UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-10831
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CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
- - -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 94-2744492
- - -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
5520 LBJ Freeway, Suite 430, Dallas, Texas 75240
- - -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(214) 702-0027
- - -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant, (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
Index to Exhibits: 10
Total Pages: 19
-1-
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- - ------ --------------------
BALANCE SHEETS
(unaudited)
(in thousands, except unit data)
JUNE 30, DECEMBER 31,
ASSETS 1994 1993
- - ------ ----------- -----------
Real estate, net of accumulated depreciation.......... $ 4,961 $ 5,140
---------- ----------
Net investment in Master Loan......................... 91,786 91,746
---------- ----------
Cash and cash equivalents............................. 2,149 222
United States Treasury Notes and other investments
at cost (market - $8,325 in 1994 and $10,905
in 1993)............................................ 7,997 10,391
Due from affiliates................................... - 559
Other assets.......................................... 329 384
---------- ----------
$ 107,222 $ 108,442
========== ==========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
- - ------------------------------------------
Accounts payable and accrued expenses................ $ 116 $ 177
Distributions payable................................. 324 332
Due to affiliates..................................... 21 332
---------- ----------
461 509
---------- ----------
Commitment (Note 4)...................................
Partners' equity (deficit):
Limited Partners - 199,051 units outstanding......... 107,061 108,220
General Partner...................................... (300) (287)
---------- ----------
106,761 107,933
---------- ----------
$ 107,222 $ 108,442
========== ==========
The financial information included herein has been prepared by management
without audit by independent public accountants.
The accompanying notes are an integral part of the financial statements.
-2-
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
INCOME STATEMENT
(unaudited)
(in thousands, except unit data)
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------------------- --------------------------
1994 1993 1994 1993
---------- ---------- ---------- ----------
Revenues:
Rental income........................... $ 327 $ 275 $ 641 $ 567
Income on investment in Master Loan
to affiliate.......................... 435 805 909 2,433
Interest on investments................. 168 242 335 492
---------- ---------- ---------- ----------
Total revenues........................ 930 1,322 1,885 3,492
---------- ---------- ---------- ----------
Costs and expenses:
Property operations..................... 140 197 284 349
Depreciation............................ 103 102 207 204
Administrative.......................... 121 184 259 429
---------- ---------- ---------- ----------
Total costs and expenses (a).......... 364 483 750 982
---------- ---------- ---------- ----------
Income from operations................... 566 839 1,135 2,510
Other income............................ - - 56 -
Gain on sale of United States Treasury
Note.................................. - - - 17
---------- ---------- ---------- ----------
Net income............................... $ 566 $ 839 $ 1,191 $ 2,527
========== ========== ========== ==========
Net income per Limited Partnership Unit:
Income from operations.................. $ 2.81 $ 4.17 $ 5.64 $ 12.48
Other income............................ - - .28 -
Gain on sale of Treasury Note........... - - - .09
---------- ---------- ---------- ----------
Net income............................... $ 2.81 $ 4.17 $ 5.93 $ 12.57
========== =========== ========== ==========
Distributions per Limited Partnership
Unit.................................... $ - $ - $ 11.75 $ 14.25
========== =========== ========== ==========
(a) Costs and expenses include $115,000 and $68,000 to related parties for the
three months ended June 30, 1994 and 1993, respectively, and $218,000 and
$171,000 for the six months ended June 30, 1994 and 1993. See supplemental
information with respect to related party transactions in Notes 2 and 3 of
the financial statements.
The financial information included herein has been prepared by management
without audit by independent public accountants.
The accompanying notes are an integral part of the financial statements.
-3-
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
(unaudited)
For the Six Months Ended June 30, 1994 and 1993
(in thousands)
TOTAL
GENERAL LIMITED PARTNERS'
PARTNER PARTNERS EQUITY (DEFICIT)
------- ---------- ----------------
Balance at December 31, 1992....... $ (163) $ 120,575 $ 120,412
Net income......................... 25 2,502 2,527
Distributions...................... (29) (2,836) (2,865)
------- --------- ---------
Balance at June 30, 1993........... $ (167) $ 120,241 $ 120,074
======= ========= =========
Balance at December 31, 1993....... $ (287) $ 108,220 $ 107,933
Net income......................... 11 1,180 1,191
Distributions...................... (24) (2,339) (2,363)
------- --------- --------
Balance at June 30, 1994........... $ (300) $ 107,061 $ 106,761
======= ========= =========
The financial information included herein has been prepared by management
without audit by independent public accountants.
