EXHIBIT 99.1
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED
September, 1998 AND 1997
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
1998 1997
(Unaudited) (Note)
Assets
Cash and cash equivalents $ 2,013 $ 1,439
Receivables and deposits 1,947 1,241
Restricted escrows 560 798
Other assets 1,292 1,550
Investment properties:
Land 9,237 10,217
Building and related personal property 94,549 97,598
103,786 107,815
Less accumulated depreciation (75,922) (75,746)
27,864 32,069
$ 33,676 $ 37,097
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 361 $ 426
Tenant security deposit liabilities 580 620
Accrued property taxes 907 116
Other liabilities 474 513
Mortgage notes 22,926 23,133
Master loan and interest payable 310,870 289,783
336,118 314,591
Partners' Deficit
General partner (3,024) (2,775)
Limited partners (299,418) (274,719)
(302,442) (277,494)
$ 33,676 $ 37,097
Note:The balance sheet at December 31, 1997, has been derived from the
audited financial statements at that date, but does not include all the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
See Accompanying Notes to Consolidated Financial Statements
b)
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
Revenues:
Rental income $ 4,943 $ 4,730 $ 14,795 $ 14,099
Interest income 45 31 138 91
Other income 382 277 1,048 871
Gain on sale of property -- -- 523 --
Total revenues 5,370 5,038 16,504 15,061
Expenses:
Operating 2,550 2,956 7,451 8,150
General and administrative 133 158 455 685
Depreciation 1,312 1,325 3,950 3,873
Property taxes 310 320 954 962
Interest 9,449 8,614 28,615 25,935
Total expenses 13,754 13,373 41,425 39,605
Net loss $ (8,384) $ (8,335) $(24,921) $(24,544)
Net loss allocated
to general partner (1%) $ (84) $ (83) $ (249) $ (245)
Net loss allocated
to limited partners (99%) (8,300) (8,252) (24,672) (24,299)
$ (8,384) $ (8,335) $(24,921) $(24,544)
See Accompanying Notes to Consolidated Financial Statements
c)
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
For the Nine Months Ended September 30, 1998 and 1997
(in thousands)
General Limited
Partners Partners Total
Partners' deficit at
December 31, 1996 $ (2,449) $(242,488) $(244,937)
Net loss for the nine months
ended September 30, 1997 (245) (24,299) (24,544)
Partners' deficit at
September 30, 1997 $ (2,694) $(266,787) $(269,481)
Partners' deficit at
December 31, 1997 $ (2,775) $(274,719) $(277,494)
Distributions -- (27) (27)
Net loss for the nine months
ended September 30, 1998 (249) (24,672) (24,921)
Partners' deficit at
September 30, 1998 $ (3,024) $(299,418) $(302,442)
See Accompanying Notes to Consolidated Financial Statements
d)
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
1998 1997
Cash flows from operating activities:
Net loss $(24,921) $(24,544)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 4,118 4,039
Gain on sale of property (523) --
Loss on disposal of property 28 --
Change in accounts:
Receivables and deposits (706) (300)
Other assets 35 (111)
Accounts payable (65) (550)
Tenant security deposit liabilities (9) (5)
Accrued property taxes 778 586
Other liabilities (49) 74
Accrued interest on Master Loan 23,568 23,238
Net cash provided by operating activities 2,254 2,427
Cash flows from investing activities:
Property improvements and replacements (1,328) (1,615)
Lease commissions paid (54) (136)
Net withdrawals from restricted escrows 238 906
Proceeds from sale of investment property 2,179 --
Distributions from investments in limited partnerships -- 336
Net cash provided by (used in)
investing activities 1,035 (509)
Cash flows from financing activities:
Principal payments on Master Loan (2,481) (2,031)
Principal payments on notes payable (207) (194)
Distributions to partners (27) --
Net cash used in financing activities (2,715) (2,225)
Net increase (decrease) in cash and cash equivalents 574 (307)
Cash and cash equivalents at beginning of period 1,439 1,961
Cash and cash equivalents at end of period $ 2,013 $ 1,654
Supplemental disclosure of cash flow information:
Cash paid for interest $ 4,990 $ 2,635
See Accompanying Notes to Consolidated Financial Statements
e)
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Consolidated
Capital Equity Partners, L.P. ("CCEP") have been prepared in accordance with
generally accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of ConCap Holdings, Inc. (the "General Partner"), all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and nine month
periods ended September 30, 1998, are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 1998.
