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. 4/26/93.)
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 from.........to.........
Commission file number 0-11002
CONSOLIDATED CAPITAL PROPERTIES IV
(Exact name of registrant issuer as specified in its charter)
California 94-2768742
(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)
Issuer'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 PROPERTIES IV
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except for unit data)
June 30, December 31,
1995 1994
Assets
Cash and cash equivalents $ 7,279 $ 4,674
Securities available for sale 5,668 4,343
Prepaid expenses and other assets 4,648 4,108
Note and interest receivable 1,171 1,189
Real estate, net of accumulated
depreciation and allowance
for possible losses 39,824 42,498
$ 58,590 $ 56,812
Liabilities and Partners' Deficit
Accounts payable and accrued expenses $ 2,880 $ 2,502
Notes and interest payable 72,271 70,825
75,151 73,327
Partners' Deficit
General partners (5,868) (5,866)
Limited partners (342,783 and 342,825
units outstanding in 1995 and 1994,
respectively) (10,693) (10,649)
(16,561) (16,515)
$ 58,590 $ 56,812
See Accompanying Notes to Consolidated Financial Statements
2
b) CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED 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 $6,688 $ 7,066 $13,072 $14,094
Interest and dividend income 245 98 363 162
Total revenues 6,933 7,164 13,435 14,256
Expenses:
Property operations 3,271 4,107 6,321 8,386
Depreciation and amortization 1,570 1,944 3,287 3,867
Interest 1,658 2,101 3,293 4,198
Administrative 411 220 830 452
Total expenses 6,910 8,372 13,731 16,903
Income (loss) from operations 23 (1,208) (296) (2,647)
Other income (Note E) -- -- -- 195
Income (loss) before
extraordinary item 23 (1,208) (296) (2,452)
Extraordinary item-gain on
refinancing (Note F) -- -- 250 --
Net income (loss) $ 23 $(1,208) $ (46) $(2,452)
Net income (loss) allocated
to general partners (4%) $ 1 $ (48) $ (2) $ (98)
Net income (loss) allocated
to limited partners (96%) 22 (1,160) (44) (2,354)
Net income (loss) $ 23 $(1,208) $ (46) $(2,452)
Net income (loss) per weighted
average limited partnership unit:
Income (loss) before extraordinary
item $ .06 $ (3.38) $ (.83) $(7.42)
Other income -- -- -- .55
Extraordinary item -- -- .70 --
Net income(loss) per weighted
average limited partnership unit $ .06 $ (3.38) $ (.13) $(6.87)
See Accompanying Notes to Consolidated Financial Statements
3
c) CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
For the Six Months Ended June 30, 1995 and 1994
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 343,106 $ 1 $171,553 $171,554
Partners' deficit at December 31, 1993 342,839 $(6,335) $(21,897) $(28,232)
Abandonment of limited partnership
units (Note G) (14) -- -- --
Net loss for the six months ended
June 30, 1994 -- (98) (2,354) (2,452)
Partners' deficit at June 30, 1994 342,825 $(6,433) $(24,251) $(30,684)
Partners' deficit at December 31, 1994 342,783 $(5,866) $(10,649) $(16,515)
Net loss for the six months ended
June 30, 1995 -- (2) (44) (46)
Partners' deficit at June 30, 1995 342,783 $ (5,868) $(10,693) $(16,561)
See Accompanying Notes to Consolidated Financial Statements
4
d) CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
1995 1994
Cash flows from operating activities:
Net loss $ (46) $(2,452)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization of
discounts, loan costs and lease
commissions 3,438 4,039
Gain on refinancing (250) --
Change in accounts:
Prepaid expenses and other assets (534) (315)
Accounts payable and accrued expenses 368 (777)
Note interest payable 123 619
Net cash provided by
operating activities
3,099 1,114
Cash flows from investing activities:
Property improvements and replacements (606) (832)
Purchase of securities available for sale (5,177) --
Proceeds from sale of securities available
for sale 3,852 197
Deposits to restricted escrows (436) --
Receipts from restricted escrows 600 --
Principal receipts on notes receivable 18 --
Net cash used in
investing activities (1,749) (635)
See Accompanying Notes to Consolidated Financial Statements
5
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
Six Months Ended
June 30,
1995 1994
Cash flows from financing activities:
Payments on notes payable $ (354) $ (387)
Repayment of notes payable (5,573) --
Proceeds from long-term borrowings 7,500 --
Loan costs (318) --
Net cash provided by (used in)
financing activities 1,255 (387)
Net increase in cash and cash
equivalents 2,605 92
Cash and cash equivalents at beginning of period 4,674 4,390
Cash and cash equivalents at end of period $ 7,279 $ 4,482
Supplemental disclosure of cash
flow information:
Cash paid for interest $ 3,073 $ 3,407
See Accompanying Notes to Consolidated Financial Statements
6
e) CONSOLIDATED CAPITAL PROPERTIES IV
NOTES TO CONSOLIDATED 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 annual report on Form 10-K for the fiscal year ended
December 31, 1994, for Consolidated Capital Properties IV (the
"Partnership").
