Item 1. Description of Business
Consolidated Capital Properties IV (the "Partnership" or "Registrant") was organized on September 22, 1981 as a limited partnership under the California Uniform Limited Partnership Act. On December 18, 1981, the Partnership commenced a public offering for the sale of 200,000 units (the "Units") with the general partner's right to increase the offering to 400,000 units. The Units represent equity interests in the Partnership and entitle the holders thereof to participate in certain allocations and distributions of the Partnership. The sale of Units closed on December 14, 1983, with 343,106 Units sold at $500 each, or gross proceeds of $171,553,000 to the Partnership. Since its initial offering, the Partnership has not received, nor are limited partners required to make, additional capital contributions.
By the end of fiscal year 1985, approximately 73% of the proceeds raised had been invested in 48 properties. Of the remaining 27%, 11% was required for organizational and offering expenses, sales commissions and acquisition fees, and 16% was retained in Partnership reserves for project improvements and working capital as required by the Partnership Agreement.
The general partner of the Partnership is ConCap Equities, Inc., a Delaware corporation (the "General Partner" or "CEI"). The General Partner is a subsidiary of Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The directors and officers of the General Partner also serve as executive officers of AIMCO. The Partnership Agreement provides that the Partnership is to terminate on December 31, 2011 unless terminated prior to that date.
The Partnership's primary business and only industry segment is real estate related operations. The Partnership is engaged in the business of operating and holding real estate properties for investment. As of the close of fiscal year 1985, the Partnership had completed its property acquisition stage and had acquired 48 properties. At December 31, 2002, the Partnership owned 15 income-producing properties (or interests therein), which range in age from 26 to 31 years old, principally located in the midwest, southeastern and southwestern United States. Prior to 2002, the Partnership had disposed of 33 properties originally owned by the Partnership. See "Item 2.
Item 2. Description of Properties
The Partnership originally acquired 48 properties of which thirteen (13) were sold, ten (10) were conveyed to lenders in lieu of foreclosure, and ten (10) were foreclosed upon by the lenders. As of December 31, 2002, the Partnership owned fifteen (15) apartment complexes. Additional information about the properties is found in "Item 8. Financial Statements and Supplementary Data".
(1) Property is held by a limited partnership and/or limited liability corporation in which the Partnership owns a 100% interest.
(2) Property is held by a limited partnership in which the Partnership owns a 99% interest.
(3) Property is held by a limited partnership in which the Partnership owns a 50% interest.
(4) Property sold subsequent to December 31, 2002.
Schedule of Properties
Set forth below for each of the Registrant's properties is the gross carrying value, accumulated depreciation, depreciable life, method of depreciation and Federal tax basis.
See "Note A - Organization and Significant Accounting Policies" to the consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data" for a description of the Partnership's capitalization and depreciation policies.
Schedule of Property Indebtedness
The following table sets forth certain information relating to the loans encumbering the Registrant's properties.
(1) Monthly payments of interest only at the stated rate until maturity.
(2) See "Note C - Mortgage Notes Payable" to the consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data" for information with respect to the Registrant's ability to prepay these loans and other specific details about the loans.
See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" for information relating to the refinancing of the mortgages encumbering The Apartments and Citadel Apartments in February 2000, the refinancing of the mortgage encumbering River's Edge Apartments in August 2000, the refinancing of the mortgage encumbering Lake Forest Apartments in September 2001, and the refinancing of the mortgage encumbering Post Ridge Apartments in December 2001.
Rental Rates and Occupancy
The following table sets forth the average annual rental rates and occupancy for 2002 and 2001 for each property.
The decrease in occupancy at Village East Apartments, River's Edge Apartments, Point West Apartments, Foothill Place Apartments, and Citadel Village Apartments is due to more tenants purchasing houses due to lower mortgage interest rates and changing economic conditions in their respective local markets. The Partnership attributes the decrease in occupancy at Chimney Hill Apartments primarily to general economic conditions, local market conditions and the location of the property. In addition, the presence of mold in a significant number of the units and general deferred maintenance issues has resulted in all apartment units not being available for rent at December 31, 2002. The General Partner is currently evaluating its options with respect to Chimney Hill Apartments, including rehabilitation or complete rebuild of the property.