The accompanying notes are an integral part of the financial statements.
-4-
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
STATEMENTS OF CASH FLOWS
(unaudited)
Increase in Cash and Cash Equivalents
(in thousands)
FOR THE SIX MONTHS
ENDED JUNE 30,
------------------------
1994 1993
---------- ----------
Cash flows from operating activities:
Cash received from tenants......................... $ 639 $ 564
Cash paid to suppliers (a)......................... (620) (670)
Interest received (b).............................. 1,889 3,594
Other income....................................... 50 -
--------- ---------
Net cash provided by operating activities........... 1,958 3,488
--------- ---------
Cash flows from investing activities:
Additions to real estate........................... (28) (14)
Advances on Master Loan............................ (40) (340)
Purchase of United States Treasury Note............ (2,320) -
Proceeds from sale of United States Treasury Note.. 4,720 616
--------- ---------
Net cash provided by investing activities........... 2,332 262
--------- ---------
Cash flows from financing activities:
Distributions paid................................. (2,363) (2,865)
--------- ---------
Net increase in cash and cash equivalents........... 1,927 885
Cash and cash equivalents, at beginning of period... 222 1,877
--------- ---------
Cash and cash equivalents, at end of period......... $ 2,149 $ 2,762
========= =========
(a) Payments to related parties totaling $218,000 and $171,000 for the six
months ended June 30, 1994 and 1993, respectively, are included in cash
paid to suppliers. See Note 2.
(b) Payments from related parties totaling $1.5 million and $3.1 million for
the six months ended June 30, 1994 and 1993, respectively, are included in
interest received. See Note 3.
The financial information included herein has been prepared by management
without audit by independent public accountants.
The accompanying notes are an integral part of the financial statements.
-5-
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
Notes to Financial Statements
June 30, 1994
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
- - ------------------------------
The financial statements reflect all adjustments necessary for a fair
presentation of the financial position of Consolidated Capital Institutional
Properties (the "Partnership") and the results of its operations. All
adjustments were of a normal recurring nature. However, the results of
operations for the six months ended June 30, 1994, are not necessarily
indicative of the results to be expected for the year ending December 31, 1994.
The financial statements should be read in conjunction with the financial
statements contained in the Partnership's Annual Report on Form 10-K for the
year ended December 31, 1993 (the "1993 Annual Report"), and the notes thereto,
as filed with the Securities and Exchange Commission, which is available upon
request by writing to the General Partner, ConCap Equities, Inc. ("CEI"),
Investor Relations, 5520 LBJ Freeway, Suite 430, Dallas, Texas 75240.
NOTE 2 - RELATED PARTY TRANSACTIONS
- - -----------------------------------
The Partnership has paid property management fees equal to 5% of collected gross
rental revenues ("Rental Revenues") for property management services in each of
the six month periods ended June 30, 1994 and 1993. A portion of such property
management fees equal to 4% of Rental Revenues has been paid to the property
management company performing day-to-day property management services and the
portion equal to 1% of Rental Revenues has been paid to Partnership Services,
Inc. ("PSI") for advisory services related to day-to-day property operations.
During the six months ended June 30, 1993, day-to-day property management
services were provided to the Partnership's property by an unaffiliated
management company. In July 1993, Coventry Properties, Inc. ("Coventry"), an
affiliate of the General Partner, assumed day-to-day property management
responsibilities for the Partnership's property under the same management fee
arrangement as the unaffiliated management company. Fees paid to PSI and
Coventry have been reflected in the table below as compensation to related
parties:
FOR THE SIX MONTHS
ENDED JUNE 30,
-----------------------------
COMPENSATION 1994 1993
- - ------------ ------------ ------------
(in thousands)
Charged to property operations expense:
Property management fees............ $ 32 $ 6
=========== ===========
The Partnership Agreement provides for reimbursement to the general partner and
its affiliates for costs incurred in connection with administration of
Partnership activities and for reimbursement to Coventry for expenses related to
property operations (primarily salaries and related costs for on-site property
personnel). The General Partner and its affiliates, including Coventry,
received reimbursements included in the following table:
FOR THE SIX MONTHS
ENDED JUNE 30,
-----------------------------
REIMBURSEMENT 1994 1993
- - ------------- ------------ ------------
(in thousands)
Charged to property operations expense:
Reimbursement of direct property expense...... $ 62 $ -
Charged to administrative expenses:
Reimbursement of administrative expenses (including
payroll reimbursements)............................. 124 165
----------- -----------
$ 186 $ 165
=========== ===========
-6-
In addition to the compensation and reimbursements described above, interest
payments are received from and loan advances are made to Consolidated Capital
Equity Partners ("CCEP") pursuant to the New Master Loan Agreement, which is
described more fully in the 1993 Annual Report. See Note 3.
