EXHIBIT 28.1
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED
MARCH 31, 1995 AND 1994
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
--------------------
a) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands)
March 31, December 31,
1995 1994
---------- -----------
Assets
Cash and cash equivalents $ 4,871 $ 3,393
Securities available for sale -- 195
Prepaid expenses and other assets 2,166 1,254
Investments in limited partners 2,508 2,508
Land 10,831 10,831
Buildings and related personal equipment 93,956 93,660
-------- --------
104,787 104,491
Less accumulated depreciation (64,520) (63,288)
-------- --------
40,267 41,203
Real estate assets of property in-substance
foreclosed 20,774 20,722
Less accumulated depreciation (1,372) (1,122)
-------- --------
19,402 19,600
-------- --------
$ 69,214 $ 68,153
======== ========
Liabilities and Partners' Deficit
Accounts payable and accrued expenses $ 2,854 $ 2,038
Notes and interest payable 5,721 4,700
Master loan and interest payable 246,042 238,486
Due to affiliates 981 969
-------- --------
255,598 246,193
Partners' Deficit
General partners (1,863) (1,780)
Limited partners (20 units outstanding) (184,521) (176,260)
-------- --------
(186,384) (178,040)
-------- --------
$ 69,214 $ 68,153
======== ========
b) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
1995 1994
----------- ----------
Revenues:
Rental income $ 6,054 $ 5,592
Interest income 15 7
-------- --------
Total revenues 6,069 5,599
-------- --------
Expenses:
Property operations 3,851 3,851
Depreciation and amortization 1,577 1,475
Interest 8,807 6,809
Administrative 216 242
-------- --------
Total expenses 14,451 12,377
-------- --------
Loss on disposition (7) --
Casualty gain 45 --
-------- --------
Net loss $ (8,344) $ (6,778)
======== ========
Net loss allocated to general
partners (1%) $ (83) $ (68)
Net loss allocated to limited
partners (99%) (8,261) (6,710)
-------- --------
$ (8,344) $ (6,778)
======== ========
Net loss per limited partnership unit $ (413,050) $(335,500)
======== ========
c) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
For the Three Months Ended March 31, 1995 and 1994
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
----------- ---------- ---------- ----------
Partners' deficit at
December 31, 1993 20 $(1,507) $(149,178) $(150,685)
Net loss for the three months
ended March 31, 1994 -- (68) (6,710) (6,778)
------ ------ -------- --------
Partners' deficit at
March 31, 1994 20 $(1,575) $(155,888) $(157,463)
====== ====== ======== ========
Partners' deficit at
December 31, 1994 20 $(1,780) $(176,260) $(178,040)
Net loss for the three months
ended March 31, 1995 -- (83) (8,261) (8,344)
------ ------ -------- --------
Partners' deficit at
March 31, 1995 20 $(1,863) $(184,521) $(186,384)
====== ====== ======== ========
d) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
1995 1994
-------- --------
Cash flows from operating activities:
Net loss $(8,344) $ (6,778)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 1,577 1,475
Loss on disposal of property 7 --
Casualty gain (45) --
Change in accounts:
Prepaid expenses and other assets (935) (106)
Accounts payable and accrued expenses 886 (142)
Interest on master loan 7,556 6,207
Due to affiliates -- 432
Note interest payable 1,158 --
------ ------
Net cash provided by
operating activities 1,860 1,088
------ ------
Cash flows from investing activities:
Property improvements and replacements (441) (248)
Proceeds from sale of securities
available for sale 195 --
------ ------
Net cash used in investing activities (246) (248)
------ ------
Cash flows used in financing activities:
Payments on notes payable (136) (153)
Advances on master loan -- 40
------ ------
Net cash used in financing activities (136) (113)
------ ------
Net increase in cash and cash equivalents 1,478 727
Cash and cash equivalents at beginning of period 3,393 2,429
------ ------
Cash and cash equivalents at end of period $ 4,871 $ 3,156
====== ======
Supplemental disclosure of cash
flow information:
Cash paid for interest $ 92 $ 597
====== ======
e) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
------------------------------
The accompanying unaudited financial statements 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 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, 1995 are not necessarily
indicative of the results that may be expected for the fiscal year ended
December 31, 1995.