Consolidation
The Partnership's consolidated financial statements include the
Partnership's equity interest in a joint-venture partnership which owns
South Port Apartments. No minority interest has been reflected for the
joint venture partnership because the minority interests are limited to
the extent of their equity capital, and losses in excess of the minority
interest equity capital are charged against the Partnership's interest.
The Partnership's financial statements include the accounts of
certain wholly-owned limited partnerships: ConCap Citadel Associates,
Ltd., Apartment Associates, Ltd., ConCap River's Edge Associates, Ltd.,
ConCap Stratford Associates, Ltd., Briar Bay Apartments Associates,
Ltd., CCP IV Associates, Ltd., Greenbriar Associates, Ltd., Nob Hill
Villa Associates, Ltd., and Overlook Associates, Ltd. The Partnership's
financial statements also include the Partnership's majority interest in
a joint-venture partnership and certain other single-asset limited
partnerships. All intercompany transactions have been eliminated.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents
include cash on hand, demand deposits and money market funds and
commercial paper with original maturities of three months or less.
7
Note A - Basis of Presentation - continued
Net Loss Per Weighted Average Limited Partnership Unit
Net loss per weighted average Limited Partnership Unit is computed by
dividing net loss allocated to the Limited Partners by the number of
Units outstanding. Per Unit information has been computed based on
weighted average Units outstanding of 342,783 and 342,825 for the six
months ended June 30, 1995 and 1994, respectively.
Presentation of Accounts
Certain reclassifications have been made to the 1994 information to
conform to the 1995 presentation.
Note B - Related Party Transactions
The Partnership has paid the property management fees noted below
based on collected gross rental revenues ("Rental Revenues") for
property management services in each of the three and six months ended
June 30, 1995 and 1994, respectively. For the three and six months ended
June 30, 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 a portion equal
to 1% of Rental Revenues were paid to Partnership Services, Inc. ("PSI")
or its predecessor for advisory services related to day-to-day property
operations. Prior to July 1993, day-to-day property management
services were provided to the Partnership properties by unaffiliated
management companies. In July 1993, Coventry Properties, Inc.
("Coventry"), an affiliate of the General Partner, assumed day-to-day
property management responsibilities for two of the Partnership's
properties under the same management fee arrangement as the unaffiliated
management companies. Coventry assumed day-to-day property management
responsibilities for four additional Partnership properties in January
1994. In late December 1994, an affiliate of Insignia Financial Group,
Inc., ("Insignia"), assumed day-to-day property management
responsibilities for all of the Partnership's properties except for Lake
Forest, Post Ridge and South Port Apartments. On February 15, 1995, an
affiliate of Insignia assumed day-to-day property management
responsibilities for Lake Forest and Post Ridge Apartments.
Fees paid to Insignia and affiliates for the six months ended June
30, 1995, and fees paid to PSI and Coventry for the six months ended
June 30, 1994, have
8
Note B - Related Party Transactions - continued
been reflected in the following table as compensation to related parties
in the applicable periods:
For the Six Months Ended
June 30,
1995 1994
(in thousands)
Property management fees $607 $283
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. The General Partner and
its affiliates, which includes Coventry for the three and six months
ended June 30, 1994, received reimbursements as reflected in the
following table:
For the Six Months Ended
June 30,
1995 1994
(in thousands)
Reimbursement for services of affiliates $434 $280
Note C - Chapter 11 Proceeding
Greenbriar Associates
In December 1990, the Partnership ceased debt service on the note and
interest payable secured by Greenbriar Apartments because the property's
operations did not support scheduled debt service payments. As a result
of the Partnership's non-performance under the terms of the mortgage
note, the lien-holder moved to foreclose on the property in October
1991, and in December 1991, Greenbriar Associates, a wholly-owned
limited partnership that holds title to the Greenbriar Apartments, filed
for Chapter 11 protection. Property management services for the
property were transferred to a management company employed by the lender
in December 1991. In March 1994, the General Partner, on behalf of
Greenbriar Associates, executed a deed-in-lieu of foreclosure, because
Greenbriar Associates was unable to obtain the debt concessions proposed
in its reorganization plan.