NOTE 3 - NET INVESTMENT IN MASTER LOAN
- - --------------------------------------
Interest due to the Partnership according to the terms of the New Master Loan
Agreement but not recognized in the income statements totaled approximately $6.3
million and $12.5 million for the three and six months ended June 30, 1994,
respectively, and $5.2 million and $9.6 million for the three and six months
ended June 30, 1993, respectively. At June 30, 1994, cumulative unrecognized
interest totaling approximately $98.7 million was not included in the balance of
the investment in Master Loan.
In February 1994, the Partnership advanced $40,000 to CCEP as an advance on the
Master Loan. CCEP then advanced $40,000 to New Carlton House Partners as an
advance on the note receivable secured by the Carlton House Apartment and Office
Building ("Carlton House") to pay the remaining balance of 1993 property taxes.
NOTE 4 - COMMITMENT
- - -------------------
The Partnership is required by the Partnership Agreement to maintain working
capital reserves for contingencies of not less than 5% of Net Invested Capital,
as defined in the Partnership Agreement. Reserves, including cash and cash
equivalents and Treasury Notes (at market), totaling approximately $10.5 million
at June 30, 1994, were greater than the reserve requirement of $8 million.
NOTE 5 - DISTRIBUTIONS
- - ----------------------
During the six months ended June 30, 1994, the General Partner distributed
approximately $2.3 million or $11.75 per Unit to Limited Partners and paid a
matching general partner distribution of approximately $24,000, all of which
represented distributable cash flow from operations.
NOTE 6 - OTHER INCOME
- - ---------------------
As described in the 1993 Annual Report, the Partnership (and simultaneously 15
affiliated partnerships) entered claims in Southmark Corporation's Chapter 11
bankruptcy proceeding in 1991. These claims related to Southmark Corporation's
activities while it exercised control (directly, or indirectly through its
affiliates) over the Partnership. The Bankruptcy Court set the Partnership's
and the affiliated partnerships' allowed claim at $11 million, in aggregate. In
March 1994, the Partnership received cash, 909 shares of Southmark Corporation
Redeemable Series A Preferred Stock and 6,651 shares of Southmark Corporation
New Common Stock, with a total market value on the date of receipt of $56,000,
representing the Partnership's share of the recovery based on its pro rata
portion of claims filed.
-7-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- - ------ ---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
RESULTS OF OPERATIONS
- - ---------------------
Property Operations:
For the three and six months ended June 30, 1994, rental revenues increased
$52,000 or 19% and $74,000 or 13%, respectively, over 1993 due to increased
occupancy and rental rates at the Loft Apartments.
Property operation expenses decreased $57,000 or 29% and $65,000 or 19%,
respectively, over the three and six month periods ended June 30, 1994, compared
with 1993, partially as a result of decreased personnel costs. Additionally,
higher average occupancies resulted in reduced leasing and maintenance costs.
Real estate taxes increased approximately $8,000 as a result of a tax refund
received in the first quarter of 1993.
Administrative Expenses:
Administrative expenses decreased $63,000 or 34% and $170,000 or 4% for the
three and six month period ended June 30, 1994, over 1993 primarily because of a
decrease in data processing, insurance and administrative overhead expenses.
Income on Investment in Master Loan:
As described below under "Status of the Master Loan," income on the investment
in Master Loan is based on operations of CCEP's properties which secure the
Master Loan. The following table summarizes the sources of income on the
investment in Master Loan with respect to CCEP's operations during the six
months ended June 30, 1994, and 1992, respectively:
FOR THE SIX MONTHS
ENDED JUNE 30,
-----------------------------
1994 1993
------------ -------------
Funds provided by property operations......................... $ 8,997 $ 8,896
Funds used for property operations (includes administrative
expenses)................................................... (6,983) (6,000)
Debt service payments on underlying notes payable............. (532) (624)
----------- ------------
Net funds from property operations............................ 1,482 2,272
Collection of note receivable................................. - 150
----------- ------------
Total funds from operations................................... 1,482 2,422
Advance on Carlton House note receivable...................... (589) -
Net investing activity........................................ 16 11
----------- ------------
Net funds provided............................................ $ 909 $ 2,433
=========== ============
Income from the investment in Master Loan..................... $ 909 $ 2,433
=========== ============
Income from the investment in Master Loan during the six months ended June 30,
1994, decreased $1.5 million or 63% from 1993. Funds used for property
operations increased $983,000 or 16% in 1994 because of increases in
replacements and refurbishments and an increase in service and utility expenses.
