UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2004
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 as Specified in Its Charter)
California 94-2768742
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Registrant's telephone number)
Check 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 proceeding
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
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
June 30, December 31,
2004 2003
(Unaudited) (Note)
Assets
Cash and cash equivalents $ 3,218 $ 1,537
Receivables and deposits 1,162 1,163
Restricted escrows 1,087 748
Other assets 2,022 1,504
Investment properties:
Land 12,790 12,996
Buildings and related personal property 111,724 109,374
124,514 122,370
Less accumulated depreciation (94,652) (96,547)
29,862 25,823
$ 37,351 $ 30,775
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 1,944 $ 731
Tenant security deposit liabilities 470 510
Accrued property taxes 902 1,247
Other liabilities 1,137 1,107
Distributions payable 715 715
Mortgage notes payable 69,066 67,900
74,234 72,210
Partners' Deficit
General partners (6,867) (7,044)
Limited partners (342,773 units issued and
outstanding) (30,016) (34,391)
(36,883) (41,435)
$ 37,351 $ 30,775
Note: The consolidated balance sheet at December 31, 2003, has been derived from
the audited financial statements at that date but does not include all the
information and footnotes required by accounting principles generally
accepted in the United States for complete financial statements.
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
(Restated) (Restated)
Revenues:
Rental income $ 4,802 $ 4,924 $ 9,654 $ 9,645
Other income 629 588 1,222 1,225
Casualty gains 355 -- 399 --
Total revenues 5,786 5,512 11,275 10,870
Expenses:
Operating 2,538 2,133 4,791 4,667
General and administrative 263 271 510 622
Depreciation 617 840 1,322 1,668
Interest 1,171 1,168 2,340 2,342
Property taxes 415 397 809 774
Total expenses 5,004 4,809 9,772 10,073
Income from continuing operations 782 703 1,503 797
Loss from discontinued operations (33) (37) (87) (21)
Gain on sale of discontinued operations -- -- 3,141 6,149
Net income $ 749 $ 666 $ 4,557 $ 6,925
Net income allocated to general partners (4%) $ 30 $ 27 $ 182 $ 277
Net income allocated to limited partners (96%) 719 639 4,375 6,648
$ 749 $ 666 $ 4,557 $ 6,925
Per limited partnership unit:
Income from continuing operations $ 2.19 $ 1.98 $ 4.20 $ 2.24
Loss from discontinued operations (.09) (.12) (.24) (.07)
Gain on sale of discontinued operations -- -- 8.80 17.22
Net income $ 2.10 $ 1.86 $ 12.76 $ 19.39
Distributions per limited partnership unit $ -- $ 10.50 $ -- $ 12.72
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited Total
Partnership General Limited Partners'
Units Partners Partners Deficit
Original capital contributions 343,106 $ 1 $171,553 $171,554
Partners' deficit at
December 31, 2003 342,773 $ (7,044) $(34,391) $(41,435)
Distributions to partners -- (5) -- (5)
Net income for the six months
ended June 30, 2004 -- 182 4,375 4,557
Partners' deficit at
June 30, 2004 342,773 $ (6,867) $(30,016) $(36,883)
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
2004 2003
Cash flows from operating activities:
Net income $ 4,557 $ 6,925
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,358 1,796
Amortization of loan costs 98 103
Casualty gains (399) --
Loss on early extinguishment of debt 48 13
Gain on sales of discontinued operations (3,141) (6,149)
Change in accounts:
Receivables and deposits 1 164
Other assets (515) (375)
Accounts payable 304 (307)
Tenant security deposit liabilities (40) (20)
Accrued property taxes (345) (281)
Other liabilities 30 387
Due from affiliates -- 149
Net cash provided by operating activities 1,956 2,405
Cash flows from investing activities:
Property improvements and replacements (5,141) (1,621)
Net (deposits to) withdrawals from restricted escrows (339) 310
Insurance proceeds from casualties 399 --
Net proceeds from sales of discontinued operations 3,794 8,137
Net cash (used in) provided by investing activities (1,287) 6,826
Cash flows from financing activities:
Proceeds from mortgage notes payable 3,810 --
Loan costs paid (149) --
Repayment of mortgage notes payable (2,204) (4,229)
Payments on mortgage notes payable (440) (437)
Distributions to partners (5) (4,395)
Advances from affiliates 900 --
Payments on advances from affiliates (900) --
Net cash provided by (used in) financing activities 1,012 (9,061)
Net increase in cash and cash equivalents 1,681 170
Cash and cash equivalents at beginning of period 1,537 2,127
Cash and cash equivalents at end of period $ 3,218 $ 2,297
Supplemental Disclosures of Cash Flow Information and Non-Cash Activities:
Cash paid for interest was approximately $2,487,000 and $2,629,000 for the six
months ended June 30, 2004 and 2003, respectively.
At June 30, 2004 and December 31, 2003, property improvements and replacements
of approximately $1,052,000 and $243,000, respectively, were included in
accounts payable.
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Consolidated
Capital Properties IV (the "Partnership" or "Registrant") 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 ConCap Equities, Inc. ("CEI" or 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 months ended June 30, 2004, are not necessarily indicative of the
results that may be expected for the fiscal year ending December 31, 2004. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Partnership's Annual Report on Form 10-K for
the fiscal year ended December 31, 2003. The General Partner is a subsidiary of
Apartment Investment and Management Company ("AIMCO"), a publicly traded real
estate investment trust.
In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
the accompanying consolidated statements of operations for the three and six
months ended June 30, 2003 have been restated to reflect the operations of Point
West Apartments, as loss from discontinued operations due to its sale in March
2004. In addition, the operations of South Port Apartments are shown as loss
from discontinued operations due to its sale in March 2003.
Note B - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all Partnership activities.
The Partnership Agreement provides for (i) certain payments to affiliates for
services and (ii) reimbursements of certain expenses incurred by affiliates on
behalf of the Partnership.
Affiliates of the General Partner are entitled to receive 5% of gross receipts
from all the Partnership's properties as compensation for providing property
management services. The Partnership paid to such affiliates approximately
$545,000 and $581,000 for the six months ended June 30, 2004 and 2003,
respectively, which is included in operating expenses and discontinued
operations.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $402,000 and $416,000 for the
six months ended June 30, 2004 and 2003, respectively, which is included in
general and administrative expenses and investment properties. Included in these
amounts are fees related to construction management services provided by an
affiliate of the General Partner of approximately $21,000 and $33,000 for the
six months ended June 30, 2004 and 2003, respectively. The construction
management service fees are calculated based on a percentage of current year
additions to investment properties.
The Partnership Agreement provides for a special management fee equal to 9% of
the total distributions made to the limited partners from cash flow provided by
operations to be paid to the General Partner for executive and administrative
management services. The Partnership paid approximately $68,000 under this
provision of the Partnership Agreement to the General Partner during the six
months ended June 30, 2003, which is included in general and administrative
expenses. There were no such special management fees paid or earned during the
six months ended June 30, 2004.
For acting as real estate broker in connection with the sale of South Port
Apartments, the General Partner was paid a real estate commission of
approximately $295,000 during the six months ended June 30, 2003. When the
Partnership terminates, the General Partner will have to return this commission
if the limited partners do not receive their original invested capital plus a 6%
per annum cumulative return.
In accordance with the Partnership Agreement, an affiliate of the General
Partner advanced the Partnership approximately $900,000 during the six months
ended June 30, 2004 to assist with the construction of Belmont Place Apartments.
During the same period, the Partnership repaid approximately $905,000, which
included approximately $5,000 of interest. There were no such advances or
repayments during the six months ended June 30, 2003. Interest on advances is
charged at prime plus 2% or 6.00% at June 30, 2004. Interest expense was
approximately $5,000 for the six months ended June 30, 2004. There was no
interest expense for the six months ended June 30, 2003. Subsequent to June 30,
2004, the Partnership received an advance of approximately $1,584,000 to pay
construction invoices for Belmont Place Apartments.
The Partnership insures its properties up to certain limits through coverage
provided by AIMCO which is generally self-insured for a portion of losses and
liabilities related to workers compensation, property casualty and vehicle
liability. The Partnership insures its properties above the AIMCO limits through
insurance policies obtained by AIMCO from insurers unaffiliated with the General
Partner. During the six months ended June 30, 2004 and 2003, the Partnership was
charged by AIMCO and its affiliates approximately $244,000 and $350,000,
respectively, for insurance coverage and fees associated with policy claims
administration.
Note C - Casualty Gains
In October 2003, Citadel Village Apartments suffered fire damage to five
apartment units. Insurance proceeds of approximately $92,000 were received
during the six months ended June 30, 2004. The Partnership recognized a casualty
gain of approximately $92,000 during the six months ended June 30, 2004 as the
damaged assets were fully depreciated at the time of the casualty.
In November 2003, Lake Forest Apartments suffered water damage to some of the
rental units. Insurance proceeds of approximately $44,000 were received during
the six months ended June 30, 2004. The Partnership recognized a casualty gain
of approximately $44,000 during the six months ended June 30, 2004 as the
damaged assets were fully depreciated at the time of the casualty.