As noted under "Item 1. Description of Business", the real estate industry is highly competitive. All of the properties are subject to competition from other residential apartment complexes in the area. The General Partner believes that all of the properties are adequately insured. Each property is an apartment complex which leases units for lease terms of one year or less. No residential tenant leases 10% or more of the available rental space. All of the properties are in good physical condition, with the exception of Chimney Hill Apartments, as described above, subject to normal depreciation and deterioration as is typical for assets of this type and age.
Real Estate Taxes and Rates
Real estate taxes and rates in 2002 and 2001 for each property were:
Capital Improvements
The Apartments
During the year ended December 31, 2002, the Partnership completed approximately $70,000 of capital improvements at the property, consisting primarily of structural upgrades, parking area improvements, office computers and appliance and floor covering replacements. These improvements were funded from operating cash flow. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year and currently expects to budget approximately $56,000. Additional improvements may be considered during 2003 and will depend on the physical condition of the property as well as Partnership reserves and anticipated cash flow generated by the property.
Arbours of Hermitage Apartments
During the year ended December 31, 2002, the Partnership completed approximately $208,000 of capital improvements at the property, consisting primarily of structural enhancements, office computers, plumbing improvements, air conditioning upgrades, roof replacements and floor covering replacements. These improvements were funded from operating cash flow. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year and currently expects to budget approximately $105,000. Additional improvements may be considered during 2003 and will depend on the physical condition of the property as well as Partnership reserves and anticipated cash flow generated by the property.
Briar Bay Racquet Club Apartments
During the year ended December 31, 2002, the Partnership completed approximately $57,000 of capital improvements at the property consisting primarily of roof replacements, water heater replacements, installation of a sprinkler system, and appliance and floor covering replacements. These improvements were funded from operating cash flow and replacement reserves. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year and currently expects to budget approximately $58,000. Additional improvements may be considered during 2003 and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property.
Chimney Hill Apartments
During the year ended December 31, 2002, the Partnership completed approximately $410,000 of capital improvements at the property consisting primarily of parking lot resurfacing, appliance and floor covering replacements, roof replacements, air conditioning upgrades, structural upgrades, water heater replacements and clubhouse renovations. These expenditures included capitalized construction period interest of approximately $107,000, taxes and insurance of approximately $31,000 and other construction period expenses of approximately $65,000. These improvements were funded from operating cash flow and Partnership reserves. The Partnership is currently evaluating its options for the property for 2003, including rehabilitation or complete rebuild of the property.
Citadel Apartments
During the year ended December 31, 2002, the Partnership completed approximately $116,000 of capital improvements at the property consisting primarily of electrical upgrades, roof replacements, water heater replacements, plumbing improvements, air conditioning replacements, floor covering and appliance replacements and swimming pool improvements. These improvements were funded from operating cash flow. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year and currently expects to budget approximately $78,000. Additional improvements may be considered during 2003 and will depend on the physical condition of the property as well as Partnership reserves and anticipated cash flow generated by the property.
Citadel Village Apartments
During the year ended December 31, 2002, the Partnership completed approximately $90,000 of capital improvements at the property, consisting primarily of major landscaping, plumbing improvements, water heater replacements, air conditioning replacements and appliance and floor covering replacements and structural upgrades. These improvements were funded from operating cash flow. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year and currently expects to budget approximately $37,000. Additional improvements may be considered during 2003 and will depend on the physical condition of the property as well as Partnership reserves and anticipated cash flow generated by the property.
Foothill Place Apartments
During the year ended December 31, 2002, the Partnership completed approximately $286,000 of capital improvements at the property, consisting primarily of floor covering and appliance replacements, plumbing fixture replacements, parking area improvements, air conditioning upgrades, roof replacements, major landscaping, office computers and water heater replacements. These improvements were funded from operating cash flow. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year and currently expects to budget approximately $135,000. Additional improvements may be considered during 2003 and will depend on the physical condition of the property as well as Partnership reserves and anticipated cash flow generated by the property.
Knollwood Apartments
During the year ended December 31, 2002, the Partnership completed approximately $223,000 of capital improvements at the property, consisting primarily of structural improvements, water heater replacements, roof replacements, office computers, plumbing fixture replacements, air conditioning replacements and floor covering and appliance replacements. These improvements were funded from operating cash flow. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year and currently expects to budget approximately $98,000. Additional improvements may be considered during 2003 and will depend on the physical condition of the property as well as Partnership reserves and anticipated cash flow generated by the property.