Debt service payments to third party lien holders decreased $92,000 as a result
of the maturity and payoff of a note payable and the modification of a note
payable to eliminate mortgage interest participation during the third quarter of
1993. In March 1994, CCEP advanced $589,000 to New Carlton House Partners, as
an advance on the Carlton House Note, to pay Carlton House's 1994 property taxes
in an effort to protect CCEP's interest in the property. As discussed in the
1993 Annual Report, all cash flows generated by Carlton House are being
reinvested in the property.
-8-
LIQUIDITY AND CAPITAL RESOURCES
- - -------------------------------
Six Months Ended June 30, 1994
- - ------------------------------
The Partnership's net cash inflows totaling approximately $6.7 million for the
six months ended June 30, 1994, consisted of proceeds from the sale of United
States Treasury Notes of approximately $4.7 million and net cash provided by
operations of approximately $2 million. The primary uses of cash for the same
six month period, totaling approximately $4.7 million, were distributions paid
to Limited Partners of $2.3 million, purchase of Treasury notes of approximately
$2.3 million, payment of Master Loan advances of $40,000 and additions to real
estate of $28,000.
The Partnership is required by the Partnership Agreement to maintain working
capital reserves for contingencies of not less than 5% of Net Invested Capital,
as defined in the Partnership Agreement. Reserves, including cash and cash
equivalents and United States Treasury Notes (at market), totaling approximately
$10.5 million, were greater than the reserve requirement of approximately $8
million at June 30, 1994.
Status of the Master Loan
- - -------------------------
In February 1994, the Partnership advanced $40,000 to CCEP as an advance on the
Master Loan. CCEP then advanced $40,000 to New Carlton House Partners as an
advance on the note receivable secured by the Carlton House Apartment and Office
Building ("Carlton House") to pay the remaining balance of Carlton House's 1993
property taxes.
CCEP Property Operations
- - ------------------------
For the three and six months ended June 30, 1994, CCEP's net loss totaled
approximately $6.6 million and $13.4 million on total revenues of $5.6 million
and $11.2 million primarily because CCEP's statements of operations include
interest expense of approximately $6.7 million and $13.4 million, attributable
to the Master Loan, of which approximately $6.3 million and $12.5 million
represents interest accrued in excess of required payments. CCEP recognizes
interest expense on the Master Loan obligation according to the note terms,
although payments to the Partnership are required only to the extent of excess
cash flow, as defined in the New Master Loan Agreement. CCEP will continue to
generate operating losses as a result of such interest accruals and noncash
charges for depreciation.
Distributions
- - -------------
During the six months ended June 30, 1994, the General Partner distributed
approximately $2.3 million or $11.75 per Unit to Limited Partners and paid a
matching general partner distribution of approximately $24,000, all of which
represented distributable cash flow from operations.
Other Income
- - ------------
As described in the 1993 Annual Report, the Partnership (and simultaneously 15
affiliated partnerships) entered claims in Southmark Corporation's Chapter 11
bankruptcy proceeding in 1991. These claims related to Southmark Corporation's
activities while it exercised control (directly, or indirectly through its
affiliates) over the Partnership. The U.S. Bankruptcy Court set the
Partnership's and the Affiliated Partnership's allowed claim at $11 million, in
aggregate. In March 1994, The Partnership received cash, 909 shares of Southmark
Corporation Redeemable Series A Preferred Stock and 6,651 shares of Southmark
Corporation New Common Stock, with a total market value on the date of receipt
of $56,000, representing the Partnership's share of the recovery based on its
pro rata portion of claims filed.
-9-
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- - ------ -----------------
Neither the Partnership, nor CCEP, are parties to, nor are any of the
Partnership's or CCEP's properties the subject of, any material pending legal
proceedings as of June 30, 1994.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- - ------ --------------------------------
(a) Exhibits.
