Inc.
10.73 Amended and Restated Multifamily note dated November 1, 1996,
between Post Ridge Associates, Ltd., Limited Partnership , a
Tennessee Limited Partnership and Lehman Brothers Holding, Inc.
d/b/a Lehman Capitol, a division of Lehman Brothers Holdings, Inc.
10.74 Multifamily note dated November 1, 1996, between Consolidated
Capital Properties IV, a California Limited Partnership and Lehman
Brothers Holdings, Inc. d/b/a Lehman Capitol, a division of Lehman
Brothers Holdings, Inc.
10.75 Mortgage and Security Agreement dated November 18, 1997, between
Southport CCP IV, L.L.C., a South Carolina limited liability company
and Lehman Brothers Holdings, Inc. d/b/a Lehman Capital, a division
of Lehman Brothers Holdings, Inc., a Delaware Corporation.
11 Statement regarding computation of Net Income per Limited
Partnership Unit (Incorporated by reference to Note 1 of Item 8 -
Financial Statements of this Form 10-K).
16.1 Letter, dated August 12, 1992, from Ernst & Young to the Securities
and Exchange Commission regarding change in certifying accountant.
(Incorporated by reference to Form 8-K dated August 6, 1992).
16.2 Letter dated May 9, 1995 from the Registrant's former independent
accountant regarding its concurrence with the statements made by the
Registrant regarding a change in the certifying accountant.
(Incorporated by reference to Form 8-K dated May 3, 1995).
19.1 Chapter 11 Plan of CCP/IV Associates, Ltd. (Restated to incorporate
first amended Chapter 11 Plan filed October 27, 1992 and second
amendments to Chapter 11 Plan of CCP/IV Associates, Ltd. filed
December 14, 1992) dated December 14, 1992, and filed December 14,
1992, in the United States Bankruptcy Court for the Middle District
of Tennessee. (Incorporated by reference to the Annual Report on
Form 10-K for the year ended December 31, 1992).
19.2 First amended disclosure statement to accompany Chapter 11 Plan,
dated February 21, 1992, and amended October 27, 1992 filed by
CCP/IV Associates, Ltd. filed October 27, 1992, in the United States
Bankruptcy Court for the Middle District of Tennessee.
(Incorporated by reference to the Annual Report on Form 10-K for the
year ended December 31, 1992).
27 Financial Data Schedule.
(b) Reports on Form 8-K filed during the fourth quarter of 1998:
Current Report on Form 8-K dated October 1, 1998 and filed on October 16,
1998, disclosing change in control of Registrant from Insignia Financial
Group, Inc. to AIMCO.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CONSOLIDATED CAPITAL PROPERTIES IV
By: CONCAP EQUITIES, INC.
General Partner
By: /s/ Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/ Timothy R. Garrick
Timothy R. Garrick
Vice President - Accounting
Date: March 30, 1999
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
date indicated.
/s/ Patrick J. Foye Executive Vice President Date: March 30, 1999
Patrick J. Foye and Director
/s/ Timothy R. Garrick Vice President - Accounting Date: March 30, 1999
Timothy R. Garrick and Director