Certain reclassifications have been made to the 1994 information to conform
to the 1995 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.
The assets and liabilities of March 31, 1995 and December 31, 1994, and
operations for the three months ended March 31, 1995 and 1994, of the
Carlton House are consolidated in CCEP's financial statements pursuant to
accounting guidelines regarding notes receivable in-substance foreclosed.
Note Receivable In-Substance Foreclosed
---------------------------------------
The note receivable secured by the Carlton House Apartment and Office
Building ("Carlton House") was deemed in-substance foreclosed as of
September 30, 1993. The Carlton House note receivable is deemed in-
substance foreclosed because control of the property effectively rest with
an affiliate of CCEP and the debtor is unable to pay debt service according
to the note terms. The note receivable in-substance foreclosed is recorded
at the estimated fair value of the collateral property. See Note C.
Investments in Limited Partnerships
-----------------------------------
The investments in limited partnerships represent certain general partner
interest in seven affiliated limited partnerships that were contributed by
EP's general partners to CCEP. These investments are stated at the lower
of estimated fair value of the interests at the time of contribution to
CCEP or the current estimated fair value of the interests.
NOTE B - RELATED PARTY TRANSACTIONS
- -----------------------------------
Consolidated Capital Equity Partners ("Partnership") paid property management
fees equal to 5% of collected gross rental revenues ("Rental Revenues") for
property management services in each of the three months ended March 31, 1995
and 1994. For the three months ended March 31, 1994 a portion of such property
management fees equal to 4% of Rental Revenues were paid to the property
management companies performing day-to-day property management services and the
portion equal to 1% of Rental Revenues were paid to Partnership Services, Inc.
("PSI") for advisory services related to day-to-day property operations.
Coventry Properties, Inc. ("Coventry"), an affiliate of the General Partner,
provided day-to-day property management responsibilities for two of the
Partnership's properties under the same management fee arrangement as the
unaffiliated management companies. In late December 1994, an affiliate of
Insignia assumed day-to-day property management responsibilities for all of the
Partnerships' properties. Fees paid to affiliates of Insignia during the three
months ended March 31, 1995, and fees paid to Coventry and PSI for the three
months ended March 31, 1994, are reflected in the following table.
Also, CCEP is subject to an Investment Advisory Agreement between CCEP and an
affiliate of CHI. This agreement provides for an annual fee, payable in monthly
installments, to an affiliate of CHI for advising and consulting services for
CCEP's services for CCEP's properties. Advisory fees paid pursuant to this
agreement are reflected in the following table.
For the Three Months Ended
March 31,
-------------------------
1995 1994
-------- -------
(in thousands)
Property management fees $314 $164
Investment advisory fees 64 64
Property management fees increased for the three months ended March 31, 1995
compared to the three months ended March 31, 1994, due to the fact that all but
two of the Partnership's investment properties were managed by unaffiliated
management companies during the three months ended March 31, 1994. All of the
Partnership's investment properties were managed by an affiliate of Insignia
during the three months ended March 31, 1995.
The Partnership Agreement ("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 current
and former affiliates which includes Coventry for the three months ended March
31, 1994, received reimbursements as reflected in the following table:
For the Three Months Ended
March 31,
-------------------------
1995 1994
-------- -------
(in thousands)
Reimbursement for services of affiliates $126 $ 68
Reimbursements for services of affiliates increased during the three months
ended March 31, 1995 compared to the three months ended March 31, 1994 due to
increased expense reimbursements related to the combined efforts of the Dallas
and Greenville offices during the transition period for the three months ended
March 31, 1995. These increased costs related to the transition efforts were
incurred to minimize any disruption in the year-end reporting function including
the financial reporting and K-1 preparation and distribution. The General
Partner expects overall administrative expenses to be reduced after the second
quarter of 1995 once the transition efforts are completed.