S-K REFERENCE SEQUENTIAL
NUMBER DESCRIPTION PAGE NUMBER
------------- ----------- -----------
28.1 Consolidated Capital Equity Partners, L.P., 12 - 19
unaudited Financial Statements for the six
months ended June 30, 1994 and 1993.
(b) Reports on Form 8-K:
None.
-10-
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
SIGNATURE PAGE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
By: CONCAP EQUITIES, INC.
Its General Partner,
August 19, 1994 By: /s/ David C. Meek
- - -------------------- ----------------------------------------
Date David C. Meek
President
August 19, 1994 By: /s/ David K. Ronck
- - -------------------- ----------------------------------------
Date David K. Ronck
Vice President and Secretary
August 19, 1994 By: /s/ Patricia L. Campbell
- - --------------- ----------------------------------------
Date Patricia L. Campbell
Vice President and Treasurer (chief
accounting officer)
-11-
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
UNAUDITED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED
JUNE 30, 1994 AND 1993
-12-
CONSOLIDATED CAPITAL EQUITY PARTNERS L.P.
BALANCE SHEETS
(unaudited)
(in thousands)
JUNE 30, DECEMBER 31,
ASSETS 1994 1993
- - ------ ------------ ------------
Real estate, net of accumulated depreciation.............. $ 43,285 $ 45,140
Real estate assets of property in-substance
foreclosed, net of accumulated depreciation.............. 19,622 19,808
----------- -----------
62,907 64,948
Cash and cash equivalents................................. 2,779 2,429
Investments in limited partnerships....................... 2,508 2,508
Other assets.............................................. 1,252 1,083
----------- -----------
$ 69,446 $ 70,968
=========== ===========
LIABILITIES AND PARTNERS' DEFICIT
---------------------------------
Master Loan and interest payable.......................... $ 226,326 $ 213,798
Notes and interest payable................................ 5,018 5,338
Due to affiliates......................................... 34 620
Other liabilities......................................... 2,128 1,897
----------- -----------
233,506 221,653
----------- -----------
Partners' deficit:
Limited Partners......................................... (162,420) (149,178)
General Partner.......................................... (1,640) (1,507)
----------- -----------
(164,060) (150,685)
----------- -----------
$ 69,446 $ 70,968
=========== ===========
The financial information included herein has been prepared by management
without audit by independent public accountants.
The accompanying notes are an integral part of the financial statements.
-13-
CONSOLIDATED CAPITAL EQUITY PARTNERS L.P.
STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except unit data)
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
----------------------- ------------------------
1994 1993 1994 1993
---------- ---------- ---------- ----------
Revenues:
Rental income.................. $ 5,606 $ 4,429 $ 11,198 $ 8,881
Interest....................... 9 7 16 161
--------- --------- --------- ---------
Total revenues............... 5,615 4,436 11,214 9,042
--------- --------- --------- ---------
Costs and expenses:
Interest (a)................... 6,875 6,222 13,684 12,360
Property operations (b)........ 3,686 2,811 7,537 5,389
Depreciation................... 1,504 1,337 2,979 2,674
Administrative (b)............. 147 209 389 408
--------- --------- --------- ---------
Total costs and expenses..... 12,212 10,579 24,589 20,831
--------- --------- --------- ---------
Net loss........................ $ (6,597) $ (6,143) $ (13,375) $ (11,789)
========= ========= ========= =========
(a) Interest expense includes $6.7 million and $6 million to related parties
for the three months ended June 30, 1994 and 1993, respectively, and $13.4
million and $12 million for the six months ended June 30, 1994 and 1993,
respectively. See supplemental information with respect to related party
transactions in Note 2 of the financial statements.
(b) Costs and expenses include $550,000 and $174,000 to related parties for the
three months ended June 30, 1994 and 1993, respectively, and $1.1 million
and $348,000 for the six months ended June 30, 1994 and 1993, respectively.
See supplemental information with respect to related party transactions in
Note 2 of the financial statements.
The financial information included herein has been prepared by management
without audit by independent public accountants.
The accompanying notes are an integral part of the financial statements.
-14-
CONSOLIDATED CAPITAL EQUITY PARTNERS L.P.