9
Note C - Chapter 11 Proceeding - (continued)
In July 1994, the deed was recorded and the property was transferred to
the lienholder resulting in a net gain of approximately $9.5 million on
the property disposition and extinguishment of debt.
Note D - Commitment and Contingencies
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. 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, and
securities available for sale totalling approximately $12.9 million at
June 30, 1995, exceeded the Partnership's reserve requirement of $8.6
million. Such cash reserves include $931,000 of cash and cash
equivalents restricted for use at the Partnership's HUD-financed
property.
Contingencies
Approximately $14.3 million of nonrecourse debt secured by two of the
Partnership's properties, Foothill Place Apartments and Chimney Hill
Apartments, was due to mature in 1994. In July 1994, the Partnership
exercised its option to extend the notes' maturities until September
1995 by paying a 1% loan extension fee of $143,000 to the lender as
provided for in the loan agreement. The Partnership intends to
refinance the debt prior to the maturities; however, there is no
assurance that the refinancings will be completed.
Approximately $2.5 million of nonrecourse mortgage debt secured by
the Metro Centre Office Building, located in Southern California,
matured July 1, 1995. The property has historically had difficulty
making its scheduled debt service payments. Since 1985, the property
has made quarterly cash flow payments pursuant to a modified and
restructured loan agreement. Given current economic conditions in
Southern California, property operations are not expected to improve
sufficiently to enable the Partnership to refinance the existing
indebtedness under current market terms. The Partnership is currently
negotiating with the lender to retire the existing indebtedness at a
reduced rate, however, the outcome of this uncertainty cannot be
predicted and the property could be lost to foreclosure if negotiations
are not successful.
10
Note D - Commitment and Contingencies - continued
Greenbriar Associates, Ltd. ("Greenbriar Associates"), a wholly-owned
limited partnership that holds fee title to the Greenbriar Apartments,
filed for protection under Chapter 11 of the United States Bankruptcy
Code ("Chapter 11") with the District of Arizona, Bankruptcy Court, in
December 1991. This Chapter 11 proceeding was dismissed in 1994.
Lake Forest Apartments secures a mortgage note, which is guaranteed
by the U.S. Department of Housing and Urban Development ("HUD"), and
accrued interest totalling approximately $4.3 million at June 30, 1995.
Post Ridge Apartments secures a mortgage note and accrued interest
totalling approximately $4.5 million at June 30, 1995, which was
guaranteed by HUD. Operating cash flow from the Post Ridge Apartments
has not supported its scheduled debt service payments. As a result, in
January 1991, the Partnership suspended scheduled debt service for Post
Ridge Apartments. Since 1991, the Partnership remitted excess cash
flow from the properties' operations to HUD as debt service. On March
28, 1995, this debt was sold to an unaffiliated third party, and since
the closing of the sale on May 8, 1995, this debt is no longer
regulated by HUD.
Note E - Other Income
In 1991, the Partnership (and simultaneously other affiliated
partnerships) entered claims in Southmark's Chapter 11 bankruptcy
proceeding. These claims related to Southmark's activities while it
exercised control (directly, or indirectly through its affiliates) over
the Partnership. The Bankruptcy Court set the Partnership's and the
other affiliated partnerships' allowed claim at $11 million, in the
aggregate. In March 1994, the Partnership received 3,143 shares of
Southmark Corporation Redeemable Series A Preferred Stock and 22,985
shares of Southmark Corporation New Common Stock with an aggregate
market value on the date of receipt of approximately $23,000 and
$172,000 in cash, representing the Partnership's share of the recovery,
based on its pro rata share of the claims filed.