Lake Forest Apartments
During the year ended December 31, 2002, the Partnership completed approximately $126,000 of capital improvements at the property, consisting primarily of water heater replacements, office computers, parking lot resurfacing and floor covering and appliance replacements. These improvements were funded from operating cash flow. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year and currently expects to budget approximately $94,000. Additional improvements may be considered during 2003 and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property.
Nob Hill Villa Apartments
During the year ended December 31, 2002, the Partnership completed approximately $277,000 of capital improvements at the property consisting primarily of structural improvements, water heater replacements, office computers, plumbing fixture replacements, perimeter fencing, air conditioning replacements and floor covering and appliance replacements. These improvements were funded from replacement reserves and operating cash flow. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year and currently expects to budget approximately $142,000. Additional improvements may be considered during 2003 and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property.
Point West Apartments
During the year ended December 31, 2002, the Partnership completed approximately $62,000 of capital improvements at the property consisting primarily of water heater replacements, air conditioning replacements and floor covering and appliance replacements. These improvements were funded from operating cash flow. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year and currently expects to budget approximately $36,000. Additional improvements may be considered during 2003 and will depend on the physical condition of the property as well as Partnership reserves and anticipated cash flow generated by the property.
Post Ridge Apartments
During the year ended December 31, 2002, the Partnership completed approximately $139,000 of capital improvements at the property, consisting primarily of floor covering and appliance replacements, structural improvements, water submetering enhancements, water heater replacements, office computers and air conditioning replacements. These improvements were funded from operating cash flow and Partnership reserves. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year and currently expects to budget approximately $45,000. Additional improvements may be considered during 2003 and will depend on the physical condition of the property as well as Partnership reserves and anticipated cash flow generated by the property.
Rivers Edge Apartments
During the year ended December 31, 2002, the Partnership completed approximately $86,000 of capital improvements at the property, consisting primarily of major landscaping and floor covering and appliance replacements. These improvements were funded from operating cash flow. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year and currently expects to budget approximately $36,000. Additional improvements may be considered during 2003 and will depend on the physical condition of the property as well as Partnership reserves and anticipated cash flow generated by the property.
South Port Apartments
During the year ended December 31, 2002, the Partnership completed approximately $105,000 of capital improvements at the property, consisting primarily of water heater replacements, land improvements, floor covering and appliance replacements and plumbing fixture replacements. These improvements were funded from operating cash flow, insurance proceeds and replacement reserves. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year and currently expects to budget approximately $72,000. Additional improvements may be considered during 2003 and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. In March 2000, South Port Apartments had hail and wind damage, which affected all 240 units and damaged 100% of the roof, which was replaced. Insurance proceeds of approximately $168,000 and $182,000 were received during the years ended December 31, 2002 and 2001, respectively. The Partnership recognized a casualty gain of approximately $120,000 and $128,000 for the years ended December 31, 2002 and 2001, respectively, which represents the excess of the proceeds received as of December 31, 2002 and 2001, respectively, over the write-off of the undepreciated damaged assets.
Village East Apartments
During the year ended December 31, 2002, the Partnership completed approximately $310,000 of capital improvements at the property, consisting primarily of plumbing fixture replacements, swimming pool improvements, land improvements, water heater replacements, major landscaping, exterior building painting and floor covering and appliance replacements. These improvements were funded from Partnership reserves and operating cash flow. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year and currently expects to budget approximately $41,000. Additional improvements may be considered during 2003 and will depend on the physical condition of the property as well as Partnership reserves and anticipated cash flow generated by the property.
Item 3.