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
(unaudited)
For the Six Months Ended June 30, 1994 and 1993
(in thousands)
TOTAL
GENERAL LIMITED PARTNERS'
PARTNER PARTNERS EQUITY (DEFICIT)
----------- ----------- ---------------
Balance at December 31, 1992..... $ (1,225) $ (121,258) $ (122,483)
Net loss......................... (118) (11,671) (11,789)
---------- ---------- ----------
Balance at June 30, 1993......... $ (1,343) $ (132,929) $ (134,272)
========== ========== ==========
Balance at December 31, 1993..... $ (1,507) $ (149,178) $ (150,685)
Net loss......................... (133) (13,242) (13,375)
---------- ---------- ----------
Balance at June 30, 1994......... $ (1,640) $ (162,420) $ (164,060)
========== ========== ==========
The financial information included herein has been prepared by management
without audit by independent public accountants.
The accompanying notes are an integral part of the financial statements.
-15-
CONSOLIDATED CAPITAL EQUITY PARTNERS L.P.
STATEMENTS OF CASH FLOWS
(unaudited)
Increase in Cash and Cash Equivalents
(in thousands)
FOR THE SIX MONTHS
ENDED JUNE 30,
----------------------------
1994 1993
----------- -----------
Cash flows from operating activities:
Cash received from tenants........................... $ 11,292 $ 8,896
Cash paid to suppliers (a)........................... (7,140) (5,298)
Interest received.................................... 16 161
Interest paid (b).................................... (1,722) (3,395)
Property taxes paid.................................. (838) (320)
---------- ----------
Net cash provided by operating activities............. 1,608 44
---------- ----------
Cash flows from investing activities:
Additions to real estate............................. (938) (220)
---------- ----------
Cash flows from financing activities:
Advances from affiliate on Master Loan............... - 340
Principal payments on notes payable.................. (320) (308)
---------- ----------
Net cash provided by (used in) financing activities... (320) 32
---------- ----------
Net increase (decrease) in cash and cash equivalents.. 350 (144)
Cash and cash equivalents, at beginning of period..... 2,429 998
---------- ----------
Cash and cash equivalents, at end of period........... $ 2,779 $ 854
========== ==========
(a) Payments to related parties totaling $1.1 million and $320,000 for the
six months ended June 30, 1994 and 1993, respectively, are included in cash
paid to suppliers.
(b) Payments to related parties totaling $1.5 million and $3.1 million for
the six months ended June 30, 1994 and 1993, are included in interest paid.
See supplemental information with respect to related party
transactions in Notes 2 and 3 of the financial statements.
The financial information included herein has been prepared by management
without audit by independent public accountants.
The accompanying notes are an integral part of the financial statements.
-16-
CONSOLIDATED CAPITAL EQUITY PARTNERS L.P.
Notes to Financial Statements
June 30, 1994
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
- - ------------------------------
The financial statements reflect all adjustments necessary for a fair
presentation of the financial position of Consolidated Capital Equity Partners,
L.P. ("CCEP") and the results of its operations. All adjustments were of a
normal recurring nature. However, the results of operations for the six months
ended June 30, 1994, are not necessarily indicative of the results to be
expected for the year ending December 31, 1994.
The financial statements should be read in conjunction with the financial
statements contained Consolidated Capital Institutional Properties' ("CCIP")
Annual Report on Form 10-K for the year ended December 31, 1993 (the "1993
Annual Report"), and the notes thereto, as filed with the Securities and
Exchange Commission, which is available upon request by writing to CCIP's
general partner, ConCap Equities, Inc. ("CEI"), Investor Relations, 5520 LBJ
Freeway, Suite 430, Dallas, Texas 75240.
NOTE 2 - RELATED PARTY TRANSACTIONS
- - -----------------------------------
CCEP has paid property management fees equal to 5% of collected gross rental
revenues ("Rental Revenues") for property management services in each of the six
month periods ended June 30, 1994 and 1993. A portion of such property
management fees equal to 4% of Rental Revenues has been paid to the property
management companies performing day-to-day property management services and the
portion equal to 1% of Rental Revenues has been paid to Partnership Services,
Inc. ("PSI") for advisory services related to day-to-day property operations.
During the six months ended June 30, 1993, day-to-day property management
services were provided to CCEP's properties by unaffiliated management
companies. In July 1993, Coventry Properties, Inc. ("Coventry"), an affiliate
of CCEP's general partner, ConCap Holdings, Inc. ("CHI"), assumed day-to-day
property management responsibilities for two of CCEP's properties under the same
management fee arrangement as the unaffiliated management companies. Coventry
assumed day-to-day property management responsibilities for two additional CCEP
properties in January 1994. The management fee arrangements with Coventry and
the unaffiliated management companies also provide for the payment of leasing
commissions to the management companies as compensation for their services in
connection with obtaining new or renewed leases with tenants of the commercial
office buildings. Fees paid to PSI and Coventry have been reflected in the
table below as compensation to related parties.
