FORM 10-Q--QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(As last amended in Rel. No. 312905, eff. 04/26/93.)
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, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period.........to.........
Commission file number 0-10831
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.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (803) 239-1000
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 (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) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, December 31,
1995 1994
Assets
Cash $ 3,863 $ 1,554
Securities available for sale 5,767 8,329
Prepaid expenses and other assets 186 276
Due from affiliates -- 935
Net investment in master loan 93,322 91,786
Investment properties:
Land 1,053 1,053
Building and related personal property 5,218 5,202
6,271 6,255
Less accumulated depreciation (1,715) (1,505)
4,556 4,750
$107,694 $107,630
Liabilities and Partners' Capital (Deficit)
Accounts payable and accrued expenses $ 128 $ 55
Tenant security deposits 33 47
Distributions payable 324 324
485 426
Partners' Capital (Deficit)
General partner (294) (294)
Limited partners (199,052 and 199,045 units
outstanding at June 30, 1995, and
December 31, 1994, respectively) 107,503 107,498
107,209 107,204
$107,694 $107,630
See Accompanying Notes to Financial Statements
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b) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Revenues:
Rental income $ 434 $ 327 $ 757 $ 641
Interest income on
investment in master
loan to affiliate -- 435 1,536 909
Interest and dividend
income on investments 99 168 218 335
Total revenues 533 930 2,511 1,885
Expenses:
Property operations 154 140 330 284
Depreciation 105 103 210 207
Administrative 243 121 439 259
Total expenses 502 364 979 750
Other income -- -- -- 56
Casualty gain -- -- 9 --
Net income $ 31 $ 566 $ 1,541 $ 1,191
Net income allocated
to general partner (1%) $ -- $ 6 $ 15 $ 11
Net income allocated
to limited partners (99%) 31 560 1,526 1,180
$ 31 $ 566 $ 1,541 $ 1,191
Net income per limited
partnership unit $ .16 $ 2.81 $ 7.67 $ 5.93
See Accompanying Notes to Financial Statements
2
c) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 200,342 $ 1 $200,342 $200,343
Partners' capital (deficit) at
December 31, 1993 199,046 $ (287) $108,220 $107,933
Distributions -- (24) (2,339) (2,363)
Net income for the six months
ended June 30, 1994 -- 11 1,180 1,191
Partners' capital (deficit) at
June 30, 1994 199,046 $ (300) $107,061 $106,761
Partners' capital (deficit) at
December 31, 1994 199,045 $ (294) $107,498 $107,204
Distributions -- (15) (1,521) (1,536)
Net income for the six months
ended June 30, 1995 7 15 1,526 1,541
Partners' capital (deficit) at
June 30, 1995 199,052 $ (294) $107,503 $107,209
See Accompanying Notes to Financial Statements
3
d) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
1995 1994
Cash flows from operating activities:
Net income $ 1,541 $ 1,191
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 210 207
Casualty gain (9) --
Change in accounts:
Prepaid expenses and other assets 90 50
Interest receivable on master loan (1,536) 579
Due from affiliates 935 --
Accounts payable and accrued expenses 82 (63)
Tenant security deposits (14) (6)
Net cash provided by
operating activities 1,299 1,958
Cash flows from investing activities:
Property improvements and replacements (15) (28)
Purchase of securities available for sale (2,115) (2,320)
Proceeds from sale of securities available
for sale 4,676 4,720
Advances on master loan -- (40)
Net cash provided by
investing activities 2,546 2,332
Cash flows used in financing activities:
Distributions (1,536) (2,363)
Net increase in cash 2,309 1,927
Cash at beginning of period 1,554 222
Cash at end of period $ 3,863 $ 2,149
See Accompanying Notes to Financial Statements
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e) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
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 and with the instructions to Form 10-Q and Article
10 of Regulation S-X. 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 and six month periods ended
June 30, 1995, are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 1995. For further
information, refer to the financial statements and footnotes thereto
included in the Partnership's annual report on Form 10-K for the year
ended December 31, 1994.
Investment in Master Loan
The Master Loan and the New Master Loan agreements are considered
investments in acquisition, development, and construction ("ADC") loans,
primarily because the Partnership is entitled to receive, according to
the provisions of the Master Loan and New Master Loan agreements, in
excess of 50% of the residual profits from the sale or refinancing of
the properties securing the agreements. The investment in Master Loan
is accounted for by the cost method, whereby income from the investment
is recognized as interest income to the extent of payments received and
losses in the estimated net realizable value of the investment are
recognized in the period they are identified. Interest income
contractually due according to the terms of the Master Loan and New
Master Loan agreements in excess of payments received is deferred. As
of June 30, 1995, and December 31, 1994, such cumulative deferred
interest, which is not included in the balance of the net investment in
Master Loan, totaled $124.4 million and $110.8 million, respectively.
Certain reclassifications have been made to the 1994 information to
conform to the 1995 presentation.
