FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY OR TRANSITIONAL REPORT
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, 1997
[ ] 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, 1997
Assets
Cash and cash equivalents:
Unrestricted $ 1,692
Restricted - tenant security deposits 61
Investments 447
Accounts receivable, net of allowance 13
Escrows for taxes and insurance 108
Restricted escrows 326
Other assets 258
Investment property held for sale 850
Investment properties:
Land $ 1,571
Buildings and related personal property 11,128
12,699
Less accumulated depreciation (5,813) 6,886
$10,641
Liabilities and Partners' Capital (Deficit)
Accounts payable $ 103
Tenant security deposits 61
Accrued taxes 42
Other liabilities 60
Notes payable 2,325
Partners' Capital (Deficit)
General partner $ (165)
Corporate limited partner on behalf
of the Unitholders - (128,810 Units
issued and outstanding) 8,215 8,050
$10,641
See Accompanying Notes to Financial Statements
b) JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
1997 1996
Revenues:
Rental income $ 543 $ 514
Other income 38 45
Total revenues 581 559
Expenses:
Operating 168 158
General and administrative 52 61
Maintenance 57 63
Depreciation 122 127
Interest 46 49
Property taxes 41 44
Total expenses 486 502
Net income $ 95 $ 57
Net income allocated to general partner (1%) $ 1 $ 1
Net income allocated to limited partners (99%) 94 56
$ 95 $ 57
Net income per Unit of
Depositary Receipt $ .73 $ .44
See Accompanying Notes to 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 Receipt
Receipt Partner (Note A) Total
Original capital contributions 129,266 $ 1 $ 32,317 $ 32,318
Partners' capital (deficit)
at December 31, 1996 128,810 $ (166) $ 8,121 $ 7,955
Net income for the three months
ended March 31, 1997 -- 1 94 95
Partners' capital (deficit) at
March 31, 1997 128,810 $ (165) $ 8,215 $ 8,050
<FN>
See Accompanying Notes to Financial Statements
d) JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
1997 1996
Cash flows from operating activities:
Net income $ 95 $ 57
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 122 127
Amortization of lease commissions, discounts
and loan costs 12 13
Bad debt expense 10 8
Change in accounts:
Restricted cash (8) --
Accounts receivable 6 (17)
Escrows for taxes and insurance (41) (38)
Other assets (13) 27
Accounts payable (1) (4)
Accrued taxes (5) 43
Other liabilities (22) 14
Net cash provided by operating
activities 155 230
Cash flows from investing activities:
Property improvements and replacements (17) (10)
Deposits to restricted escrows (18) (6)
Net cash used in investing activities (35) (16)
Cash flows from financing activities:
Payments on notes payable -- (14)
Loan costs paid (11) --
Distributions to partners -- (495)
Net cash used in financing
activities (11) (509)
Net increase (decrease) in cash and cash equivalents 109 (295)
Cash and cash equivalents at beginning of period 1,583 1,967
Cash and cash equivalents at end of period $1,692 $1,672
Supplemental disclosure of cash flow information:
Cash paid for interest $ 43 $ 40
<FN>
See Accompanying Notes to Financial Statements
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 ConCap Equities, 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 month period ended March 31,
1997, 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, 1996.
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 Receipt
Johnstown/Consolidated Depositary Corporation (the "Corporate Limited Partner"),
an affiliate of the General Partner, serves as a depositary of certain Units of
Depositary Receipt ("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. For this reason, Partners' capital (deficit)
is herein represented as an interest of the Unitholder.
Investment Property Held for Sale
Effective December 31, 1996, the Florida #6 Mini-Warehouse was classified as an
investment property held for sale. Accordingly, the property has been recorded
at the lower of carrying amount or fair value less costs to sell and no
additional depreciation expense will be recorded during the period the assets
are held for sale.
NOTE B - 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, as provided for in the Partnership agreement.
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. Under this provision, fees of approximately $24,000 were
paid to the General Partner and its affiliates for each of the three months
ended March 31, 1997 and 1996, respectively, and are included in general and
administrative expenses.