In February 2004, The Apartments suffered damage to 180 apartment units due to
an ice storm. During the six months ended June 30, 2004, the Partnership
received insurance proceeds of approximately $190,000, which included
approximately $29,000 for emergency expenses. The Partnership recognized a
casualty gain of approximately $161,000 during the six months ended June 30,
2004 as the damaged assets were fully depreciated at the time of the casualty.
In February 2004, Knollwood Apartments suffered fire damage to some of the
rental units. Insurance proceeds of approximately $47,000 were received during
the six months ended June 30, 2004. The Partnership recognized a casualty gain
of approximately $47,000 during the six months ended June 30, 2004 as the
damaged assets were fully depreciated at the time of the casualty.
In March 2004, Village East Apartments suffered an electrical fire that damaged
six apartment units. Insurance proceeds of approximately $55,000 were received
during the six months ended June 30, 2004. The Partnership recognized a casualty
gain of approximately $55,000 during the six months ended June 30, 2004 as the
damaged assets were fully depreciated at the time of the casualty.
Note D - Disposition of Investment Properties
On March 31, 2004, the Partnership sold Point West Apartments to a third party,
for a gross sales price of $3,900,000. The net proceeds realized by the
Partnership were approximately $3,794,000 after payment of closing costs of
approximately $106,000. The Partnership used approximately $2,204,000 of the net
proceeds to repay the mortgage encumbering the property. The Partnership
realized a gain of approximately $3,141,000 for the six months ended June 30,
2004, as a result of this sale. The property's operations, a loss of
approximately $39,000 and $30,000 for the six months ended June 30, 2004 and
2003, respectively, including revenues of approximately $189,000 and $397,000,
respectively, are included in loss from discontinued operations. In addition,
the Partnership recorded a loss on early extinguishment of debt of approximately
$48,000 for the six months ended June 30, 2004 due to the write off of
unamortized loan costs, which is also included in loss from discontinued
operations in the accompanying consolidated statements of operations.
On March 28, 2003, the Partnership sold South Port Apartments to a third party,
for a gross sale price of $8,625,000. The net proceeds realized by the
Partnership were approximately $8,137,000 after payment of closing costs of
approximately $488,000. The Partnership used approximately $4,229,000 of the net
proceeds to repay the mortgage encumbering the property. The Partnership
realized a gain of approximately $6,149,000 for the six months ended June 30,
2003, as a result of this sale. The property's operations, income of
approximately $22,000 for the six months ended June 30, 2003, including revenues
of approximately $327,000, are included in loss from discontinued operations. In
addition, the Partnership recorded a loss on early extinguishment of debt of
approximately $13,000 for the six months ended June 30, 2003 due to the
write-off of unamortized loan costs, which is also included in loss from
discontinued operations in the accompanying consolidated statements of
operations.
Note E - Redevelopment of Belmont Place Apartments
During 2003, the General Partner determined that Belmont Place Apartments
suffered from severe structural defects in the buildings' foundation and as
such, demolished the property. The General Partner has designed and approved a
redevelopment plan for the property. Site work on the redevelopment began during
the fourth quarter of 2003.
The Partnership has entered into a construction contract with Casden Builders,
Inc. (a related party) to develop the new Belmont Place Apartments at an
estimated cost of approximately $26.4 million. The construction contract
provides for the payment of the cost of the work plus a fee without a maximum
guaranteed price. Construction is expected to be completed in 2005. The
Partnership plans to fund these construction expenditures from operating cash
flow, proceeds from a cross collateralized loan, Partnership reserves and loans
from the General Partner. During the six months ended June 30, 2004,
approximately $4,491,000 of construction costs were incurred. These expenditures
included capitalized construction period interest of approximately $198,000 and
capitalized property tax expense of approximately $111,000.
Note F - Second Mortgage Financing
On June 8, 2004, the Partnership obtained a second mortgage loan on Lake Forest
Apartments in the amount of $2,500,000. The second mortgage requires monthly
payments of interest beginning August 1, 2004 until the loan matures July 1,
2007. Interest is variable and is equal to the one month LIBOR rate plus 300
basis points (4.36% at June 30, 2004). Capitalized loan costs incurred on the
financing were approximately $83,000.
In connection with the new financing, the Partnership agreed to certain
modifications on the existing mortgage loan encumbering Lake Forest Apartments.
The modification of terms consisted of an interest rate of 7.43%, a payment of
approximately $44,000 due on July 1, 2004 and monthly payments of approximately
$42,000, commencing August 1, 2004 through the maturity of July 1, 2014, at
which time a balloon payment of approximately $5,255,000 is due. The previous
terms consisted of monthly payments of approximately $51,000 with a stated
interest rate of 7.13% through the maturity date of October 1, 2021, at which
time the loan was scheduled to be fully amortized.
On June 18, 2004, the Partnership obtained a second mortgage loan on Citadel
Apartments in the amount of $1,310,000. The second mortgage requires monthly
payments of interest beginning August 1, 2004 until the loan matures July 1,
2007. Interest is variable and is equal to the one month LIBOR rate plus 300
basis points (4.36% at June 30, 2004). Capitalized loan costs incurred on the
financing were approximately $66,000.
In connection with the new financing, the Partnership agreed to certain
modifications on the existing mortgage loan encumbering Citadel Apartments. The
modification of terms consisted of an interest rate of 8.55%, a payment of
approximately $38,000 due on July 1, 2004 and monthly payments of approximately
$33,000, commencing August 1, 2004 through the maturity of July 1, 2014, at
which time a balloon payment of approximately $3,748,000 is due. The previous
terms consisted of monthly payments of approximately $40,000 with a stated
interest rate of 8.25% through the maturity date of March 1, 2020, at which time
the loan was scheduled to be fully amortized.
Note G - Contingencies
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its General Partner and several of
their affiliated partnerships and corporate entities. The action purported to
assert claims on behalf of a class of limited partners and derivatively on
behalf of a number of limited partnerships (including the Partnership) that are
named as nominal defendants, challenging, among other things, the acquisition of
interests in certain General Partner entities by Insignia Financial Group, Inc.
("Insignia") and entities that were, at one time, affiliates of Insignia; past
tender offers by the Insignia affiliates to acquire limited partnership units;
management of the partnerships by the Insignia affiliates; and the series of
transactions which closed on October 1, 1998 and February 26, 1999 whereby
Insignia and Insignia Properties Trust, respectively, were merged into AIMCO.
The plaintiffs sought monetary damages and equitable relief, including judicial
dissolution of the Partnership. In addition, during the third quarter of 2001, a
complaint (the "Heller action") was filed against the same defendants that are
named in the Nuanes action, captioned Heller v. Insignia Financial Group. On or
about August 6, 2001, plaintiffs filed a first amended complaint. The Heller
action was brought as a purported derivative action, and asserted claims for,
among other things, breach of fiduciary duty, unfair competition, conversion,
unjust enrichment, and judicial dissolution.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action.
In general terms, the proposed settlement provides for certification for
settlement purposes of a settlement class consisting of all limited partners in
this Partnership and others (the "Partnerships") as of December 20, 2002, the
dismissal with prejudice and release of claims in the Nuanes and Heller
litigation, payment by AIMCO of $9.9 million (which shall be distributed to
settlement class members after deduction of attorney fees and costs of class
counsel and certain costs of settlement) and up to $1 million toward the cost of
independent appraisals of the Partnerships' properties by a Court appointed
appraiser. An affiliate of the General Partner has also agreed to make at least
one round of tender offers to purchase all of the partnership interests in the
Partnerships within one year of final approval, if it is granted, and to provide
partners with the independent appraisals at the time of these tenders. The
proposed settlement also provided for the limitation of the allowable costs
which the General Partner or its affiliates will charge the Partnerships in
connection with this litigation and imposes limits on the class counsel fees and
costs in this litigation. On April 11, 2003, notice was distributed to limited
partners providing the details of the proposed settlement.
On June 13, 2003, the Court granted final approval of the settlement and entered
judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector
("Objector") filed an appeal seeking to vacate and/or reverse the order
approving the settlement and entering judgment thereto. On November 24, 2003,
the Objector filed an application requesting the Court order AIMCO to withdraw
settlement tender offers it had commenced, refrain from making further offers
pending the appeal and auction any units tendered to third parties, contending
that the offers did not conform with the terms of the Settlement. Counsel for
the Objector (on behalf of another investor) had alternatively requested the
Court take certain action purportedly to enforce the terms of the settlement
agreement. On December 18, 2003, the Court heard oral argument on the motions
and denied them both in their entirety.
On January 28, 2004, Objector filed his opening brief in his pending appeal. On
April 23, 2004, the General Partner and its affiliates filed a response brief in
support of the settlement and the judgment thereto. Plaintiffs have also filed a
brief in support of the settlement. On June 4, 2004, Objector filed a reply to
the briefs submitted by the General Partner and Plaintiffs. No hearing has been
scheduled in the matter.
The General Partner does not anticipate that any costs to the Partnership,
whether legal or settlement costs, associated with these cases will be material
to the Partnership's overall operations.