Item 3. 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 purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which 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 which 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 seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs filed an amended complaint. The General Partner filed demurrers to the amended complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to court approval, on behalf of the Partnership and all limited partners who owned units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Court, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing, the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of prior lead counsel to enter the settlement. On December 14, 1999, the General Partner and its affiliates terminated the proposed settlement. In February 2000, counsel for some of the named plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated the settlement. On June 27, 2000, the Court entered an order disqualifying them from the case and an appeal was taken from the order on October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the putative class. Plaintiffs filed a third amended complaint on January 19, 2001. On March 2, 2001, the General Partner and its affiliates filed a demurrer to the third amended complaint. On May 14, 2001, the Court heard the demurrer to the third amended complaint. On July 10, 2001, the Court issued an order sustaining defendants' demurrer on certain grounds. On July 20, 2001, Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order granting in part and denying in part defendants' demurrer. On September 7, 2001, Plaintiffs filed a fourth amended class and derivative action complaint. On September 12, 2001, the Court denied Plaintiffs' motion for reconsideration. On October 5, 2001, the General Partner and affiliated defendants filed a demurrer to the fourth amended complaint, which was heard on December 11, 2001. On February 2, 2002, the Court served its order granting in part the demurrer. The Court has dismissed without leave to amend certain of the plaintiffs' claims. On February 11, 2002, plaintiffs filed a motion seeking to certify a putative class comprised of all non-affiliated persons who own or have owned units in the partnerships. The General Partner and affiliated defendants oppose the motion. On April 29, 2002, the Court held a hearing on plaintiffs' motion for class certification and took the matter under submission after further briefing, as ordered by the court, was submitted by the parties. On July 10, 2002, the Court entered an order vacating the current trial date of January 13, 2003 (as well as the pre-trial and discovery cut-off dates) and stayed the case in its entirety through November 7, 2002 so that the parties could have an opportunity to discuss settlement. On October 30, 2002, the court entered an order extending the stay in effect through January 10, 2003.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed settlement of the Nuanes action and the Heller action described below. The Court has scheduled the hearing on preliminary approval for April 4, 2003 and the hearing on final approval for June 2, 2003.
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 a tender offer 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 provides 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. If the Court grants preliminary approval of the proposed settlement in April, a notice will be distributed to partners providing detail on the terms of the proposed settlement.
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 first amended complaint in the Heller action is brought as a purported derivative action, and asserts claims for among other things breach of fiduciary duty; unfair competition; conversion, unjust enrichment; and judicial dissolution. Plaintiffs in the Nuanes action filed a motion to consolidate the Heller action with the Nuanes action and stated that the Heller action was filed in order to preserve the derivative claims that were dismissed without leave to amend in the Nuanes action by the Court order dated July 10, 2001. On October 5, 2001, the General Partner and affiliated defendants moved to strike the first amended complaint in its entirety for violating the Court's July 10, 2001 order granting in part and denying in part defendants' demurrer in the Nuanes action, or alternatively, to strike certain portions of the complaint based on the statute of limitations. Other defendants in the action demurred to the fourth amended complaint, and, alternatively, moved to strike the complaint. On December 11, 2001, the court heard argument on the motions and took the matters under submission. On February 4, 2002, the Court served notice of its order granting defendants' motion to strike the Heller complaint as a violation of its July 10, 2001 order in the Nuanes action. On March 27, 2002, the plaintiffs filed a notice appealing the order striking the complaint. Before completing briefing on the appeal, the parties stayed further proceedings in the appeal pending the Court's review of the terms of the proposed settlement described above.
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.
The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature arising in the ordinary course of business.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
The unit holders of the Partnership did not vote on any matter during the quarter ended December 31, 2002.
PART II
Item 5.
Item 5. Market for the Registrant's Units of Limited Partnership and Related Security Holder Matters
(A) No established trading market for the Partnership's Units exists, nor is one expected to develop.
(B) Title of Class Number of Unitholders of Record
Limited Partnership Units 7,548 as of December 31, 2002
There were 342,773 Units outstanding at December 31, 2002, of which affiliates of the General Partner owned 193,528.50 Units or approximately 56.46%.
The following table sets forth the distributions declared by the Partnership for the years ended December 31, 2000, 2001 and 2002 (see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" for more details):
Distributions Per Limited Aggregate Partnership Unit (in thousands)
01/01/00 - 12/31/00 $11,239 (1) $31.32 01/01/01 - 12/31/01 9,205 (2) 25.59 01/01/02 - 12/31/02 5,620 (3) 15.66
(1) Consists of approximately $6,250,000 of cash from operations and approximately $4,989,000 of surplus cash. The surplus funds were from the refinancing of The Apartments, Citadel Apartments, Stratford Place Apartments, and River's Edge Apartments and sales proceeds from Overlook Apartments sold in December 1999. Approximately $197,000 of this distribution from surplus cash was accrued at December 31, 2002.