Note B - Related Party Transactions
Consolidated Capital Institutional Properties ("Partnership") paid
property management fees based upon collected gross rental revenues for
property management services as noted below for the six month periods
ended June 30, 1995 and 1994. For the six months ended June 30, 1994, a
portion of such property management fees were paid to Coventry
Properties, Inc. ("Coventry"), an affiliate of the General Partner, for
day-to-day property management services and a portion was paid to
Partnership Services, Inc. ("PSI") for advisory services related to day-
to-day property operations. In late December 1994, an affiliate of
Insignia assumed day-to-day property management responsibilities for
all of the Partnership's properties. Fees paid to affiliates of
Insignia during the six months ended June 30, 1995, and fees paid to
Coventry and PSI for the six months ended June 30, 1994, are reflected
in the following table:
5
For the Six Months Ended
June 30,
1995 1994
(in thousands)
Property management fees $34 $32
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 six months ended June 30, 1994, received
reimbursements as reflected in the following table:
For the Six Months Ended
June 30,
1995 1994
Reimbursement for services of affiliates $212 $124
Note C - 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 $13.6 and $12.5 million for the six months ended
June 30, 1995 and 1994, respectively. At June 30, 1995, and December
31, 1994, such cumulative unrecognized interest totalling approximately
$124.4 million and $110.8 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 D - Other Income
In 1991, the Partnership (and simultaneously other affiliated
partnerships) entered claims in Southmark Corporation's Chapter 11
bankruptcy proceeding. 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'
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Note D - Other Income - continued
allowed claim at $11 million, in aggregate. In March 1994, the
Partnership received 909 shares of Southmark Corporation Redeemable
Series A Preferred Stock and 6,651 shares of Southmark Corporation New
Common Stock with an aggregate market value on the date of receipt of
$6,690 and $49,847 in cash representing the Partnership's share of the
recovery, based on its pro rata share of the claims filed.
Note E - Commitment
The Partnership is required by the Agreement to maintain working
capital reserves for contingencies of not less than 5% of Net Invested
Capital, as defined in the Agreement. In the event expenditures are made
from this reserve, operating revenue shall be allocated to such reserves
to the extent necessary to maintain the foregoing level. Reserves,
including cash and cash equivalents and securities available for sale,
totalling approximately $9.6 million, were greater than the reserve
requirement of approximately $8.0 million at June 30, 1995.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of one apartment
complex. The following table sets forth the average occupancy of this
property for the six months ended June 30, 1995 and 1994:
Average
Occupancy
Property 1995 1994
The Loft Apartments
Raleigh, North Carolina 91% 96%
The General Partner attributes the decrease in occupancy to increased
rental rates.
The Partnership's net income for the six months ended June 30, 1995,
was approximately $1,541,000 as compared to approximately $1,191,000 for
the six months ended June 30, 1994. The Partnership realized net income
of approximately $31,000 for the three months ended June 30, 1995, as
compared to net income of approximately $566,000 for the three months
ended June 30, 1994. The increase in net income for the six months
ended June 30, 1995, is due primarily to an increase in interest income
on the master loan due to increased cash flows at the affiliated
properties (income is recorded based on the cash flow of the properties
collateralized by the master loan). The decrease in net income for the
three months ended June 30, 1995, is primarily due to a decrease in
interest income on the master loan due to decreased cash flows at the
affiliated properties for the three months ended June 30, 1995, as
compared to the three months ended June 30, 1994. Rental income for the
three and six month periods has increased due to higher rental rates
which have more than offset the increase in vacancy loss. Also, the
increase in net income for the six months ended June 30, 1995, is
attributable to $9,000 in casualty income related to insurance proceeds
from damages occurred in the prior year. Offsetting these increases in
net income is a decrease in interest and dividend income on investments
due to lower investment balances for the three and six month periods
ended June 30, 1995, as compared to prior year. Also, property
operations for the three and six month periods ended June 30, 1995,
increased due to higher maintenance expenses. The increase in
maintenance expense is the result of increased interior and exterior
painting and other miscellaneous maintenance work being done at the
property. Administrative expense increased primarily due to increased
expense related to the combined efforts of the Dallas and Greenville
offices during the transition period for the six months ended June 30,
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 administrative expenses to be reduced
beginning in the third quarter of 1995 as the transition efforts are now
complete.
Other income realized in the six months ended June 30, 1994, is due
to the receipt of its pro rata share of the claims filed in Southmark's
Chapter 11 bankruptcy proceedings. (See Note D).
8
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 expense. 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 June 30, 1995, the Partnership reported cash of approximately
$3,863,000 versus approximately $2,149,000 for the corresponding period
of 1994. Net cash provided from operations decreased primarily due to
an increase in interest receivable on the master loan which was
partially offset by a decrease in due from affiliates. The decrease in
due from affiliates is the result of the master loan interest payment
received from Consolidated Capital Equity Partners, L.P. during the six
months ended June 30, 1995. Net cash provided by investing activities
remained consistent with the prior year amount. Net cash used in
financing activities decreased due to a decrease in distributions paid.
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. A distribution of approximately $1,485,000 or $4.46 per
Unit was made to the limited partners in March 1995. A matching
distribution of approximately $15,000 was made to the General Partner.
In June 1995, a distribution of approximately $36,000 was accrued to pay
the limited partners' income taxes due to the State of North Carolina
for income generated by the Partnership's investment property located in
North Carolina. Future cash distributions will depend on the levels of
cash generated from operations, master loan interest income, capital
expenditure requirements, property sales, and the availability of cash
reserves.
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
S-K Reference
Number Description
27 Financial Data Schedule is filed as
an exhibit to this report.
28.1 Consolidated Capital Equity Partners,
L.P., unaudited financial statements
for the six months ended June 30,
1995 and 1994.
(b) Reports on Form 8-K:
A Form 8-K dated May 3, 1995, was filed reporting a change
in the Registrant's Certifying Accountant.
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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.
CONSOLIDATED CAPITAL INSTITUTIONAL
PROPERTIES
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.
Controller and Principal
Accounting Officer
Date: August 8, 1995
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