On August 8, 2003 AIMCO Properties L.P., an affiliate of the General Partner,
was served with a complaint in the United States District Court, District of
Columbia alleging that AIMCO Properties L.P. willfully violated the Fair Labor
Standards Act ("FLSA") by failing to pay maintenance workers overtime for all
hours worked in excess of forty per week. On March 5, 2004 Plaintiffs filed an
amended complaint also naming NHP Management Company, which is also an affiliate
of the General Partner. The complaint is styled as a Collective Action under the
FLSA and seeks to certify state subclasses in California, Maryland, and the
District of Columbia. Specifically, the plaintiffs contend that AIMCO Properties
L.P. failed to compensate maintenance workers for time that they were required
to be "on-call". Additionally, the complaint alleges AIMCO Properties L.P.
failed to comply with the FLSA in compensating maintenance workers for time that
they worked in responding to a call while "on-call". The defendants have filed
an answer to the amended complaint denying the substantive allegations. Some
discovery has taken place and settlement negotiations continue. Although the
outcome of any litigation is uncertain, AIMCO Properties, L.P. does not believe
that the ultimate outcome will have a material adverse effect on its financial
condition or results of operations taken as a whole. Similarly, the General
Partner does not believe that the ultimate outcome will have a material adverse
effect on the Partnership's financial condition or results of operations taken
as a whole.
The Partnership is unaware of any other pending or outstanding litigation
matters involving it or its investment properties that are not of a routine
nature arising in the ordinary course of business.
As previously disclosed, the Central Regional Office of the United States
Securities and Exchange Commission is conducting an investigation relating to
certain matters. AIMCO believes the areas of investigation include AIMCO's
miscalculated monthly net rental income figures in third quarter 2003,
forecasted guidance, accounts payable, rent concessions, vendor rebates, and
capitalization of expenses and payroll. AIMCO is cooperating fully. AIMCO does
not believe that the ultimate outcome will have a material adverse effect on its
consolidated financial condition or results of operations taken as a whole.
Similarly, the General Partner does not believe that the ultimate outcome will
have a material adverse effect on the Partnership's consolidated financial
condition or results of operations taken as a whole.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The matters discussed in this report contain certain forward-looking statements,
including, without limitation, statements regarding future financial performance
and the effect of government regulations. Actual results may differ materially
from those described in the forward-looking statements and will be affected by a
variety of risks and factors including, without limitation: national and local
economic conditions; the terms of governmental regulations that affect the
Registrant and interpretations of those regulations; the competitive environment
in which the Registrant operates; financing risks, including the risk that cash
flows from operations may be insufficient to meet required payments of principal
and interest; real estate risks, including variations of real estate values and
the general economic climate in local markets and competition for tenants in
such markets; litigation, including costs associated with prosecuting and
defending claims and any adverse outcomes, and possible environmental
liabilities. Readers should carefully review the Registrant's financial
statements and the notes thereto, as well as the risk factors described in the
documents the Registrant files from time to time with the Securities and
Exchange Commission.
The Partnership's investment properties consist of thirteen apartment complexes.
The following table sets forth the average occupancy of the properties for the
six months ended June 30, 2004 and 2003:
Average Occupancy
Property 2004 2003
The Apartments (1) 89% 92%
Omaha, NE
Arbours of Hermitage Apartments 93% 94%
Nashville, TN
Briar Bay Racquet Club Apartments 92% 92%
Miami, FL
Belmont Place -- 3%
Marietta, GA
Citadel Apartments 92% 94%
El Paso, TX
Citadel Village Apartments (2) 83% 72%
Colorado Springs, CO
Foothill Place Apartments 86% 87%
Salt Lake City, UT
Knollwood Apartments (3) 88% 96%
Nashville, TN
Lake Forest Apartments 94% 95%
Omaha, NE
Nob Hill Villa Apartments (3) 85% 94%
Nashville, TN
Post Ridge Apartments (3) 90% 96%
Nashville, TN
Rivers Edge Apartments (2) 96% 91%
Auburn, WA
Village East Apartments 69% 69%
Cimarron Hills, CO
(1) The General Partner attributes the decrease in occupancy at The Apartments
to damage sustained in an ice storm in February 2004 which caused many tenants
to vacate the property.
(2) The General Partner attributes the increase in occupancy at Citadel Village
and Rivers Edge Apartments to a more aggressive marketing campaign and the use
of competitive pricing strategies in the local market.
(3) The General Partner attributes the decrease in occupancy at Knollwood, Nob
Hill Villa and Post Ridge Apartments to a more stringent tenant acceptance
policy in order to create a more stable customer base.
During 2003, the General Partner determined that Belmont Place Apartments
suffered from severe structural defects in the buildings' foundation and as
such, demolished the property. The General Partner has designed and approved a
redevelopment plan for the property. Site work on the redevelopment began during
the fourth quarter of 2003.
The Partnership has entered into a construction contract with Casden Builders,
Inc. (a related party) to develop the new Belmont Place Apartments at an
estimated cost of approximately $26.4 million. The construction contract
provides for the payment of the cost of the work plus a fee without a maximum
guaranteed price. Construction is expected to be completed in 2005. The
Partnership plans to fund these construction expenditures from operating cash
flow, proceeds from a cross collateralized loan, partnership reserves and loans
from the General Partner.
The Partnership's financial results are dependent upon a number of factors
including the ability to attract and maintain tenants at the investment
properties, interest rates on mortgage loans, costs incurred to operate the
investment properties, general economic conditions and weather. As part of the
ongoing business plan of the Partnership, the General Partner monitors the
rental market environment 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, the General Partner may use rental concessions and
rental rate reductions to offset softening market conditions, accordingly, there
is no guarantee that the General Partner will be able to sustain such a plan.
Further, a number of factors which are outside the control of the Partnership
such as the local economic climate and weather can adversely or positively
impact the Partnership's financial results.
Results of Operations
The Partnership's net income for the three and six months ended June 30, 2004
was approximately $749,000 and $4,557,000, compared to net income of
approximately $666,000 and $6,925,000 for the three and six months ended June
30, 2003, respectively. The decrease in net income for the six months ended June
30, 2004 is due to the recognition in 2004 of a smaller gain on sale of
discontinued operations.
In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
the accompanying consolidated statements of operations for the three and six
months ended June 30, 2003 have been restated to reflect the operations of Point
West Apartments as loss from discontinued operations due to its sale in March
2004. In addition, the operations of South Port Apartments are shown as loss
from discontinued operations due to its sale in March 2003.
On March 31, 2004, the Partnership sold Point West Apartments to a third party,
for a gross sales price of $3,900,000. The net proceeds realized by the
Partnership were approximately $3,794,000 after payment of closing costs of
approximately $106,000. The Partnership used approximately $2,204,000 of the net
proceeds to repay the mortgage encumbering the property. The Partnership
realized a gain of approximately $3,141,000 for the six months ended June 30,
2004, as a result of this sale. The property's operations, a loss of
approximately $39,000 and $30,000 for the six months ended June 30, 2004 and
2003, respectively, including revenues of approximately $189,000 and $397,000,
respectively, are included in loss from discontinued operations. In addition,
the Partnership recorded a loss on early extinguishment of debt of approximately
$48,000 for the six months ended June 30, 2004 due to the write off of
unamortized loan costs, which is also included in loss from discontinued
operations.
On March 28, 2003, the Partnership sold South Port Apartments to a third party,
for a gross sale price of $8,625,000. The net proceeds realized by the
Partnership were approximately $8,137,000 after payment of closing costs of
approximately $488,000. The Partnership used approximately $4,229,000 of the net
proceeds to repay the mortgage encumbering the property. The Partnership
realized a gain of approximately $6,149,000 for the six months ended June 30,
2003, as a result of this sale. The property's operations, income of
approximately $22,000 for the six months ended June 30, 2003 is included in loss
from discontinued operations. The Partnership also recorded a loss on early
extinguishment of debt of approximately $13,000 for the six months ended June
30, 2003 due to the write-off of unamortized loan costs, which is also included
in loss from discontinued operations.
Excluding the discontinued operations and gain on sales, the Partnership's
income from continuing operations for the three and six months ended June 30,
2004 was approximately $782,000 and $1,503,000, respectively, compared to income
from continuing operations of approximately $703,000 and $797,000 for the
corresponding periods in 2003. Income from continuing operations decreased for
the three month period due to an increase in total expenses partially offset by
an increase in total revenues. Income from continuing operations increased for
the six month period due to an increase in total revenues and a decrease in
total expenses.
Total revenues for the three month period increased due to an increase in other
income and the recognition of casualty gains partially offset by a decrease in
rental income. Other income increased due to an increase in resident application
fees partially offset by a decrease in lease cancellation fees at most of the
investment properties. Rental income decreased due to a decrease in occupancy at
nine of the investment properties. Total revenues for the six month period
increased due to casualty gains recognized in 2004 and a slight increase in
rental income. Rental income increased slightly due to increases in occupancy at
three investment properties and the average rental rate at five investment
properties and a decrease in bad debt expense at five investment properties
offset by a decrease in occupancy at eight investment properties.
In October 2003, Citadel Village Apartments suffered fire damage to five
apartment units. Insurance proceeds of approximately $92,000 were received
during the six months ended June 30, 2004. The Partnership recognized a casualty
gain of approximately $92,000 during the six months ended June 30, 2004 as the
damaged assets were fully depreciated at the time of the casualty.
In November 2003, Lake Forest Apartments suffered water damage to some of the
rental units. Insurance proceeds of approximately $44,000 were received during
the six months ended June 30, 2004. The Partnership recognized a casualty gain
of approximately $44,000 during the six months ended June 30, 2004 as the
damaged assets were fully depreciated at the time of the casualty.