(2) Consists of approximately $5,047,000 of cash from operations and approximately $4,158,000 of surplus cash. Surplus funds were from the refinancing of Lake Forest Apartments and sales proceeds from Stratford Place Apartments sold in December of 2000. Approximately $166,000 of this distribution from surplus cash was accrued at December 31, 2002.
(3) Consists of approximately $5,544,000 of cash from operations and approximately $76,000 of surplus funds. The surplus funds were from the refinancing proceeds of Post Ridge Apartments which occurred in December 2001. Approximately $3,000 of this distribution from surplus cash was accrued at December 31, 2002.
During the year ended December 31, 2000, approximately $4,113,000 of surplus funds from the financing of Point West Apartments in 1999 and previously undistributed refinance proceeds from 1996 and 1997 were distributed. At December 31, 2002, approximately $205,000, of the total distributions were accrued.
Future cash distributions will depend on the levels of net cash generated from operations, the availability of cash reserves and the timing of the debt maturities, refinancings and/or property sales. The Partnership's cash available for distribution is reviewed on a monthly basis. There can be no assurance, however, that the Partnership will generate sufficient funds from operations after required capital expenditures to permit distributions to its partners in the year 2003 or subsequent periods. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" for information relating to anticipated capital expenditures at the properties.
In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 193,528.50 limited partnership units in the Partnership representing 56.46% of the outstanding units at December 31, 2002. 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 of limited partnership interest in the Partnership in exchange for cash or a combination of cash and units in the operating partnership of AIMCO either through private purchases or tender offers. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters, which would include voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. As a result of its ownership of 56.46% 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.
Item 6.
Item 6. Selected Financial Data
The following table sets forth a summary of certain financial data for the Partnership. Certain 1998, 1999, 2000 and 2001 amounts have been restated to conform to the 2002 presentation in accordance with accounting principles generally accepted in the United States. This summary should be read in conjunction with the Partnership's consolidated financial statements and notes thereto appearing in "Item 8. Financial Statements and Supplementary Data."
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
INTRODUCTION
The operations of the Partnership primarily include operating and holding income-producing real estate properties for the benefit of its partners. Therefore, the following discussion of operations, liquidity and capital resources will focus on these activities and should be read in conjunction with "Item 8. Financial Statements and Supplementary Data" and the notes related thereto included elsewhere in this report.
Results of Operations
The Partnership's net income was approximately $4,264,000 for the year ended December 31, 2002, as compared to approximately $4,158,000 for the year ended December 31, 2001 and net income of approximately $8,474,000 for the year ended December 31, 2000.
Effective January 1, 2002, the Partnership adopted Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", which established standards for the way that public business enterprises report information about long-lived assets that are either being held for sale or have already been disposed of by sale or other means. The standard requires that results of operations for a long-lived asset that is being held for sale or has already been disposed of be reported as a discontinued operation on the statement of operations. As a result, the accompanying consolidated statements of operations have been restated as of December 31, 2001 and 2000, respectively, to reflect the operations of Stratford Place Apartments and Overlook Apartments as income from discontinued operations due to their sales ranging from December 1999 to December 2000. The gain on sale of discontinued operations recognized during the year ended December 31, 2000, was approximately $3,440,000. The income from discontinued operations recognized during the years ended December 31, 2001 and 2000 was approximately $84,000 and $21,000, respectively.
Effective April 1, 2002, the Partnership adopted SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64". SFAS No. 4 "Reporting Gains and Losses from Extinguishment of Debt," required that all gains and losses from extinguishment of debt be aggregated and, if material, classified as an extraordinary item. SFAS No. 145 rescinds SFAS No. 4, and accordingly, gains and losses from extinguishment of debt should only be classified as extraordinary if they are unusual in nature and occur infrequently. Neither of these criteria applies to the Partnership. As a result, the accompanying consolidated statements of operations have been restated as of December 31, 2001 and 2000, respectively, to reflect the loss on early extinguishment of debt of approximately $142,000 at Post Ridge Apartments and approximately $40,000 at Lake Forest Apartments in interest expense in 2001, approximately $26,000 at Citadel Apartments and approximately $33,000 at the Apartments in interest expense in 2000 and approximately $148,000 at Stratford Place Apartments in gain from sale of discontinued operations rather than as an extraordinary item in 2000.