Note F - Note Refinancing
In March of 1995, the General Partner refinanced two nonrecourse
mortgage notes totalling approximately $5.8 million which were secured
by the Nob Hill Villa Apartments. Under the terms of the refinancing
agreement, the new $7.5 million mortgage note bears interest at 9.2% and
matures in April 2005. As a result of the refinancing, the Partnership
realized a $250,000 discount on the second mortgage which resulted in an
extraordinary gain on refinancing. Through the refinancing, a capital
improvement reserve of $218,750 was established and $298,000 in loan
costs were incurred. These loan costs will be amortized over the life
of the loan.
11
Note G - Abandoned Limited Partnership Units
For the six months ended June 30, 1994, the number of Limited
Partnership Units decreased by 14 units due to limited partners
abandoning their units. In abandoning his or her Limited Partnership
Unit, a limited partner relinquishes all right, title and interest in
the Partnership as of the date of abandonment. The net loss per
weighted average Limited Partnership Unit in the accompanying Statements
of Operations is calculated based on weighted average Units outstanding
during the period.
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of seventeen
apartment complexes and one commercial property. The following table
sets forth the average occupancy of the properties for the six months
ended June 30, 1995 and 1994:
Average
Occupancy
1995 1994
The Apartments
Omaha, NE 95% 93%
Arbor East Apartments
Nashville, TN 98% 98%
Briar Bay Racquet Club Apartments
Miami, FL 92% 67%
Chimney Hills Apartments
Marietta, GA 96% 99%
Citadel Apartments
El Paso, Tx 95% 95%
Citadel Village Apartments
Colorado Springs, CO 97% 97%
Foothill Place Apartments
Salt Lake City, UT 97% 95%
Knollwood Apartments
Nashville, TN 98% 97%
*Lake Forest Apartments
Omaha, NE 98% 94%
Metro Centre Office Building
Fountain Valley, CA 57% 61%
Nob Hill Villa Apartments
Nashville, TN 98% 99%
Overlook Apartments
Memphis, TN 89% 96%
Point West Apartments
Charleston, SC 90% 91%
Post Ridge Apartments
Nashville, TN 97% 99%
13
Average
Occupancy
1995 1994
Rivers Edge Apartments
Auburn, WA 92% 90%
South Port Apartments
Tulsa, OK 79% 84%
Stratford Place Apartments
Austin, TX 93% 90%
Village East Apartments
Cimarron Hills, CO 99% 98%
* Property is regulated by the U.S. Department of Housing and Urban
Development.
The Briar Bay Racquet Club Apartments was devastated by Hurricane
Andrew, which resulted in the unusually low occupancy experienced for
the six months ended June 30, 1994. Through the restorations and
refurbishments done at the property, the occupancy has significantly
increased. The Overlook and South Port Apartment properties experienced
decreases in occupancy for the six months ended June 30, 1995, compared
to the six months ended June 30, 1994, due to increased competition in
their respective markets. The Metro Centre Office Building's decrease
in occupancy is due to the current poor economic conditions in the
Southern California area.
The Partnership realized a loss from operations of $296,000 for the
six months ended June 30, 1995, compared to a loss from operations of
$2,647,000 for the six months ended June 30, 1994. For the three months
ended June 30, 1995 and 1994, respectively, the Partnership realized
income from operations of $23,000 compared to a loss from operations of
$1,208,000. The decreased net loss is due primarily to the foreclosure
of the Greenbriar and Westwood Apartments and the sale of the Denbigh
Woods Apartments during the third quarter of 1994.
Rental income decreased for the six and three months ended June 30,
1995, as compared to the six and three months ended June 30, 1994, due
primarily to the sales and foreclosure mentioned above. The decreased
rental income was partially offset by increased occupancy at the Briar
Bay Racquet Club Apartments and rental increases at several of the
Partnership's apartment properties for the six months ended June 30,
1995. Interest and dividend income increased for the six months ended
June 30, 1995, compared to the six months ended June 30, 1994, due to
higher cash balances being available for investment in 1995. Also,
dividends of $61,000 were received on the Partnership's investment in
Southmark Preferred Stock in June 1995.