In February 2004, The Apartments suffered damage to 180 apartment units due to
an ice storm. During the six months ended June 30, 2004, the Partnership
received insurance proceeds of approximately $190,000, which included
approximately $29,000 for emergency expenses. The Partnership recognized a
casualty gain of approximately $161,000 during the six months ended June 30,
2004 as the damaged assets were fully depreciated at the time of the casualty.
In February 2004, Knollwood Apartments suffered fire damage to some of the
rental units. Insurance proceeds of approximately $47,000 were received during
the six months ended June 30, 2004. The Partnership recognized a casualty gain
of approximately $47,000 during the six months ended June 30, 2004 as the
damaged assets were fully depreciated at the time of the casualty.
In March 2004, Village East Apartments suffered an electrical fire that damaged
six apartment units. Insurance proceeds of approximately $55,000 were received
during the six months ended June 30, 2004. The Partnership recognized a casualty
gain of approximately $55,000 during the six months ended June 30, 2004 as the
damaged assets were fully depreciated at the time of the casualty.
Total expenses for the three month period increased due to an increase in
operating expense partially offset by a decrease in depreciation expense. Total
expenses for the six month period decreased due to decreases in general and
administrative and depreciation expenses partially offset by an increase in
operating expense. Operating expense for both periods increased due to an
increase in maintenance expense. For the six month period, this increase was
partially offset by a decrease in property expense. Maintenance expense
increased primarily due to fewer capitalized costs associated with the
reconstruction of Belmont Place Apartments. Property expense for the six month
period decreased due to the ongoing construction project at Belmont Place
Apartments which resulted in the property not incurring any property expense for
the period. Depreciation expense for both periods decreased due to the building
at Foothill Place Apartments becoming fully depreciated in 2003 and due to no
depreciation being charged at Belmont Place Apartments during 2004 while the
property is being constructed.
General and administrative expense for the six month period decreased due to a
decrease in management fees paid to the General Partner in connection with
distributions made from operations. Included in general and administrative
expenses for both periods are management reimbursements to the General Partner
as allowed under the Partnership Agreement. Also included are costs associated
with the quarterly and annual communications with investors and regulatory
agencies and the annual audit required by the Partnership Agreement.
Liquidity and Capital Resources
At June 30, 2004, the Partnership had cash and cash equivalents of approximately
$3,218,000 compared to approximately $2,297,000 at June 30, 2003. The increase
in cash and cash equivalents of approximately $1,681,000 from the Partnership's
year ended December 31, 2003, is due to approximately $1,956,000 of cash
provided by operating activities and approximately $1,012,000 of cash provided
by financing activities, partially offset by approximately $1,287,000 of cash
used in investing activities. Cash provided by financing activities consisted of
proceeds from mortgage notes payable and advances received from an affiliate of
the General Partner partially offset by payments of principal on the mortgages
encumbering the Partnership's properties, repayment of the mortgage encumbering
Point West Apartments, repayment of advances and loan costs paid. Cash used in
investing activities consisted of property improvements and replacements and net
deposits to escrow accounts maintained by the mortgage lenders, partially offset
by insurance proceeds received and net proceeds from the sale of Point West
Apartments. The Partnership invests its working capital reserves in interest
bearing accounts.
On June 8, 2004, the Partnership obtained a second mortgage loan on Lake Forest
Apartments in the amount of $2,500,000. The second mortgage requires monthly
payments of interest beginning August 1, 2004 until the loan matures July 1,
2007. Interest is variable and is equal to the one month LIBOR rate plus 300
basis points (4.36% at June 30, 2004). Capitalized loan costs incurred on the
financing were approximately $83,000.
In connection with the new financing, the Partnership agreed to certain
modifications on the existing mortgage loan encumbering Lake Forest Apartments.
The modification of terms consisted of an interest rate of 7.43%, a payment of
approximately $44,000 due on July 1, 2004 and monthly payments of approximately
$42,000, commencing August 1, 2004 through the maturity of July 1, 2014, at
which time a balloon payment of approximately $5,255,000 is due. The previous
terms consisted of monthly payments of approximately $51,000 with a stated
interest rate of 7.13% through the maturity date of October 1, 2021, at which
time the loan was scheduled to be fully amortized.
On June 18, 2004, the Partnership obtained a second mortgage loan on Citadel
Apartments in the amount of $1,310,000. The second mortgage requires monthly
payments of interest beginning August 1, 2004 until the loan matures July 1,
2007. Interest is variable and is equal to the one month LIBOR rate plus 300
basis points (4.36% at June 30, 2004). Capitalized loan costs incurred on the
financing were approximately $66,000.
In connection with the new financing, the Partnership agreed to certain
modifications on the existing mortgage loan encumbering Citadel Apartments. The
modification of terms consisted of an interest rate of 8.55%, a payment of
approximately $38,000 due on July 1, 2004 and monthly payments of approximately
$33,000, commencing August 1, 2004 through the maturity of July 1, 2014, at
which time a balloon payment of approximately $3,748,000 is due. The previous
terms consisted of monthly payments of approximately $40,000 with a stated
interest rate of 8.25% through the maturity date of March 1, 2020, at which time
the loan was scheduled to be fully amortized.
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 properties to adequately maintain the physical
assets and other operating needs of the Partnership and to comply with Federal,
state, and local legal and regulatory requirements. The General Partner monitors
developments in the area of legal and regulatory compliance. For example, the
Sarbanes-Oxley Act of 2002 mandates or suggests additional compliance measures
with regard to governance, disclosure, audit and other areas. In light of these
changes, the Partnership expects that it will incur higher expenses related to
compliance, including increased legal and audit fees. Capital improvements
planned for each of the Partnership's properties are detailed below.
The Apartments
During the six months ended June 30, 2004, the Partnership completed
approximately $339,000 of capital improvements at The Apartments, consisting
primarily of floor covering replacements, water heaters, and heating system
upgrades. These improvements were funded from operating cash flow and insurance
proceeds. The Partnership evaluates the capital improvement needs of the
property during the year and currently expects to complete an additional
$146,000 in capital improvements during the remainder of 2004. Additional
capital improvements may be considered and will depend on the physical condition
of the property as well as replacement reserves and the anticipated cash flow
generated by the property.
Arbours of Hermitage Apartments
During the six months ended June 30, 2004, the Partnership completed
approximately $60,000 of capital improvements at Arbours of Hermitage
Apartments, consisting primarily of structural improvements and floor covering
and appliance replacements. These improvements were funded from operating cash
flow. The Partnership evaluates the capital improvement needs of the property
during the year and currently expects to complete an additional $139,000 in
capital improvements during the remainder of 2004. Additional capital
improvements may be considered and will depend on the physical condition of the
property as well as the anticipated cash flow generated by the property.
Briar Bay Racquet Club Apartments
During the six months ended June 30, 2004, the Partnership completed
approximately $28,000 of capital improvements at Briar Bay Racquet Club
Apartments, consisting primarily of appliance and floor covering replacements.
These improvements were funded from operating cash flow. The Partnership
evaluates the capital improvement needs of the property during the year and
currently expects to complete an additional $84,000 in capital improvements
during the remainder of 2004. Additional capital improvements may be considered
and will depend on the physical condition of the property as well as replacement
reserves and the anticipated cash flow generated by the property.
Belmont Place Apartments
During 2003 the General Partner determined that Belmont Place Apartments
suffered from severe structural defects in the building's foundation and as
such, has demolished the property. The General Partner has designed and approved
a redevelopment plan for the property that requires the complete demolition and
reconstruction of the apartment complex. The property was completely demolished
and site work on the redevelopment began during the fourth quarter of 2003.
The Partnership has entered into a construction contract with Casden Builders,
Inc. (a related party) to develop the new Belmont Place Apartments at an
estimated cost of approximately $26.4 million. The construction contract
provides for the payment of the cost of the work plus a fee without a maximum
guaranteed price. Construction is expected to be completed in 2005. The
Partnership plans to fund these construction expenditures from operating cash
flow, proceeds from a cross collateralized loan, partnership reserves and loans
from the General Partner. During the six months ended June 30, 2004,
approximately $4,491,000 of construction costs were incurred. These expenditures
included capitalized construction period interest of approximately $198,000 and
capitalized property tax expense of approximately $111,000.
Citadel Apartments
During the six months ended June 30, 2004, the Partnership completed
approximately $9,000 of capital improvements at Citadel Apartments, consisting
primarily of air conditioning unit and appliance replacements. These
improvements were funded from operating cash flow. The Partnership evaluates the
capital improvement needs of the property during the year and currently expects
to complete an additional $135,000 in capital improvements during the remainder
of 2004. Additional capital improvements may be considered and will depend on
the physical condition of the property as well as the anticipated cash flow
generated by the property.
Citadel Village Apartments
During the six months ended June 30, 2004, the Partnership completed
approximately $396,000 of capital improvements at Citadel Village Apartments,
consisting primarily of appliance and floor covering replacements. These
improvements were funded from operating cash flow and insurance proceeds. The
Partnership evaluates the capital improvement needs of the property during the
year and currently expects to complete an additional $49,000 in capital
improvements during the remainder of 2004. Additional capital improvements may
be considered and will depend on the physical condition of the property as well
as the anticipated cash flow generated by the property.