In addition to the compensation and reimbursements described above, interest
payments are made to and loan advances are received from CCIP pursuant to the
New Master Loan Agreement, which is described more fully in the 1993 Annual
Report. Such interest payments totaled $0 and $474,000 in the three months
ended March 31, 1995 and 1994, respectively. CCEP received advances under the
New Master Loan Agreement totaling $40,000 in the three months ended March 31,
1994. No advances under the new Master Loan Agreement were made during the
three months ended March 31, 1995.
NOTE C - NOTE RECEIVABLE DEEMED IN-SUBSTANCE FORECLOSED
- -------------------------------------------------------
CCEP holds a note receivable (the "Carlton House Note") which is secured by a
deed of trust on the Carlton House Apartment and Office Building ("Carlton
House") with a scheduled maturity in 1995. According to the note terms,
interest accrues at 10% and compounds monthly on principal plus accrued but
unpaid interest. The note receivable has been in default since 1991. As
described more fully below the required debt service payments were reduced to
only the amount of net cash flow from the Carlton House. In 1995 and 1994 no
interest income was recognized as no cash related to the note receivable was
received by CCEP.
The Carlton House was originally owned by CCEP. In 1984, CCEP sold the Carlton
House and received back a $28 million purchase money note secured by a first
lien on the property. CCEP assigned this purchase money note to CCIP as
additional collateral for the Master Loan. In 1986, the buyer defaulted on this
purchase money note and filed for bankruptcy when CCEP attempted to foreclose on
the Carlton House. Pursuant to a reorganization plan, a successor (New Carlton
House Partners, "NCHP") to the buyer executed a new promissory note in the
amount of $31.5 million (the Carlton House Note).
In early 1991, NCHP defaulted on the Carlton House Note. Since default, CCEP
and NCHP have negotiated a restructuring of the Carlton House Note. During the
negotiating process, the owner made interim payments of $150,000 per month. In
1992, CCEP and NCHP entered into a Restructure Agreement (herein so called).
Pursuant to the Restructure Agreement, 1801 Tower, Inc., an affiliate of CCEP
and CCIP was substituted as the new general partner of NCHP in February 1993.
The Restructure Agreement provides that payments to CCEP under the Carlton House
Note will be in an amount equal to the property's net cash flow and included
CCEP's agreement not to foreclose on the property until April 1995, provided
that NCHP remains in compliance with the Restructure Agreement and various other
conditions are satisfied.
Prior to the Restructure Agreement, limited information was provided by the
borrower. Information obtained subsequent to execution of the Restructure
Agreement indicate that the property's deferred maintenance is significantly
higher than the borrower's estimate of $5 million. The substantial amount of
deferred maintenance which was, in some cases, endangering the continued
operations of the property, and the value of the property which
collateralized the Carlton House Note, is currently being addressed.
In September 1993, a wholly-owned subsidiary of CCIP purchased the $20.4
million second lien mortgage note secured by the Carlton House from an
unaffiliated third party. This mortgage note, which is subordinate to CCEP's
Master Loan debt secured by Carlton House, remains the obligation of NCHP. As
a result of the facts that (1) NCHP has no equity in the Carlton House,
considering the current fair value of the Carlton House; (2) proceeds for
repayment of the Carlton House Note can be expected to come only from the
operations or sale of the Carlton House' and (3) NCHP effectively abandoned
control of the Carlton House to CCEP when 1801 Tower, Inc. gained the general
partner interest in NCHP in 1993, CCEP has deemed the Carlton House Note in-
substance foreclosed as of December 31, 1993. Accordingly, the net note
receivable secured by Carlton House is presented at "Note Receivable in-
substance foreclosed" in accompanying financial statements.