Property operations, depreciation and amortization and interest
expense decreased for the six and three months ended June 30, 1995, as
compared to the six and three months ended June 30, 1994, due primarily
to the disposition of Greenbriar, Westwood and Denbigh Woods Apartments
in the third quarter of 1994. The decrease in property operations was
also due to decreased repairs and
14
maintenance and utility expenses associated with the Partnership's
remaining properties. Administrative expenses increased for the six and
three months ended June 30, 1995, compared to the six and three months
ended June 30, 1994, due to increased legal, printing and postage costs
associated with the Partnership's required responses to various tender
offers (See Part II Item 1. Legal Proceedings for further discussion.)
The increase in administrative expenses was also affected by increased
expense reimbursements related to the combined efforts of the Dallas and
Greenville partnership administration staffs during the transition
period in the first and second quarters of 1995. The reimbursements for
the Dallas office amounted to approximately $306,000 for the six months
ended June 30, 1995.
The 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 expense to be reduced
significantly after the second quarter of 1995 once the transition
efforts are completed.
Other income realized in the six months ended June 30, 1994, is due
to the receipt of the Partnership's pro rata share of the claims filed
in Southmark's Chapter 11 bankruptcy proceeding (See Note E to the
Consolidated Financial Statements in Item 1).
The gain on refinancing realized for the six months ended June 30,
1995, is due to the refinancing of Nob Hill Villa Apartments. Through
this refinancing, a new $7.5 million mortgage note which bears interest
at 9.20% and matures in April 2005, was obtained. As a result of the
refinancing, the Partnership realized a $250,000 discount on the second
mortgage which resulted in an extraordinary gain on refinancing.
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.
As of June 30, 1995, the Partnership had cash and cash equivalents of
approximately $7.3 million as compared to approximately $4.4 million at
June 30, 1994. Net cash provided by operating activities increased due
to the absence of negative cash flows from the properties disposed of in
1994, as mentioned above, and an increase in accounts payable and
accrued expenses at the remaining properties. Net cash used in
investing activities increased primarily due to increased purchases of
securities available for sale partially offset by the increased receipts
from restricted escrows and proceeds from sales of securities. Net cash
provided by financing activities increased as a result of the debt
refinancing of Nob Hill Villa Apartments in March 1995.
15
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 approximately $71 million
matures at various times with balloon payments due at maturity, at which
time the properties will either be refinanced or 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. No cash distributions were made in 1994
or during the six months ended June 30, 1995.
On January 20, 1995, an affiliate of the General Partner, Insignia
CCP IV Acquisition, L.L.C., closed an offer to purchase Units (the
"Tender Offer") for a cash price of $60.00 per Unit for Limited Partners
of record as of December 15, 1994. Approximately 3,370 Limited Partners
holding 64,175 Units (18.72% of total Units) accepted the Tender Offer
and sold their Units to Insignia CCP IV Acquisition, L.L.C. effective
January 20, 1995, for an aggregate sales price of approximately $3.9
million.
Approximately $14.3 million of nonrecourse mortgage debt secured by
the Foothill Place Apartments and the Chimney Hill Apartments matured
in 1994. The Partnership exercised its option to extend the debt
maturities until September 1995 by paying a 1% loan extension fee of
$143,000 to the current lender as provided for in the loan agreement.
The Partnership is currently negotiating long-term refinancing of the
mortgage debt on the two properties. No assurance can be given that the
Partnership will be successful in its refinancing efforts. For the six
months ended June 30, 1995, the properties which secure the debt
generated aggregate net income of approximately $32,000 from aggregate
revenues of approximately $2.7 million.
Approximately $2.5 million of nonrecourse mortgage debt secured by
the Metro Centre Office Building, located in Southern California,
matured July 1, 1995. The property has historically had difficulty
making its scheduled debt service payments. Since 1985, the property
has made quarterly cash flow payments pursuant to a modified and
restructured loan agreement. Given current economic conditions in
Southern California, property operations are not expected to improve
sufficiently to enable the Partnership to refinance the existing
indebtedness under current market conditions. The Partnership is
currently negotiating with the lender to retire the existing
indebtedness at a reduced rate, however, the outcome of this uncertainty
cannot be predicted and the property could be lost to foreclosure if
negotiations are not successful. For the six months ended June 30,
1995, the Metro Centre Office Building generated a net loss of
approximately $27,000 from revenues of approximately $165,000.
16
Lake Forest Apartments secures a mortgage note, which is guaranteed
by the U.S. Department of Housing and Urban Development ("HUD"), and
accrued interest totalling approximately $4.3 million at June 30, 1995.