Foothill Place Apartments
During the six months ended June 30, 2004, the Partnership completed
approximately $192,000 of capital improvements at Foothill Place Apartments,
consisting primarily of water heater and plumbing fixture installations,
appliance and floor covering replacements and structural upgrades. These
improvements were funded from operating cash flow. The Partnership evaluates the
capital improvement needs of the property during the year and currently expects
to complete an additional $56,000 in capital improvements during the remainder
of 2004. Additional capital improvements may be considered and will depend on
the physical condition of the property as well as the anticipated cash flow
generated by the property.
Knollwood Apartments
During the six months ended June 30, 2004, the Partnership completed
approximately $72,000 of capital improvements at Knollwood Apartments,
consisting primarily of water heater, appliance and floor covering replacements.
These improvements were funded from operating cash flow and insurance proceeds.
The Partnership evaluates the capital improvement needs of the property during
the year and currently expects to complete an additional $107,000 in capital
improvements during the remainder of 2004. Additional capital improvements may
be considered and will depend on the physical condition of the property as well
as the anticipated cash flow generated by the property.
Lake Forest Apartments
During the six months ended June 30, 2004, the Partnership completed
approximately $114,000 of capital improvements at Lake Forest Apartments,
consisting primarily of structural upgrades and floor covering and appliance
replacements. These improvements were funded from operating cash flow and
insurance proceeds. The Partnership evaluates the capital improvement needs of
the property during the year and currently expects to complete an additional
$64,000 in capital improvements during the remainder of 2004. Additional capital
improvements may be considered and will depend on the physical condition of the
property as well as the anticipated cash flow generated by the property.
Nob Hill Villa Apartments
During the six months ended June 30, 2004, the Partnership completed
approximately $95,000 of capital improvements at Nob Hill Villa Apartments,
consisting primarily of appliance and floor covering replacements, water heater
replacements and plumbing fixtures. These improvements were funded from
replacement reserves and operating cash flow. The Partnership evaluates the
capital improvement needs of the property during the year and currently expects
to complete an additional $165,000 in capital improvements during the remainder
of 2004. Additional capital improvements may be considered and will depend on
the physical condition of the property as well as replacement reserves and the
anticipated cash flow generated by the property.
Point West Apartments
During the six months ended June 30, 2004, the Partnership completed
approximately $3,000 of capital improvements at Point West Apartments,
consisting primarily of floor covering replacements. These improvements were
funded from operating cash flow. The property was sold on March 31, 2004.
Post Ridge Apartments
During the six months ended June 30, 2004, the Partnership completed
approximately $72,000 of capital improvements at Post Ridge Apartments,
consisting primarily of parking area improvements and floor covering and water
heater replacements. These improvements were funded from operating cash flow.
The Partnership evaluates the capital improvement needs of the property during
the year and currently expects to complete an additional $11,000 in capital
improvements during the remainder of 2004. Additional capital improvements may
be considered and will depend on the physical condition of the property as well
as the anticipated cash flow generated by the property.
Rivers Edge Apartments
During the six months ended June 30, 2004, the Partnership completed
approximately $35,000 of capital improvements at Rivers Edge Apartments,
consisting primarily of floor covering and appliance replacements. These
improvements were funded from operating cash flow. The Partnership evaluates the
capital improvement needs of the property during the year and currently expects
to complete an additional $57,000 in capital improvements during the remainder
of 2004. Additional capital improvements may be considered and will depend on
the physical condition of the property as well as the anticipated cash flow
generated by the property.
Village East Apartments
During the six months ended June 30, 2004, the Partnership completed
approximately $44,000 of capital improvements at Village East Apartments,
consisting primarily of floor covering replacements. These improvements were
funded from operating cash flow and insurance proceeds. The Partnership
evaluates the capital improvement needs of the property during the year and
currently expects to complete an additional $31,000 in capital improvements
during the remainder of 2004. Additional capital improvements may be considered
and will depend on the physical condition of the property as well as replacement
reserves and the anticipated cash flow generated by the property.
Additional capital expenditures will be incurred only if cash is available from
operations or from Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Partnership's distributable cash flow,
if any, may be adversely affected at least in the short term.
The Partnership's assets are thought to be sufficient for any near-term needs
(exclusive of capital improvements) of the Partnership. The mortgage
indebtedness encumbering the Partnership's investment properties of
approximately $69,066,000 matures at various dates between 2005 and 2022 with
balloon payments of approximately $42,280,000 due in 2005, $3,810,000 due in
2007, $9,003,000 due in 2014 and $173,000 due in 2022. The General Partner will
attempt to refinance such indebtedness and/or sell the properties prior to such
maturity dates. If a property cannot be refinanced or sold for a sufficient
amount, the Partnership will risk losing such property through foreclosure.
The Partnership distributed the following amounts during the six months ended
June 30, 2004 and 2003 (in thousands except per unit data):
Six Months Per Six Months Per
Ended Limited Ended Limited
June 30, Partnership June 30, Partnership
2004 Unit 2003 Unit
Operations $ -- $ -- $ 792 $ 2.22
Sale (1) -- -- 3,743 10.50
Total $ -- $ -- $4,535 $12.72
(1) Proceeds from the sale of Southport Apartments in March 2003.
In conjunction with the transfer of funds from certain majority-owned sub-tier
limited partnerships to the Partnership, approximately $5,000 and $4,000 was
distributed to the general partner of the majority owned sub-tier limited
partnerships during the six months ended June 30, 2004 and 2003, respectively.
The Partnership's cash available for distribution is reviewed on a monthly
basis. Future cash distributions will depend on the levels of net cash generated
from operations, the availability of cash reserves, and the timing of debt
maturities, refinancings and/or property sales. There can be no assurance,
however, that the Partnership will generate sufficient funds from operations,
after planned capital improvement expenditures, to permit distributions to its
partners during the remainder of 2004 or subsequent periods.
Other
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 203,491.50 limited partnership units
(the "Units") in the Partnership representing 59.37% of the outstanding Units at
June 30, 2004. A number of these Units were acquired pursuant to tender offers
made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates
will acquire additional Units in exchange for cash or a combination of cash and
units in AIMCO Properties, L.P., the operating partnership of AIMCO, either
through private purchases or tender offers. Pursuant to the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters that include, but are not limited
to, voting on certain amendments to the Partnership Agreement and voting to
remove the General Partner. As a result of its ownership of 59.37% of the
outstanding units, AIMCO is in a position to control all such voting decisions
with respect to the Partnership. Although the General Partner owes fiduciary
duties to the limited partners of the Partnership, the General Partner also owes
fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of
the General Partner, as general partner, to the Partnership and its limited
partners may come into conflict with the duties of the General Partner to AIMCO,
as its sole stockholder.
Critical Accounting Policies and Estimates
The consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States which require the Partnership
to make estimates and assumptions. The Partnership believes that of its
significant accounting policies, the following may involve a higher degree of
judgment and complexity.
Impairment of Long-Lived Assets
Investment properties are recorded at cost, less accumulated depreciation,
unless considered impaired. If events or circumstances indicate that the
carrying amount of a property may be impaired, the Partnership will make an
assessment of its recoverability by estimating the undiscounted future cash
flows, excluding interest charges, of the property. If the carrying amount
exceeds the aggregate future cash flows, the Partnership would recognize an
impairment loss to the extent the carrying amount exceeds the fair value of the
property.
Real property investments are subject to varying degrees of risk. Several
factors may adversely affect the economic performance and value of the
Partnership's investment properties. These factors include, but are not limited
to, changes in the national, regional and local economic climate; local
conditions, such as an oversupply of multifamily properties; competition from
other available multifamily property owners and changes in market rental rates.
Any adverse changes in these factors could cause impairment of the Partnership's
assets.
Revenue Recognition
The Partnership generally leases apartment units for twelve-month terms or less.
Rental income attributable to leases is recognized monthly as it is earned. The
Partnership evaluates all accounts receivable from residents and establishes an
allowance, after the application of security deposits, for accounts greater than
30 days past due on current tenants and all receivables due from former tenants.
The Partnership will offer rental concessions during particularly slow months or
in response to heavy competition from other similar complexes in the area. Any
concessions given at the inception of the lease are amortized over the life of
the lease.
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
The Partnership is exposed to market risks from adverse changes in interest
rates. In this regard, changes in U.S. interest rates affect the interest earned
on the Partnership's cash and cash equivalents as well as interest paid on its
indebtedness. As a policy, the Partnership does not engage in speculative or
leveraged transactions, nor does it hold or issue financial instruments for
trading purposes. The Partnership is exposed to changes in interest rates
primarily as a result of its borrowing activities used to maintain liquidity and
fund business operations. To mitigate the impact of fluctuations in U.S.
interest rates, the Partnership maintains its debt as fixed rate in nature by
borrowing on a long-term basis. Based on interest rates at June 30, 2004, a 100
basis point increase or decrease in market interest rates would not have a
material impact on the Partnership.
The following table summarizes the Partnership's debt obligations at June 30,
2004. The interest rates represent the weighted-average rates. The fair value of
the debt obligations approximated the recorded value as of June 30, 2004.
