FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT
For the transition period.........to.........
Commission file number 0-16010
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
(Exact name of small business issuer as specified in its charter)
California 94-3004963
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (864) 239-1000
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 1996
Assets
Cash:
Unrestricted $ 1,672
Restricted - tenant security deposits 52
Investments 447
Accounts receivable, net of allowance 43
Escrows for taxes and insurance 76
Restricted escrows 125
Prepaid and other assets 217
Investment properties:
Land $ 1,896
Buildings and related personal property 11,738
13,634
Less accumulated depreciation (5,547) 8,087
$10,719
Liabilities and Partners' Capital (Deficit)
Accounts payable $ 13
Tenant security deposits 52
Accrued taxes 43
Other liabilities 104
Notes payable 1,881
Partners' Capital (Deficit)
General partner $ (159)
Corporate limited partner on behalf
of the Unitholders - (128,810 Units
issued and outstanding) 8,785 8,626
$10,719
See Accompanying Notes to Consolidated Financial Statements
b) JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
1996 1995
Revenues:
Rental income $ 514 $ 542
Other income 45 50
Total revenues 559 592
Expenses:
Operating 158 189
General and administrative 61 83
Maintenance 63 33
Depreciation 127 123
Interest 49 45
Property taxes 44 42
Total expenses 502 515
Net income $ 57 $ 77
Net income allocated to general partner (1%) $ 1 $ 1
Net income allocated to Unitholders (99%) 56 76
$ 57 $ 77
Net income per Unit of
Depositary Receipt $ .44 $ .59
See Accompanying Notes to Consolidated Financial Statements
c) JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
Unitholders
Units of
Units of Depositary
Depositary General Receipts
Receipts Partner (Note A) Total
Original capital contributions 129,266 $ 1 $ 32,317 $ 32,318
Partners' capital (deficit)
at December 31, 1995 128,810 $ (155) $ 9,219 $ 9,064
Distributions to partners -- (5) (490) (495)
Net income for the three months
ended March 31, 1996 -- 1 56 57
Partners' capital (deficit) at
March 31, 1996 128,810 $ (159) $ 8,785 $ 8,626
<FN>
See Accompanying Notes to Consolidated Financial Statements
d) JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
1996 1995
Cash flows from operating activities:
Net income $ 57 $ 77
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 127 123
Amortization of lease commissions, discounts
and loan costs 13 4
Change in accounts:
Restricted cash -- 27
Accounts receivable, net of allowance (9) --
Escrows for taxes and insurance (38) (33)
Prepaids and other assets 27 22
Accounts payable (4) 2
Tenant security deposit liabilities -- 3
Accrued taxes 43 42
Other liabilities 14 83
Net cash provided by operating
activities 230 350
Cash flows from investing activities:
Property improvements and replacements (10) (3)
Purchase of investments -- (251)
Proceeds from sale of investments -- 1,705
Deposits to restricted escrows (6) (4)
Net cash (used in) provided by
investing activities (16) 1,447
Cash flows from financing activities:
Payments on notes payable (14) (9)
Distributions to partners (495) (500)
Net cash used in financing
activities (509) (509)
Net (decrease) increase in cash and cash equivalents (295) 1,288
Cash and cash equivalents at beginning of period 1,967 564
Cash and cash equivalents at end of period $1,672 $ 1,852
Supplemental disclosure of cash flow information:
Cash paid for interest $ 40 $ 27
<FN>
See Accompanying Notes to Consolidated Financial Statements
e) JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements of Johnstown/Consolidated Income
Partners, (the "Partnership") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of the General Partner, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three month period ended March 31, 1996, are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 31, 1996. For further information, refer to the financial
statements and footnotes thereto included in the Partnership's annual report on
Form 10-KSB for the fiscal year ended December 31, 1995.
Certain reclassifications have been made to the 1995 information to conform to
the 1996 presentation.
Investments
Investments consisting primarily of U.S. Treasury Notes with original maturities
of more than ninety days are considered to be held-to-maturity securities.
Units of Depositary Receipts
Johnstown/Consolidated Depositary Corporation (the "Corporate Limited Partner"),
an affiliate of the General Partner, serves as a depositary of certain Units of
Depositary Receipts ("Units"). The Units represent economic rights attributable
to the limited partnership interests in the Partnership and entitle the holders
thereof ("Unitholders") to certain economic benefits, allocations and
distributions of the Partnership.
Note B - Transactions with Affiliated Parties
The Partnership Agreement provides that the Partnership shall pay in monthly
installments to the General Partner, or an affiliate, a yearly asset management
fee equal to: (i) 3/8 of 1% of the original principal balance of mortgage loans
outstanding at the end of the month preceding the installment payment; (ii) 1/8
of 1% of the market value of guaranteed mortgage-backed securities as of the end
of the Partnership quarter immediately preceding the installment payment; and
(iii) 5/8 of 1% of the purchase price of the properties plus improvements for
managing the Partnership's assets. In the event the property was not owned at
the beginning or end of the year, such fee shall be pro rated for the short-year
period of ownership. These asset management fees are included in compensation
to related parties in the table below.