Post Ridge Apartments secures a mortgage note and accrued interest
totalling approximately $4.5 million at June 30, 1995, which was
guaranteed by HUD. Operating cash flow from the Post Ridge Apartments
has not supported its scheduled debt service payments. As a result, in
January 1991, the Partnership suspended scheduled debt service for Post
Ridge Apartments. Since 1991, the Partnership has remitted excess cash
flow from the properties' operations to HUD as debt service. On March
28, 1995, this debt was sold to an unaffiliated third party, and since
the closing of the sale on May 8, 1995, this debt is no longer regulated
by HUD.
Greenbriar Associates Chapter 11 Proceeding
In December 1990, the Partnership ceased debt service on the note and
interest payable of $12.7 million secured by Greenbriar Apartments
because the property's operations did not support scheduled debt service
payments. As a result of the Partnership's nonperformance under the
terms of the mortgage note, the lien-holder moved to foreclose on the
property in October 1991, and in December 1991, Greenbriar Associates, a
wholly-owned limited partnership that holds title to the Greenbriar
Apartments, filed for Chapter 11 protection. Property management
services for the property were transferred to a management company
employed by the lender in December 1991. During the pendency of its
Chapter 11 proceeding, Greenbriar Associates has generated net cash from
operations of $415,000 which is controlled, pursuant to Bankruptcy Court
supervision, by the lender's management company. In March 1994, the
General Partner, on behalf of Greenbriar Associates, executed a deed-in-
lieu of foreclosure, because Greenbriar Associates was unable to obtain
the debt concessions proposed in its reorganization plan. In July 1994,
the deed was recorded and the property was transferred to the lender.
17
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In November of 1994, C.E. and Berniece Patterson, each of whom is a
limited partner of the Partnership, filed an action in the United States
District Court for the Northern District of California seeking
declaratory and injunctive relief, but not monetary damages, alleging,
among other things, that a tender offer by LP 5 Acceptance Corporation
for limited partnership units of the Partnership violated the federal
securities laws and the partnership agreements and breached the general
partner's fiduciary duties. The complaint names ConCap Equities, Inc.,
the general partner of the Partnership and others as defendants. These
actions were filed by the Pattersons as individuals and are not class
actions. The tender offer was terminated in December 1994. In December
1994, the complaint in this action was amended to include Insignia, MAE
and MAE-ICC, Inc. and others as defendants in connection with a tender
offer commenced in December 1994, by Insignia CCP IV Acquisition, L.L.C.
for limited partnership units of the Partnership. On January 20, 1995,
the District Court denied Plaintiffs' motion for a preliminary
injunction to enjoin the tender offer. The tender offer closed on
January 20, 1995, and the offeror purchased the tendered units. C.E.
and Berniece Patterson had also initiated other causes of action against
two affiliated entities, which held limited partnership units in
Consolidated Capital Properties III and Consolidated Capital Properties
VI regarding other tender offers. On March 31, 1995, the parties to the
above referenced actions entered into a settlement agreement and a
standstill agreement for all actions pursuant to which (i) Plaintiffs
filed a notice of dismissal with respect to the first amended complaints
in the actions; (ii) Plaintiffs and defendants released each other from
all claims which were or could have been asserted in connection with the
first amended complaints in the actions; (iii) Plaintiffs and MacKenzie
Patterson, Inc. ("MacKenzie") will refrain from certain activities
relating to the acquisition of limited partnership units in any
partnership of which Insignia or any of its affiliates is a general
partner; (iv) Plaintiffs and their affiliates granted to a subsidiary of
Insignia a right of first refusal in connection with the sale of limited
partnership interests in the Partnership by plaintiffs; and (v)
Plaintiffs and their affiliates will assign to a subsidiary of Insignia
irrevocable proxies to vote any limited partnership interests in the
Consolidated Capital Properties VI acquired by MacKenzie as a result of
the tender offer by MacKenzie Patterson, Inc. and affiliates to acquire
limited partnership interests in Consolidated Capital Properties VI or
thereafter.
Except for the above proceedings, the Partnership is not a party to,
nor are any of the Partnership's properties the subject of, any material
pending legal proceedings, other than ordinary litigation routine to the
Partnership's business.
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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:
A Form 8-K dated May 3, 1995, was filed reporting a change
in accountants of the Registrant.
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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 PROPERTIES IV
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 11, 1995
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