The Partnership has paid property management fees based upon collected gross
rental revenues for property management services in each of the three months
ended March 31, 1997 and 1996. Property management fees of approximately
$28,000 and $30,000 were paid to affiliates of the General Partner for the three
months ended March 31, 1997 and 1996, respectively. These fees are included in
operating expenses.
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. Reimbursements for services of affiliates of
approximately $25,000 and $24,000 were paid to the General Partner and its
affiliates for each of the three months ended March 31, 1997 and 1996,
respectively. Reimbursements of costs are classified as general and
administrative expenses. Also during the three months ended March 31, 1997,
approximately $6,000 of leasing commissions were paid to an affiliate of
Insignia. Leasing commissions are capitalized and included in other assets.
Approximately $16,000 during the three months ended March 31, 1997, was paid to
affiliates for construction oversight costs incurred in conjunction with
improvements made at the Cedar Brooke Apartments. These amounts are included in
maintenance expense.
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
$2,200,000 at March 31, 1997, exceeded the Partnership's reserve requirement of
approximately $1,385,000.
NOTE D - DISTRIBUTIONS
In March of 1996, the Partnership paid distributions attributable to cash flow
from operations of approximately $495,000. During the three months ended March
31, 1997, no distributions were declared or paid.
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, 1997 and 1996:
Average Occupancy
1997 1996
Cedar Brooke Apartments
Independence, Missouri 97% 99%
Florida #6 Mini-Warehouse
Lauderhill, Florida 90% 91%
Florida #11 Mini-Warehouse
Davie, Florida 99% 93%
Phoenix Business Campus
College Park, Georgia 70% 58%
The increase in occupancy at the Florida #11 Mini-Warehouse is due to the
improved curb appeal of the property resulting from the exterior painting
project completed in 1996 and increased marketing efforts at the property. The
increase in average occupancy at the Phoenix Business Center is due to a new
tenant who moved in in the fourth quarter of 1996, occupying 14% of the total
square footage.
The Partnership realized net income of approximately $95,000 for the three
months ended March 31, 1997, compared to net income of approximately $57,000 for
the three months ended March 31, 1996. The increase in net income is primarily
due to the increase in rental income resulting from rental rate increases at the
Cedar Brooke Apartments and occupancy increases at the Florida #11 Mini-
Warehouse and Phoenix Business Campus, as noted above. Property operating
expenses increased slightly due to increased flood insurance coverage at the
Cedar Brooke Apartments. General and administrative expenses decreased
primarily as a result of lower audit fees. The mortgage note secured by Cedar
Brooke Apartments was refinanced in November of 1996. Accordingly, the debt is
no longer regulated by the U.S. Department of Housing and Urban Development
which required a separate audit.
Included in maintenance expense is approximately $19,000 of major repairs and
maintenance comprised primarily of construction oversight costs related to the
ongoing repair projects at Cedar Brooke paid during the three months ended March
31, 1997. For the three months ended March 31, 1996, approximately $29,000 of
major repairs and maintenance comprised primarily of exterior painting which was
included in maintenance expense.
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, 1997, the Partnership held cash and cash equivalents of
approximately $1,692,000 compared to approximately $1,672,000 at March 31, 1996.
Net cash provided by operating activities decreased primarily due to the timing
of property tax payments and the annual audit fee payment. Net cash used in
investing activities increased as a result of increased property improvements
and replacements and increased escrow funding requirements for the Cedar Brooke
Apartments. Net cash used in financing activities decreased primarily as a
result of the absence of cash distributions to partners during the three months
ended March 31, 1997.
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 $2,325,000, matures in 2003, at which time the debt will either
be refinanced or the related property 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 negotiating the sale of its one-third interest in the Florida #6
Mini-Warehouse. During the three months ended March 31, 1996, cash
distributions of approximately $495,000 were paid. No cash distributions were
declared or paid during the three months ended March 31, 1997.
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 Partnership
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/William H. Jarrard, Jr.
William H. Jarrard, Jr.
President
By: /s/Ronald Uretta
Ronald Uretta
Vice President/Treasurer
Date: May 2, 1997