Principal amount by expected maturity:
Long Term Debt
Fixed Rate Debt Average Interest Rate
(in thousands)
2004 $ 440 7.78%
2005 43,066 7.36%
2006 797 7.54%
2007 4,670 7.19%
2008 928 7.54%
Thereafter 19,165 7.54%
Total $69,066
ITEM 4. CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures. The Partnership's management, with the
participation of the principal executive officer and principal financial officer
of the General Partner, who are the equivalent of the Partnership's principal
executive officer and principal financial officer, respectively, has evaluated
the effectiveness of the Partnership's disclosure controls and procedures (as
such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the
period covered by this report. Based on such evaluation, the principal executive
officer and principal financial officer of the General Partner, who are the
equivalent of the Partnership's principal executive officer and principal
financial officer, respectively, have concluded that, as of the end of such
period, the Partnership's disclosure controls and procedures are effective.
(b) Internal Control Over Financial Reporting. There have not been any changes
in the Partnership's internal control over financial reporting (as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the
fiscal quarter to which this report relates that have materially affected, or
are reasonably likely to materially affect, the Partnership's internal control
over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its General Partner and several of
their affiliated partnerships and corporate entities. The action purported to
assert claims on behalf of a class of limited partners and derivatively on
behalf of a number of limited partnerships (including the Partnership) that are
named as nominal defendants, challenging, among other things, the acquisition of
interests in certain General Partner entities by Insignia Financial Group, Inc.
("Insignia") and entities that were, at one time, affiliates of Insignia; past
tender offers by the Insignia affiliates to acquire limited partnership units;
management of the partnerships by the Insignia affiliates; and the series of
transactions which closed on October 1, 1998 and February 26, 1999 whereby
Insignia and Insignia Properties Trust, respectively, were merged into AIMCO.
The plaintiffs sought monetary damages and equitable relief, including judicial
dissolution of the Partnership. In addition, during the third quarter of 2001, a
complaint (the "Heller action") was filed against the same defendants that are
named in the Nuanes action, captioned Heller v. Insignia Financial Group. On or
about August 6, 2001, plaintiffs filed a first amended complaint. The Heller
action was brought as a purported derivative action, and asserted claims for,
among other things, breach of fiduciary duty, unfair competition, conversion,
unjust enrichment, and judicial dissolution.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action.
In general terms, the proposed settlement provides for certification for
settlement purposes of a settlement class consisting of all limited partners in
this Partnership and others (the "Partnerships") as of December 20, 2002, the
dismissal with prejudice and release of claims in the Nuanes and Heller
litigation, payment by AIMCO of $9.9 million (which shall be distributed to
settlement class members after deduction of attorney fees and costs of class
counsel and certain costs of settlement) and up to $1 million toward the cost of
independent appraisals of the Partnerships' properties by a Court appointed
appraiser. An affiliate of the General Partner has also agreed to make at least
one round of tender offers to purchase all of the partnership interests in the
Partnerships within one year of final approval, if it is granted, and to provide
partners with the independent appraisals at the time of these tenders. The
proposed settlement also provided for the limitation of the allowable costs
which the General Partner or its affiliates will charge the Partnerships in
connection with this litigation and imposes limits on the class counsel fees and
costs in this litigation. On April 11, 2003, notice was distributed to limited
partners providing the details of the proposed settlement.
On June 13, 2003, the Court granted final approval of the settlement and entered
judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector
("Objector") filed an appeal seeking to vacate and/or reverse the order
approving the settlement and entering judgment thereto. On November 24, 2003,
the Objector filed an application requesting the Court order AIMCO to withdraw
settlement tender offers it had commenced, refrain from making further offers
pending the appeal and auction any units tendered to third parties, contending
that the offers did not conform with the terms of the Settlement. Counsel for
the Objector (on behalf of another investor) had alternatively requested the
Court take certain action purportedly to enforce the terms of the settlement
agreement. On December 18, 2003, the Court heard oral argument on the motions
and denied them both in their entirety.
On January 28, 2004, Objector filed his opening brief in his pending appeal. On
April 23, 2004, the General Partner and its affiliates filed a response brief in
support of the settlement and the judgment thereto. Plaintiffs have also filed a
brief in support of the settlement. On June 4, 2004, Objector filed a reply to
the briefs submitted by the General Partner and Plaintiffs. No hearing has been
scheduled in the matter.
The General Partner does not anticipate that any costs to the Partnership,
whether legal or settlement costs, associated with these cases will be material
to the Partnership's overall operations.
On August 8, 2003 AIMCO Properties L.P., an affiliate of the General Partner,
was served with a complaint in the United States District Court, District of
Columbia alleging that AIMCO Properties L.P. willfully violated the Fair Labor
Standards Act ("FLSA") by failing to pay maintenance workers overtime for all
hours worked in excess of forty per week. On March 5, 2004 Plaintiffs filed an
amended complaint also naming NHP Management Company, which is also an affiliate
of the General Partner. The complaint is styled as a Collective Action under the
FLSA and seeks to certify state subclasses in California, Maryland, and the
District of Columbia. Specifically, the plaintiffs contend that AIMCO Properties
L.P. failed to compensate maintenance workers for time that they were required
to be "on-call". Additionally, the complaint alleges AIMCO Properties L.P.
failed to comply with the FLSA in compensating maintenance workers for time that
they worked in responding to a call while "on-call". The defendants have filed
an answer to the amended complaint denying the substantive allegations. Some
discovery has taken place and settlement negotiations continue. Although the
outcome of any litigation is uncertain, AIMCO Properties, L.P. does not believe
that the ultimate outcome will have a material adverse effect on its financial
condition or results of operations taken as a whole. Similarly, the General
Partner does not believe that the ultimate outcome will have a material adverse
effect on the Partnership's financial condition or results of operations taken
as a whole.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
See Exhibit Index Attached.
b) Reports on Form 8-K filed during the quarter ended June 30,
2004:
Current report on Form 8-K dated March 31, 2004 and filed on
April 13, 2004 disclosing the sale of Point West Apartments to
a third party.
SIGNATURES
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 PROPERTIES IV
By: CONCAP EQUITIES, INC.
General Partner
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
By: /s/Stephen B. Waters
Stephen B. Waters
Vice President
Date: August 16, 2004
S-K Reference
Number Document Description
3 Certificate of Limited Partnership, as amended to date.
10.41 Investor Services Agreement dated October 23, 1990, by and
between the Partnership and CCEC (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990). (Incorporated by reference to the Annual
Report on Form 10-K for the year ended December 31, 1991).
10.42 Assignment and Assumption Agreement (Investor Services
Agreement) dated October 23, 1990, by and between CCEC and
ConCap Services Company (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31,
1990).
10.43 Letter of Notice dated December 20, 1991, from Partnership
Services, Inc. ("PSI") to the Partnership regarding the change
in ownership and dissolution of ConCap Services Company
whereby PSI assumed the Investor Services Agreement.
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.44 Financial Services Agreement dated October 23, 1990, by and
between the Partnership and CCEC (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.45 Assignment and Assumption Agreement (Financial Service
Agreement) dated October 23, 1990, by and between CCEC and
ConCap Capital Company (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended September
30, 1990).
10.46 Letter of Notice dated December 20, 1991, from PSI to the
Partnership regarding the change in ownership and dissolution
of ConCap Capital Company whereby PSI (Incorporated by
reference to the Annual Report on Form 10-K for the year ended
December 31, 1991).
10.60 Stock and Asset Purchase Agreement, dated December 8, 1994
(the "Gordon Agreement"), among MAE-ICC, Inc. ("MAE-ICC"),
Gordon Realty Inc. ("Gordon"), GII Realty, Inc. ("GII
Realty"), and certain other parties. (Incorporated by
reference to Form 8-K dated December 8, 1994).
10.61 Exercise of the Option (as defined in the Gordon Agreement),
dated December 8, 1994, between MAE-ICC and Gordon.
(Incorporated by reference to Form 8-K dated December 8,
1994).
10.62 Contracts related to refinancing of debt:
(a) Deed of Trust and Security Agreement dated March 27, 1995
between Nob Hill Villa Apartment Associates, L.P., a Tennessee
limited partnership, and First Union National Bank of North
Carolina, a North Carolina Corporation.
(b) Promissory Note dated March 27, 1995 between Nob Hill
Villa Apartment Associates, L.P., a Tennessee limited
partnership, and First Union National Bank of North Carolina,
a North Carolina Corporation.
(c) Assignment of leases and Rents dated March 27, 1995
between Nob Hill Villa Apartment Associates, L.P., a Tennessee
limited partnership, and First Union National Bank of North
Carolina, a North Carolina Corporation.
10.63 Multifamily Note dated November 30, 1995 between Briar Bay
Apartments, LTD., a Texas limited partnership, and Lehman
Brothers Holdings Inc. d/b/a Lehman Capital, A Division of
Lehman Brothers Holdings Inc. (Incorporated by reference to
the Annual Report on Form 10-K for the year ended December
31, 1995).
10.64 Multifamily Note dated November 30, 1995 between CCP IV
Associates, LTD., a Texas limited partnership, and Lehman
Brothers Holdings Inc. d/b/a Lehman Capital, A Division of
Lehman Brothers Holdings Inc. (Incorporated by reference to
the Annual Report on Form 10-K for the year ended December
31, 1995).