Excluding the impact of discontinued operations, the Partnership's income was approximately $4,264,000 for the year ended December 31, 2002, as compared to approximately $4,074,000 for the year ended December 31, 2001 and income of approximately $5,013,000 for the year ended December 31, 2000.
As part of the ongoing business plan of the Partnership, the General Partner monitors the rental market environment of each of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the General Partner will be able to sustain such a plan.
2002 Compared to 2001
Excluding the impact of discontinued operations, income increased due to a decrease in total expenses partially offset by a decrease in total revenues. The decrease in total revenues is due to a decrease in rental income and casualty gain partially offset by an increase in other income. The decrease in rental income is due to decreased average rental rates at twelve of the Partnership's fifteen properties, a decrease in occupancy levels at nine of the investment properties and an increase in bad debt expense at thirteen of the investment properties partially offset by a decrease in concessions and special promotions at thirteen investment properties. The decrease in casualty gain was the result of fires and wind and hail damage at three of the properties recognized in 2001 partially offset by a casualty gain at one property recognized in 2002 as discussed below. The increase in other income is primarily attributable to an increase in utility reimbursements and lease cancellation fees partially offset by a decrease in miscellaneous income and interest income as a result of lower average cash balances being maintained in interest bearing accounts.
In March 2000, South Port Apartments had hail and wind damage, which affected all 240 units and damaged 100% of the roof, which was replaced. Insurance proceeds of approximately $168,000 and $182,000 were received during the years ended December 31, 2002 and 2001, respectively. The Partnership recognized a casualty gain of approximately $120,000 and $128,000 for the years ended December 31, 2002 and 2001, which represents the excess of the proceeds received as of December 31, 2002 and 2001, respectively, over the write-off of undepreciated damaged assets.
In April 2001, The Arbours of Hermitage had a fire, which damaged one apartment building. Insurance proceeds of approximately $83,000 were received during the year ended December 31, 2001. The Partnership recognized a casualty gain of approximately $83,000 for the year ended December 31, 2001. The damaged assets were fully depreciated at the time of the fire.
In May 2000, Nob Hill Villa Apartments had a fire, which damaged two apartment units. Insurance proceeds of approximately $33,000 were received during the year ended December 31, 2001. The Partnership recognized a casualty gain of approximately $25,000 for the year ended December 31, 2001, which represents the excess of the proceeds received as of December 31, 2001 over the write-off of the undepreciated damaged assets.
Total expenses decreased due to a decrease in operating, general and administrative, depreciation and interest expenses partially offset by an increase in property tax expense. Operating expense decreased due to a decrease in property and maintenance expenses and property management fees partially offset by an increase in advertising expense and insurance expense. Property expense decreased due to a decrease in employee salaries, gas utility bills and commissions and bonuses partially offset by an increase in utility processing fees and leasing payroll. Maintenance expense decreased during 2002 due to an increase in the capitalization of certain direct and indirect project costs, primarily payroll related costs (see "Item 8. Financial Statements - Note A"). Property management fees are based on a percentage of revenues and decreased as a result of decreases in rental income at many of the investment properties. Advertising expense increased due to an increase in resident relations at Chimney Hill Apartments and web advertising partially offset by a decrease in newspaper advertising. Insurance expense increased due to an increase in hazard insurance premiums at many of the Partnership's investment properties. General and administrative expenses decreased due to a decrease in professional fees and management reimbursements to the General Partner as allowed under the Partnership Agreement partially offset by an increase in the 9% management fee on distributions from operating cash flows. Depreciation decreased due to some fixed assets becoming fully depreciated at The Apartments and Lake Forest Apartments during 2002 partially offset by an increase in capital improvements completed and placed into service during the past twelve months. Interest expense decreased due to losses on early extinguishment of debt of approximately $142,000 from Post Ridge Apartments and approximately $42,000 from Lake Forest Apartments recognized in 2001 and the capitalization of approximately $107,000 of interest expense at Chimney Hill Apartments related to the renovation project during 2002. The increase in property tax expense is due to an increase in the assessed value of several of the Partnership's properties and a decrease in refunds from overpayment of prior year taxes.