Certain reclassifications have been made to the 1997 information to conform to
the 1998 presentation.
Consolidation
CCEP owns a 75% interest in a limited partnership ("Western Can, Ltd.") which
owns 444 De Haro, an office building in San Francisco, California. CCEP's
investment in Western Can, Ltd. is consolidated in CCEP's financial statements.
No minority interest liability has been reflected for the 25% minority interest
because Western Can, Ltd. has a net capital deficit and no minority liability
exists with respect to CCEP.
NOTE B - RELATED PARTY TRANSACTIONS
CCEP has no employees and is dependent on the General Partner and its affiliates
for the management and administration of all partnership activities. CCEP paid
property management fees based upon collected gross rental revenues for property
management services in each of the nine month periods ended September 30, 1998
and 1997. The Partnership Agreement ("Agreement") also provides for
reimbursement to the General Partner and its affiliates for costs incurred in
connection with the administration of CCEP activities.
Also, CCEP is subject to an Investment Advisory Agreement between CCEP and an
affiliate of the General Partner. This agreement provides for an annual fee,
payable in monthly installments, to an affiliate of the General Partner for
advising and consulting services for CCEP's properties. The following amounts
were paid or accrued to the General Partner and affiliates:
For the Nine Months Ended
September 30,
1998 1997
(in thousands)
Property management fees $805 $771
Investment advisory fees 131 136
Reimbursement for services of affiliates
(included in general and administrative
and operating expenses and other assets) (1) 274 424
(1) Included in "Reimbursement for services of affiliates" for 1998 and 1997 is
approximately $28,000 and $54,000, respectively, in reimbursements for
construction oversight costs and approximately $16,000 and $109,000
respectively, of lease commissions.
In addition to the compensation and reimbursements described above, interest
payments are made to and loan advances are received from Consolidated Capital
Institutional Properties ("CCIP") pursuant to the Master Loan Agreement (the
"Master Loan"), which is described more fully in the 1997 Annual Report.
Approximately $3,789,000 in interest payments were made during the nine month
period ended September 30, 1998. No advances were received under the Master
Loan during the nine months ended September 30, 1998. Principal payments of
approximately $2,481,000 were made on the Master Loan during the nine months
ended September 30, 1998.
For the period January 1, 1997 to August 31, 1997, CCEP 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 which receives payments on these obligations
from the agent. The amount of CCEP's insurance premiums accruing to the benefit
of the affiliate of the General Partner by virtue of the agent's obligations is
not significant.
NOTE C - MASTER LOAN AND ACCRUED INTEREST PAYABLE
The Master Loan principal and accrued interest payable balances at September 30,
1998, and December 31, 1997, are approximately $310,870,000 and $289,783,000,
respectively.
Terms of Master Loan Agreement
Under the terms of the Master Loan, interest accrues at a fluctuating rate per
annum adjusted annually on July 15 by the percentage change in the U.S.
Department of Commerce Implicit Price Deflator for the Gross National Product
subject to an interest rate ceiling of 12.5%. The interest rates for each of
the nine month periods ended September 30, 1998 and 1997, were 12.5%. Payments
are currently payable quarterly in an amount equal to "Excess Cash Flow",
generally defined in the Master Loan as net cash flow from operations after
third-party debt service and capital expenditures. Any unpaid interest is added
to principal, compounded annually, and is payable at the loan's maturity. Any
net proceeds from the sale or refinancing of any of CCEP's properties are paid
to CCIP under the terms of the Master Loan Agreement. The Master Loan Agreement
matures in November 2000.
During the nine months ended September 30, 1998, CCEP paid approximately
$2,481,000 to CCIP as principal payments on the Master Loan. Cash received on
certain investments by CCEP, which are required to be transferred to CCIP per
the Master Loan Agreement, accounted for approximately $79,000. Approximately
$296,000 was due to an "Excess Cash Flow" payment paid to CCIP as stipulated by
the Master Loan.
Approximately $2,106,000 received was due to the sale of Northlake Quadrangle.
Such proceeds are required to be transferred to CCIP as per the Master Loan
Agreement, as mentioned above.
NOTE D - GAIN ON SALE OF PROPERTY
On April 16, 1998, CCEP sold Northlake Quadrangle to an unrelated third party
for a contract price of $2,325,000. The Partnership received net proceeds of
approximately $2,106,000 after payment of closing costs. The proceeds were
remitted to CCIP to pay down the Master Loan, as required by the Master Loan
Agreement.