10.65 Multifamily Note dated November 30, 1995 between CCP IV
Associates, LTD., a Texas limited partnership, and Lehman
Brothers Holdings Inc. d/b/a Lehman Capital, A Division of
Lehman Brothers Holdings Inc. (Incorporated by reference to
the Annual Report on Form 10-K for the year ended December
31, 1995).
10.66 Multifamily Note dated November 30, 1995 between CCP IV
Associates, LTD., a Texas limited partnership, and Lehman
Brothers Holdings Inc. d/b/a Lehman Capital, A Division of
Lehman Brothers Holdings Inc. (Incorporated by reference to
the Annual Report on Form 10-K for the year ended December
31, 1995).
10.67 Multifamily Note dated November 30, 1995 between CCP IV
Associates, LTD., a Texas limited partnership, and Lehman
Brothers Holdings Inc. d/b/a Lehman Capital, A Division of
Lehman Brothers Holdings Inc. (Incorporated by reference to
the Annual Report on Form 10-K for the year ended December
31, 1995).
10.68 Multifamily Note dated November 30, 1995 between Foothill
Chimney Associates Limited Partnership, a Georgia limited
partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman
Capital, A Division of Lehman Brothers Holdings Inc.
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1995).
10.69 Multifamily Note dated November 30, 1995 between Foothill
Chimney Associates Limited Partnership, a Georgia limited
partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman
Capital, A Division of Lehman Brothers Holdings Inc.
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1995).
10.71 Exercise of the remaining portion of the option (as defined in
the Gordon Agreement), dated December 8, 1994 between MAE-ICC
and Gordon. (Incorporated by reference to Form 8-K dated
October 24, 1995).
10.75 Mortgage and Security Agreement dated November 18, 1997,
between Southport CCP IV, L.L.C., a South Carolina limited
liability company and Lehman Brothers Holdings, Inc. d/b/a
Lehman Capital, a division of Lehman Brothers Holdings,
Inc., a Delaware Corporation (Incorporated by reference to
the Annual Report on Form 10-K for the year ended December
31, 1998).
10.76 Multifamily Note dated November 9, 1999 between Point West
Associates Limited Partnership, a Georgia limited partnership
and GMAC Commercial Mortgage Corporation, a California
corporation. (Incorporated by reference to Annual Report on
Form 10-K ended December 31, 1999).
10.78 Multifamily Note dated February 2, 2000 between Apartment
Associates, Ltd., a Texas limited partnership and ARCS
Commercial Mortgage Co., L.P., a California limited
partnership. (Incorporated by reference to Annual Report on
Form 10-K ended December 31, 1999).
10.79 Multifamily Note dated February 28, 2000 between ConCap
Citadel Associated, Ltd., a Texas limited partnership and
ARCs Commercial Mortgage Cl., L.P., a California
corporation. (Incorporated by reference to Annual Report on
Form 10-K ended December 31, 1999).
10.80 Multifamily Note dated May 31, 2000 between Concap
Stratford Associates, Ltd., a Texas limited partnership and
ARCS Commercial Mortgage Co., L.P., a California limited
partnership. (Incorporated by reference to Quarterly Report
on Form 10-Q for quarter ended June 30, 2000.)
10.81 Multifamily Note dated August 29, 2000 between ConCap
Rivers Edge Associates, Ltd., a Texas Limited Partnership,
and GMAC Commercial Mortgage Corporation, a California
Corporation. (Incorporated by reference to Quarterly Report
on Form 10-Q for quarter ended September 30, 2000.)
10.82 Purchase and Sale Contract dated September 26, 2000 between
ConCap Stratford Associates, Ltd., a Texas Limited
Partnership, and First Worthing Company Limited, a Texas
Limited Partnership (Incorporated by reference to the Annual
Report on Form 10-K for the year ended December 31, 2000).
10.83 First Amendment to Purchase and Sale Contract dated October
26, 2000 between ConCap Stratford Associates, Ltd., a Texas
Limited Partnership, and First Worthing Company Limited, a
Texas Limited Partnership (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31,
2000).
10.84 Second Amendment to Purchase and Sale Contract dated October
31, 2000 between ConCap Stratford Associates, Ltd., a Texas
Limited Partnership, and First Worthing Company Limited, a
Texas Limited Partnership (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31,
2000).
10.85 Multifamily Note dated September 27, 2001 between
Consolidated Capital Properties IV, a California limited
partnership, doing business in Nebraska as Consolidated
Capital Properties IV Limited Partnership and AIMCO
Properties, L.P., a Delaware limited partnership, in favor
of GMAC Commercial Mortgage Corporation, a California
corporation (Incorporated by reference to the Quarterly
Report on Form 10-Q for the quarter ended September 30,
2001).
10.86 Multifamily Note dated December 20, 2001 between Post Ridge
Associates, Ltd., a Tennessee limited partnership, and GMAC
Commercial Mortgage Corporation, a California corporation.
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 2001).
10.87 Purchase and Sale Contract dated January 14, 2003 between
South Port CCP IV, L.L.C., a South Carolina limited
liability company, and Warren Lortie Associates, Inc., a
California corporation. (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31,
2003).
10.88 Reinstatement and First Amendment of Purchase and Sale
Contract between South Port IV, L.L.C., a South Carolina
limited liability company, and Warren Lortie Associates,
Inc., a California corporation. (Incorporated by reference
to the Annual Report on Form 10-K for the year ended
December 31, 2003).
10.89 Form of Multifamily Note dated October 22, 2003 between Post
Ridge Associates, Ltd., Limited Partnership, a Tennessee
limited partnership, and GMAC Commercial Mortgage Corporation,
a California corporation. (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31,
2000).
10.90 Form of Replacement Reserve Agreement dated October 22, 2003
between Post Ridge Associates, Ltd., Limited Partnership, a
Tennessee limited partnership, and GMAC Commercial Mortgage
Corporation, a California corporation. (Incorporated by
reference to the Annual Report on Form 10-K for the year ended
December 31, 2003).
10.91 Form on Repair Agreement dated October 22, 2003 between Post
Ridge Associates, Ltd., Limited Partnership, a Tennessee
limited partnership, and GMAC Commercial Mortgage Corporation,
a California corporation. (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31,
2003).
10.92 Form of Cross-Collateralization Agreement dated October 22,
2003 between Post Ridge Associates, Ltd., Limited Partnership,
a Tennessee limited partnership, and Federal Home Loan
Mortgage Corporation, a corporation organized and existing
under the laws of the United States of America. (Incorporated
by reference to the Annual Report on Form 10-K for the year
ended December 31, 2003).
10.93 Form of Cross-Collateralization Agreement dated October 22,
2003 between Foothill Chimney Associates Limited Partnership,
a Georgia limited partnership, and Federal Home Loan Mortgage
Corporation, a corporation organized and existing under the
laws of the United States of America. (Incorporated by
reference to the Annual Report on Form 10-K for the year ended
December 31, 2003.)
10.94 Form of Debt Service Escrow Agreement dated October 22, 2003
between Foothill Chimney Associates Limited Partnership, a
Georgia limited partnership, and Federal Homes Loan Mortgage
Corporation, a corporate instrumentality of the United States
of America. (Incorporated by reference to the Annual Report on
Form 10-K for the year ended December 31, 2003.)
10.95 Form of Second Modification to Replacement Reserve Agreement
dated October 22, 2003 between Foothill Chimney Associates
Limited Partnership, a Georgia limited partnership, and
Federal Homes Loan Mortgage Corporation, a corporate
instrumentality of the United States of America. (Incorporated
by reference to the Annual Report on Form 10-K for the year
ended December 31, 2003.)
10.96 Purchase and Sale Contract between Point West Associates
Limited Partnership, a Georgia limited partnership, as Seller
and Focus Development, Inc., a Georgia corporation, as
Purchaser, effective November 17, 2003. (Incorporated by
reference to Form 8-K dated March 31, 2004).
10.97 First Amendment to Purchase and Sale Contract dated January
23, 2004 between Point West Associates Limited Partnership, a
Georgia limited partnership, as Seller and Focus Development,
Inc., a Georgia corporation, as Purchaser. (Incorporated by
reference to Form 8-K dated March 31, 2004).
10.98 Multifamily Note dated June 21, 2004 between Concap Citadel
Associates, Ltd., a Texas limited partnership, and GMAC
Commercial Mortgage Bank.
10.99 Replacement Reserve Agreement dated June 21, 2004 between
Concap Citadel Associates, Ltd. a Texas limited
partnership, and GMAC Commercial Mortgage Bank.
10.100 Allonge and Amendment to Multifamily Note dated June 21,
2004 between Concap Citadel Associates, Ltd., a Texas
limited partnership, and Federal Home Loan Mortgage
Corporation.
10.101 Multifamily Note dated June 8, 2004 between Consolidated
Capital Properties IV, a California limited partnership, doing
business in Nebraska as Consolidated Capital Properties IV
Limited Partnership and GMAC Commercial Mortgage Bank.
10.102 Replacement Reserve Agreement dated June 8, 2004 between
Consolidated Capital Properties IV, a California limited
partnership, doing business in Nebraska as Consolidated
Capital Properties IV Limited Partnership and GMAC Commercial
Mortgage Bank.