The Partnership has paid property management fees noted below based upon
collected gross rental revenues for property management services in each of the
three months ended March 31, 1996 and 1995. In late December 1994, an affiliate
of Insignia Financial Group, Inc. ("Insignia") assumed day-to-day property
management responsibilities for all of the Partnerships' properties except for
Cedar Brooke Apartments. Management of Cedar Brooke was assumed by an Insignia
affiliate on February 15, 1995. Fees paid to Insignia and affiliates for the
three months ended March 31, 1996 and 1995, are presented below. The property
management fees are included in operating expenses.
For the Three Months Ended
March 31,
1996 1995
(in thousands)
Asset management fee $24 $25
Property management fees 30 27
The Partnership Agreement also provides for reimbursement to the General Partner
and its affiliates for costs incurred in connection with the administration of
Partnership activities. The General Partner and its affiliates received
reimbursements as presented below.
For the Three Months Ended
March 31,
1996 1995
(in thousands)
Reimbursement for services of affiliates $25 $39
Note B - Transactions with Affiliated Parties (continued)
In July 1995, the Partnership began insuring its properties under a master
policy through an agency and 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 current year's master policy. The current agent
assumed the financial obligations to the affiliate of the General Partner who
receives payment on these obligations from the agent. The amount of the
Partnership'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 - Commitment
The Partnership is required by the Partnership Agreement to maintain working
capital for contingencies of not less than 5% of Net Invested Capital as defined
in the Partnership Agreement. 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, tenant security deposits and investments totalling approximately
$2.2 million at March 31, 1996, exceeded the Partnership's reserve requirement
of approximately $1.4 million.
Note D - Distributions
In March of 1995, the Partnership paid distributions attributable to cash flow
from operations of approximately $500,000. In March of 1996, the Partnership
paid distributions attributable to cash flow from operations of approximately
$495,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of one apartment complex, two
commercial properties and a one-third (1/3) undivided interest in the Florida #6
Mini-Warehouse property. The following table sets forth the average occupancy
of the properties for the three months ended March 31, 1996 and 1995:
Average Occupancy
1996 1995
Cedar Brooke Apartments 99% 99%
Independence, Missouri
Florida #6 Mini-Warehouse 91% 94%
Lauderhill, Florida
Florida #1l Mini-Warehouse 93% 97%
Davie, Florida
Phoenix Business Campus 58% 56%
College Park, Georgia
The decrease in occupancy at the Florida #6 Mini-Warehouse and the Florida #11
Mini-Warehouse is due to increased competition from similar facilities in the
area. The vacancy left by a large tenant who moved out during the first quarter
of 1995 continues to negatively impact the 1996 occupancy of the Phoenix
Business Center. New tenants are being actively recruited in efforts to re-
lease this vacant space.
The Partnership realized net income of approximately $57,000 for the three
months ended March 31, 1996, compared to net income of approximately $77,000 for
the three months ended March 31, 1995. The decrease in net income is primarily
due to the decrease in rental income discussed below.
The decrease in rental income primarily results from the loss of the large
tenant at the Phoenix Business Center noted above. The loss did not negatively
impact the Partnership's revenues until after the first quarter of 1995 due to
the tenant paying rental payments through April 1995. Property operating
expenses decreased as a result of reduced concessions and utility costs during
the first quarter of 1996. General and administrative expenses decreased due to
reduced expense reimbursements related primarily to the efforts of the Dallas
partnership administration staff during the management transition in 1995.
These expense reductions were partially offset by an increase in maintenance
expenses due primarily to exterior painting at the Florida #11 Mini-Warehouse.
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.
At March 31, 1996, the Partnership held cash and cash equivalents of
approximately $1,672,000 compared to approximately $1,852,000 at March 31, 1995.
Net cash flows from operating activities decreased primarily due to reduced
revenues as noted above, an increase in interest payments and higher maintenance
expenses. Net cash flows from investing activities decreased primarily as a
result of no sales of investments during the three months ended March 31, 1996,
compared to net sales activity of approximately $1.5 million for the three
months ended March 31, 1995. The reduced volume of investment activity was due
to the Partnership investing primarily in short-term cash equivalents rather
than longer term investments. Net cash flows used in financing activities were
comparable for 1996 and 1995.
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 property to adequately maintain the physical assets
and other operating needs of the Partnership. Such assets are currently thought
to be sufficient for any near-term needs of the Partnership. The mortgage
indebtedness of approximately $1,881,000, net of discount, matures in 2013, at
which time the related property will either be refinanced or sold. Future cash
distributions will depend on the levels of net cash generated from operations,
capital expenditure requirements, property sales and the availability of cash
reserves. As part of the Partnership's ongoing attempt to maximize the return
to the Unitholders, the Partnership is exploring the possibility of selling the
Florida #6 Mini-Warehouse. Currently, disposition is not considered imminent.
Additionally, other investing parties are involved who must be consulted before
such a transaction can be consummated. During the three months ended March 31,
1996, cash distributions of approximately $495,000 were paid compared to cash
distributions of approximately $500,000 during the three months ended March 31,
1995.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
(b) Reports on Form 8-K
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
By: CONCAP EQUITIES, INC.
General Partner
By: /s/ Carroll D. Vinson
Carroll D. Vinson
President
By: /s/ Robert D. Long, Jr.
Robert D. Long, Jr.
Vice President/CAO
Date: May 26, 1995