Summarized below are the assets, liabilities, equity and the results of
operations of the Carlton House that are included in CCEP's financial
statements for the three months ended March 31, 1995 and 1994, prepared on
the same basis as CCEP's financial statements. Any intercompany balance
between CCEP and the Carlton House have been implemented in CCEP's
consolidated financial statements and the summarized financial statements set
forth below:
March 31,December 31,
1995 1994
---------------------
ASSETS
------
Cash and cash equivalents $ 1,633 $ 1,519
Securities available for sale -- 195
Prepaid expenses and other assets 602 103
Real estate:
Land 3,805 3,805
Buildings and improvements 16,969 16,917
------- --------
20,774 20,722
Less accumulated depreciation (1,372) (1,122)
------- --------
19,402 19,600
------- --------
Total assets $ 21,637 $ 21,417
======= ========
March 31, December 31,
1995 1994
---------------------
LIABILITIES AND PARTNERS' DEFICIT
---------------------------------
Notes and interest payable $ 1,156 $ 16
Due to affiliates 763 763
Other liabilities 808 467
------- --------
Total liabilities 2,727 1,246
------- --------
Partners' equity 18,910 20,171
------- --------
Total liabilities and partners' equity $21,637 $ 21,417
======= ========
For the Three Months Ended
March 31,
-------------------------
1995 1994
-------- --------
Revenues:
Rental revenue $ 1,369 $ 1,122
Interest income 9 --
------- -------
Total revenue 1,378 1,122
Expenses:
Property operations 1,248 1,073
Depreciation and amortization 250 202
Interest 1,141 4
Administrative -- 78
------- -------
Total expenses 2,639 1,357
------- -------
Net loss $(1,261) $ (235)
====== =======
NOTE D - MASTER LOAN AND ACCRUED INTEREST PAYABLE
-------------------------------------------------
The Master Loan and accrued interest payable balances at March 31, 1995 and
December 31, 1994 are $246 million and $238.5 million, respectively.
Terms of New Master Loan Agreement
----------------------------------
Under the terms of the New Master Agreement, 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 Delator for the
Gross national Product subject to an interest rate ceiling of 12.5%. The
interest rates for each of the three month periods ended March 31, 1995 and
1994 was 12.5%. Interest payments are currently payable quarterly in an
amount equal to "Excess Cash Flow", generally defined in the New Master Loan
Agreement as net cash flow from operations
after third-party debt service. If such Excess Cash Flow payments are less
than the current accrued interest during the quarterly period, the unpaid
interest is added to principal, compounded annually, and is payable at the
loan's maturity. If such Excess Cash Flow payments are greater than the
currently payable interest, the excess amount is applied to the principal
balance of the loan. Any net proceeds from sale or refinancing of any of
CCEP's properties are paid to CCIP under the terms of the New Master Loan
Agreement. The New Master Loan Agreement matures in November 2000.
Effective January 1, 1993, CCEP and CCIP amended the New Master Loan
Agreement to stipulate that Excess Cash Flow would be computed net of capital
improvements. Such expenditures were formerly funded from advances on the
Master Loan from CCIP to CCEP. This amendment and change in the definition
of Excess Cash Flow will have the effect of reducing Master Loan payments to
CCIP by the amount of CCEP's capital expenditures since such amounts were
previously excluded from Excess Cash Flow. The amendment will have no effect
on the computation of interest expense on the Master Loan for CCEP.
In February 1994, CCEP advanced approximately $589,000 to New Carlton House
Partners, as an advance on the Carlton House Note, to pay Carlton House's
1994 property taxes. In February 1994, the Partnership advanced $40,000 to
CCEP as an advance on the Master Loan. CCEP then advanced $40,000 to NCHP as
an advance on the Carlton House Note to pay the remaining balance of 1993
property taxes. The notes payable are all nonrecourse, collateralized by
deeds of trust on the real property. The notes payable bear interest at
rates ranging from 8.0% to 10.5% per annum and mature between 1998 and 2007.