2001 Compared to 2000
Excluding the impact of discontinued operations, income decreased due to an increase in total expenses partially offset by an increase in total revenues. Total revenues increased due to an increase in rental income, casualty gain and other income. The increase in rental income is due to increased average rental rates at fourteen of the Partnership's fifteen properties partially offset by a decrease in occupancy levels at eleven of the investment properties. The increase in casualty gain was the result of fires and wind and hail damage at three of the properties as discussed below. The increase in other income is primarily attributable to an increase in utility reimbursements partially offset by a decrease in interest income as a result of lower average cash balances being maintained in interest bearing accounts.
In March 2000, South Port Apartments had hail and wind damage, which affected all 240 units and damaged 100% of the roof, which was replaced. Insurance proceeds of approximately $182,000 were received during the year ended December 31, 2001. The Partnership recognized a casualty gain of approximately $128,000 for the year ended December 31, 2001, which represents the excess of the proceeds received as of December 31, 2001 over the write-off of undepreciated damaged assets.
In April 2001, The Arbours of Hermitage had a fire, which damaged one apartment building. Insurance proceeds of approximately $83,000 were received during the year ended December 31, 2001. The Partnership recognized a casualty gain of approximately $83,000 for the year ended December 31, 2001. The damaged assets were fully depreciated at the time of the fire.
In May 2000, Nob Hill Villa Apartments had a fire, which damaged two apartment units. Insurance proceeds of approximately $33,000 were received during the year ended December 31, 2001. The Partnership recognized a casualty gain of approximately $25,000 for the year ended December 31, 2001, which represents the excess of the proceeds received as of December 31, 2001 over the write-off of the undepreciated damaged assets.
Total expenses increased due to increases in operating, general and administrative, depreciation, property taxes and interest expenses. Operating expense increased due to increases in property, insurance, and maintenance expenses. Property expense increased due to an increase in employee salaries and related benefits and an increase in utility expense relating to vacant apartments. Insurance expense increased due to an increase in insurance premiums at fourteen of the Partnership's investment properties. Maintenance expense increased due to contract labor and materials and supplies used by the investment properties. General and administrative expenses increased primarily due to a new tax imposed by the State of Tennessee on the Partnership's properties in that state during the year ended December 31, 2001 and in an increase in the cost of services included in management reimbursements to the General Partner as allowed under the Partnership Agreement partially offset by a decrease in the 9% management fee on distributions from operating cash flows. Depreciation expense on the remaining properties increased due to capital improvements completed and placed into service during the past twelve months. The increase in property tax expense is due to an increase in the assessed value of five of the Partnership's properties. The increase in interest expense is attributable to an increase in debt balances is a result of refinancings that occurred in late 2000 and 2001 at Rivers Edge and Lake Forest Apartments and losses on early extinguishment of debt related to Lake Forest Apartments and Post Ridge Apartments in 2001.
On December 28, 2000, ConCap Stratford Associates, Ltd. sold Stratford Place Apartments to an unaffiliated third party for $7,600,000. After payment of closing costs of approximately $587,000, the net proceeds received by the Partnership were approximately $2,508,000. The purchaser assumed the mortgage encumbering the property of approximately $4,505,000. The gain on the sale recognized during the fourth quarter of 2000 was approximately $3,440,000 and is included in gain from sale of discontinued operations.
LIQUIDITY AND CAPITAL RESOURCES
2002 Compared to 2001
At December 31, 2002, the Partnership held cash and cash equivalents of approximately $2,127,000 as compared to approximately $2,729,000 at December 31, 2001. The decrease in cash and cash equivalents of approximately $602,000 since the Partnership's year ended December 31, 2001 is due to approximately $2,409,000 of cash used in investing activities and approximately $6,462,000 of cash used in financing activities partially offset by approximately $8,269,000 of cash provided by operating activities. Cash used in financing activities consisted primarily of distributions to partners and payments of principal on the mortgages encumbering the Partnership's properties. Cash used in investing activities consisted primarily of property improvements and replacements and deposits to restricted escrow accounts partially offset by net insurance proceeds received from the casualty at South Port Apartments. The Partnership invests its working capital reserves in interest bearing accounts.