10.103 Allonge and Amendment to Multifamily Note dated June 8, 2004
between Consolidated Capital Properties IV, a California
limited partnership, doing business in Nebraska as
Consolidated Capital Properties IV Limited Partnership and
Federal Home Loan Mortgage Corporation.
31.1 Certification of equivalent of Chief Executive Officer
pursuant to Securities Exchange Act Rules
13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
31.2 Certification of equivalent of Chief Financial Officer
pursuant to Securities Exchange Act Rules
13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
Exhibit 31.1
CERTIFICATION
I, Martha L. Long, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Consolidated Capital
Properties IV;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: August 16, 2004
/s/Martha L. Long
Martha L. Long
Senior Vice President of ConCap
Equities, Inc., equivalent of
the chief executive officer of
the Partnership
Exhibit 31.2
CERTIFICATION
I, Stephen B. Waters, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Consolidated Capital
Properties IV;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: August 16, 2004
/s/Stephen B. Waters
Stephen B. Waters
Vice President of ConCap
Equities, Inc., equivalent of the
chief financial officer of the
Partnership
Exhibit 32.1
Certification of CEO and CFO
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q of Consolidated Capital
Properties IV (the "Partnership"), for the quarterly period ended June 30, 2004
as filed with the Securities and Exchange Commission on the date hereof (the
"Report"), Martha L. Long, as the equivalent of the chief executive officer of
the Partnership, and Stephen B. Waters, as the equivalent of the chief financial
officer of the Partnership, each hereby certifies, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that, to the best of his knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Partnership.
/s/Martha L. Long
Name: Martha L. Long
Date: August 16, 2004
/s/Stephen B. Waters
Name: Stephen B. Waters
Date: August 16, 2004
This certification is furnished with this Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Partnership for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Exhibit 10.98
FHLMC Loan No. 002759993
Citadel Apartments
MULTIFAMILY NOTE
MULTISTATE - ADJUSTABLE RATE
REVISION DATE 3-25-04
US $1,310,000.00 Effective Date: as of June 21, 2004
FOR VALUE RECEIVED, the undersigned (together with such party's or
parties' successors and assigns, "Borrower"), jointly and severally (if more
than one) promises to pay to the order of GMAC COMMERCIAL MORTGAGE BANK, a Utah
industrial bank, the principal sum of One Million Three Hundred Ten Thousand and
00/100 Dollars (US $1,310,000.00), with interest on the unpaid principal balance
as hereinafter provided.
1. Defined Terms.
(a) As used in this Note:
"Adjustable Interest Rate" means the variable annual interest rate
calculated for each Interest Adjustment Period so as to equal the
Index Rate for such Interest Adjustment Period (truncated at the
fifth (5th) decimal place if necessary) plus the Margin. However, in
no event will the Adjustable Interest Rate exceed the Capped
Interest Rate.
"Amortization Period" means a period of -0- full consecutive
calendar months.
"Base Recourse" means a portion of the Indebtedness equal to zero
percent (0%) of the original principal balance of this Note.
"Business Day" means any day other than a Saturday, a Sunday or any
other day on which Lender is not open for business.
"Capped Interest Rate" is not applicable, there is no Capped
Interest Rate for the Loan.
"Default Rate" means a variable annual interest rate equal to four
(4) percentage points above the Adjustable Interest Rate in effect
from time to time. However, at no time will the Default Rate exceed
the Maximum Interest Rate.
"Index Rate" means, for any Interest Adjustment Period, the
Reference Bill(R) Index Rate for such Interest Adjustment Period.
"Installment Due Date" means, for any monthly installment of
interest only or principal and interest, the date on which such
monthly installment is due and payable pursuant to Section 3 of this
Note. The "First Installment Due Date" under this Note is August 1,
2004.
"Interest Adjustment Period" means each successive one (1) calendar
month period until the entire Indebtedness is paid in full, except
that the first Interest Adjustment Period is the period from the
date of this Note through June 30, 2004. Therefore, the second
Interest Adjustment Period shall be the period from July 1, 2004
through July 31, 2004, and so on until the entire Indebtedness is
paid in full.
"Lender" means the holder from time to time of this Note.
"LIBOR Index" means the British Bankers Association's (BBA) one (1)
month LIBOR Rate for United States Dollar deposits, as displayed on
the LIBOR Index Page used to establish the LIBOR Index Rate.
"LIBOR Index Rate" means, for any Interest Adjustment Period after
the first Interest Adjustment Period, the BBA's LIBOR Rate for the
LIBOR Index released by the BBA most recently preceding the first
day of such Interest Adjustment Period, as such LIBOR Rate is
displayed on the LIBOR Index Page. The LIBOR Index Rate for the
first Interest Adjustment Period means the British Bankers
Association's (BBA) LIBOR Rate for the LIBOR Index released by the
BBA most recently preceding the first day of the month in which the
first Interest Adjustment Period begins, as such LIBOR Rate is
displayed on the LIBOR Index Page. "LIBOR Index Page" is the
Bloomberg L.P., page "BBAM", or such other page for the LIBOR Index
as may replace page BBAM on that service, or at the option of Lender
(i) the applicable page for the LIBOR Index on another service which
electronically transmits or displays BBA LIBOR Rates, or (ii) any
publication of LIBOR rates available from the BBA. In the event the
BBA ceases to set or publish a LIBOR rate/interest settlement rate
for the LIBOR Index, Lender will designate an alternative index, and
such alternative index shall constitute the LIBOR Index Rate.
"Loan" means the loan evidenced by this Note.
"Lockout Period" is not applicable, there is no Lockout Period under
this Note.
"Margin" means three (3.00) percentage points (300 basis points).
"Maturity Date" means the earlier of (i) July 1, 2007 (the
"Scheduled Maturity Date"), and (ii) the date on which the unpaid
principal balance of this Note becomes due and payable by
acceleration or otherwise pursuant to the Loan Documents or the
exercise by Lender of any right or remedy under any Loan Document.
"Maximum Interest Rate" means the rate of interest that results in
the maximum amount of interest allowed by applicable law.
"Reference Bills(R)" means the unsecured general obligations of the
Federal Home Loan Mortgage Corporation ("Freddie Mac") designated by
Freddie Mac as "Reference Bills(R)" and having original durations to
maturity most comparable to the term of the Reference Bill Index,
and issued by Freddie Mac at regularly scheduled auctions. In the
event Freddie Mac shall at any time cease to designate any unsecured
general obligations of Freddie Mac as "Reference Bills", then at the
option of Lender (i) Lender may select from time to time another
unsecured general obligation of Freddie Mac having original
durations to maturity most comparable to the term of the Reference
Bill Index and issued by Freddie Mac at regularly scheduled
auctions, and the term "Reference Bills" as used in this Note shall
mean such other unsecured general obligations as selected by Lender;
or (ii) for any one or more Interest Adjustment Periods, Lender may
use the applicable LIBOR Index Rate as the Index Rate for such
Interest Adjustment Period(s).
"Reference Bill Index" means the one month Reference Bills.
One-month reference bills have original durations to maturity of
approximately 30 days.
"Reference Bill Index Rate" means, for any Interest Adjustment
Period after the first Interest Adjustment Period, the Money Market
Yield for the Reference Bills as established by the Reference Bill
auction conducted by Freddie Mac most recently preceding the first
day of such Interest Adjustment Period, as displayed on the
Reference Bill Index Page. The Reference Bill Index Rate for the
first Interest Adjustment Period means the Money Market Yield for
the Reference Bills as established by the Reference Bill auction
conducted by Freddie Mac most recently preceding the first day of
the month in which the first Interest Adjustment Period begins, as
displayed on the Reference Bill Index Page. The "Reference Bill
Index Page" is the Freddie Mac Debt Securities Web Page (accessed
via the Freddie Mac internet site at www.freddiemac.com), or at the
option of Lender, any publication of Reference Bills auction results
available from Freddie Mac. However, if Freddie Mac has not
conducted a Reference Bill auction within the 60-calendar day period
prior to the first day of an Interest Adjustment Period, the
Reference Bill Index Rate for such Interest Adjustment Period will
be the LIBOR Index Rate for such Interest Adjustment Period.
"Remaining Amortization Period" means, at any point in time, the
number of consecutive calendar months equal to the number of months
in the Amortization Period minus the number of scheduled monthly
installments of principal and interest that have elapsed since the
date of this Note.
"Security Instrument" means the multifamily mortgage, deed to secure
debt or deed of trust effective as of the effective date of this
Note, from Borrower to or for the benefit of Lender and securing
this Note.
"Window Period" means the three (3) consecutive calendar month
period prior to the Scheduled Maturity Date.
"Yield Maintenance Period" means the period from and including the
day following the expiration of the Lockout Period (or if there is
no Lockout Period, from and including the date of this Note) until
but not including N/A.
(b) Other capitalized terms used but not defined in this Note
shall have the meanings given to such terms in the Security
Instrument.
2. Address for Payment. All payments due under this Note shall be
payable at c/o GMAC Commercial Mortgage Corporation, 200
Witmer Road, P.O. Box 809, Horsham, Pennsylvania 19044, Attn:
Servicing-Account Manager, or such other place as may be
designated by Notice to Borrower from or on behalf of Lender.<