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 properties. Advisory fees paid pursuant to this agreement are reflected
in the following table:
FOR THE SIX MONTHS
ENDED JUNE 30,
--------------------
COMPENSATION 1994 1993
- - ------------ -------- --------
(in thousands)
Charged to other assets:
Lease commissions........................ $ 60 $ -
Charged to property operations expenses:
Property management fees................. 329 88
Charged to administrative expenses:
Investment advisory fee.................. 129 129
------- -------
$ 518 $ 217
======= =======
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The New Partnership Agreement, as defined in the 1993 Annual Report, provides
for reimbursement to the general partner and its affiliates for costs incurred
in connection with administration of CCEP's activities and for reimbursement to
Coventry for expenses related to property operations (primarily salaries and
related costs for on-site property personnel). CHI and its affiliates, including
Coventry, received reimbursements included in the following table:
FOR THE SIX MONTHS
ENDED JUNE 30,
--------------------------
REIMBURSEMENT 1994 1993
- - ------------- ---------- ----------
(in thousands)
Charged to property operations:
Reimbursement of direct property expense............. $ 469 $ -
Charged to administrative expenses:
Reimbursement of administrative expenses (including
payroll reimbursements)............................. 142 131
--------- ---------
$ 611 $ 131
========= =========
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 $1.5 million and $3.1 million in the six
months ended June 30, 1994 and 1993, respectively. CCEP received advances under
the New Master Loan Agreement totaling $40,000 and $340,000 in the six months
ended June 30, 1994 and 1993, respectively.
NOTE 3 - MASTER LOAN AND ACCRUED INTEREST PAYABLE
- - -------------------------------------------------
In February 1994, CCIP advanced $40,000 to CCEP as an advance on the Master
Loan. CCEP then advanced $40,000 to New Carlton House Partners as an advance on
the note receivable secured by the Carlton House Apartment and Office Building
("Carlton House") to pay Carlton House's 1993 property taxes.
NOTE 4 - NOTE RECEIVABLE DEEMED IN-SUBSTANCE FORECLOSED
- - -------------------------------------------------------
As more fully described in the 1993 Annual Report, the Carlton House Note is
deemed in-substance foreclosed. Summarized below are the assets, liabilities and
partner's equity of New Carlton House Partners as of June 30, 1994 and December
31, 1993, and the results of its operations for the six month period ended June
30, 1994, prepared on the same basis as CCEP's financial statements. Results of
operations for the six month period ended June 30, 1993, have not been
presented below as Carlton House was not deemed in-substance foreclosed until
September 30, 1993. Any intercompany balances between CCEP and Carlton House
have been eliminated in CCEP's consolidated financial statements and the
summarized financial statements set forth below:
JUNE 30, DECEMBER 31,
ASSETS 1994 1993
------ ---------- -----------
(in thousands)
Real estate:
Land................................................ $ 3,805 $ 3,805
Buildings and improvements.......................... 16,453 16,205
--------- ---------
20,258 20,010
Less: Accumulated depreciation...................... (636) (202)
--------- ---------
19,622 19,808
Cash and cash equivalents............................ 1,319 997
Prepaid expenses and other assets.................... 117 149
--------- ---------
$ 21,058 $ 20,954
========= =========
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JUNE 30, DECEMBER 31,
LIABILITIES AND PARTNERS' EQUITY 1994 1993
-------------------------------- --------------- -------------
(in thousands)
Note and interest payable.................. $ 30 $ 58
Other liabilities.......................... 168 474
-------------- ------------
Total liabilities.......................... 198 532
-------------- ------------
Partners' equity........................... 20,860 20,422
-------------- ------------
Total liabilities and partners' equity.. $ 21,058 $ 20,954
============== ============
FOR THE SIX MONTHS
ENDED JUNE 30, 1994
-------------------
(in thousands)
Rental revenue............................. $ 2,253
--------------
Costs and expenses:
Property operations....................... 2,013
Depreciation.............................. 434
Interest.................................. 2
Administrative............................ 22
--------------
Total costs and expenses................... 2,471
--------------
Net loss................................... $ (218)
==============
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