EXHIBIT 99.1
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED
June 30, 1998 AND 1997
EXHIBIT 99.1 (Continued)
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
1998 1997
(Unaudited) (Note)
Assets
Cash and cash equivalents $ 2,157 $ 1,439
Receivables and deposits 1,511 1,241
Restricted escrows 589 798
Other assets 1,347 1,550
Investment properties:
Land 9,237 10,217
Building and related personal property 94,071 97,598
103,308 107,815
Less accumulated depreciation (74,610) (75,746)
28,698 32,069
$ 34,302 $ 37,097
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 378 $ 426
Tenant security deposit liabilities 567 620
Accrued property taxes 587 116
Other liabilities 449 513
Mortgage notes 22,996 23,133
Master loan and interest payable 303,383 289,783
328,360 314,591
Partners' Deficit
General partner (2,940) (2,775)
Limited partners (291,118) (274,719)
(294,058) (277,494)
$ 34,302 $ 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 Financial Statements
b)
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
Revenues:
Rental income $ 4,928 $ 4,691 $ 9,867 $ 9,369
Interest income 58 25 93 60
Other income 312 292 666 594
Gain on sale of property 523 -- 523 --
Total revenues 5,821 5,008 11,149 10,023
Expenses:
Operating 2,516 2,803 4,901 5,194
General and administrative 155 275 322 527
Depreciation 1,309 1,283 2,638 2,548
Property taxes 314 317 644 642
Interest 9,564 8,629 19,166 17,321
Bad debt (recovery) expense, net (6) -- 15 --
Total expenses 13,852 13,307 27,686 26,232
Net loss $ (8,031) $ (8,299) $(16,537) $(16,209)
Net loss allocated
to general partner (1%) $ (80) $ (83) $ (165) $ (162)
Net loss allocated
to limited partners (99%) (7,951) (8,216) (16,372) (16,047)
$ (8,031) $ (8,299) $(16,537) $(16,209)
See Accompanying Notes to Financial Statements
c)
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
For the Six Months Ended June 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 six months
ended June 30, 1997 (162) (16,047) (16,209)
Partners' deficit at
June 30, 1997 $ (2,611) $(258,535) $(261,146)
Partners' deficit at
December 31, 1997 $ (2,775) $(274,719) $(277,494)
Distributions -- (27) (27)
Net loss for the six months
ended June 30, 1998 (165) (16,372) (16,537)
Partners' deficit at
June 30, 1998 $ (2,940) $(291,118) $(294,058)
See Accompanying Notes to Financial Statements
d)
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
1998 1997
Cash flows from operating activities:
Net loss $(16,537) $(16,209)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 2,752 2,657
Bad debt expense, net 15 --
Gain on sale of property (523) --
Loss on disposal of property 28 --
Change in accounts:
Receivables and deposits (285) (68)
Other assets 34 (82)
Accounts payable (48) (542)
Tenant security deposit liabilities (22) (20)
Accrued property taxes 458 286
Other liabilities (74) 103
Accrued interest on Master Loan 16,081 15,606
Net cash provided by operating activities 1,879 1,731
Cash flows from investing activities:
Property improvements and replacements (850) (892)
Lease commissions paid (54) (176)
Net withdrawals from restricted escrows 209 803
Proceeds from sale of investment property 2,179 --
Distributions from investments in limited partnerships -- 336
Net cash provided by investing activities 1,484 71
Cash flows from financing activities:
Principal payments on Master Loan (2,481) (1,590)
Principal payments on notes payable (137) (128)
Distributions to partners (27) --
Net cash used in financing activities (2,645) (1,718)
Net increase in cash and cash equivalents 718 84
Cash and cash equivalents at beginning of period 1,439 1,961
Cash and cash equivalents at end of period $ 2,157 $ 2,045
Supplemental disclosure of cash flow information:
Cash paid for interest $ 3,046 $ 1,673
<FN>
See Accompanying Notes to Financial Statements
</FN>
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 six month
periods ended June 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 six month periods ended June 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 Six Months Ended
June 30,
1998 1997
(in thousands)
Property management fees $536 $509
Investment advisory fees 87 91
Lease commissions 16 --
Reimbursement for services of affiliates 157 174
NOTE B - RELATED PARTY TRANSACTIONS (CONTINUED)
There are approximately $24,000 and $39,000, respectively, in reimbursements for
construction oversight costs included in investment properties and operating
expense for the six months ended June 30, 1998 and 1997.
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 $2,244,000 in interest payments were made during the six month
period ended June 30, 1998. No advances were received under the Master Loan
during the six months ended June 30, 1998. Principal payments of approximately
$2,481,000 were made on the Master Loan during the six months ended June 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 June 30,
1998, and December 31, 1997, are approximately $303,383,000 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 six month periods ended June 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 six months ended June 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.