In March 2000, South Port Apartments had hail and wind damage, which affected all 240 units and damaged 100% of the roof, which was replaced. Insurance proceeds of approximately $168,000 and $182,000 were received during the years ended December 31, 2002 and 2001, respectively. The Partnership recognized a casualty gain of approximately $120,000 and $128,000 for the years ended December 31, 2002 and 2001, which represents the excess of the proceeds received as of December 31, 2002 and 2001, respectively, over the write-off of undepreciated damaged assets.
In April 2001, The Arbours of Hermitage had a fire, which damaged one apartment building. Insurance proceeds of approximately $83,000 were received during the year ended December 31, 2001. The Partnership recognized a casualty gain of approximately $83,000 for the year ended December 31, 2001. The damaged assets were fully depreciated at the time of the fire.
In May 2000, Nob Hill Villa Apartments had a fire, which damaged two apartment units. Insurance proceeds of approximately $33,000 were received during the year ended December 31, 2001. The Partnership recognized a casualty gain of approximately $25,000 for the year ended December 31, 2001, which represents the excess of the proceeds received as of December 31, 2001 over the write-off of the undepreciated damaged assets.
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 and is studying new federal laws, including the Sarbanes-Oxley Act of 2002. 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. The Partnership is currently evaluating the capital improvement needs of the properties for the upcoming year and currently expects to budget approximately $1,033,000, not including Chimney Hill Apartments. The General Partner is currently evaluating its options with respect to Chimney Hill Apartments, including rehabilitation or complete rebuild of the property. The expected costs for these options is not estimable at this time. Additional improvements may be considered during 2003 and will depend on the physical condition of the properties as well as replacement reserves and anticipated cash flow generated by the properties. The 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 Partnership's mortgage indebtedness of approximately $72,630,000 matures at various dates between 2004 and 2022 with balloon payments of approximately $4,119,000 and $42,280,000 due in 2004 and 2005, respectively. 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.
Pursuant to the Partnership Agreement, the term of the Partnership is scheduled to expire on December 31, 2011. Accordingly, prior to such date the Partnership will need to either sell its investment properties or extend the term of the Partnership.
On December 21, 2001, the Partnership refinanced the mortgage encumbering Post Ridge Apartments. The refinancing replaced mortgage indebtedness of approximately $4,050,000 with a new mortgage of $4,500,000. The mortgage was refinanced at a rate of 6.63% compared to the prior rate of 7.33% and matures on January 1, 2022. Capitalized loan costs incurred for the refinancing were approximately $254,000. The Partnership wrote off approximately $32,000 in unamortized loan costs and paid prepayment penalties of approximately $110,000 resulting in a loss on early extinguishment of debt of approximately $142,000, which was reflected in interest expense.
On September 27, 2001, the Partnership refinanced the mortgage encumbering Lake Forest Apartments. The refinancing replaced mortgage indebtedness of approximately $4,700,00 with a new mortgage of $6,500,000. The mortgage was refinanced at a rate of 7.13% compared to the prior rate of 7.33% and matures on October 1, 2021. Capitalized loan costs incurred for the refinancing were approximately $217,000. The Partnership wrote off unamortized loan costs, which resulted in a loss on early extinguishment of debt of approximately $40,000 which was reflected in interest expense. The Partnership was required to establish a repair escrow of approximately $36,000 at the date of the refinancing. The Partnership is also required to establish a replacement reserve escrow by making monthly deposits until the mortgage is paid in full.
On August 31, 2000, the Partnership refinanced the mortgage encumbering Rivers Edge Apartments. The refinancing replaced mortgage indebtedness of approximately $1,895,000 with a new mortgage of $4,000,000. The mortgage was refinanced at a rate of 7.82% compared to a prior rate of 8.40% and matures on September 1, 2020. Capitalized loan costs incurred for the refinancing were approximately $90,000. There was no loss recognized due to the refinancing occurring at the maturity of the prior mortgage.
On May 31, 2000, the Partnership refinanced the mortgage encumbering Stratford Place Apartments. The refinancing replaced mortgage indebtedness of approximately $2,493,000 with a new mortgage of $4,550,000. The mortgage was refinanced at a rate of 8.48% compared to the prior rate of 8.65%. Capitalized loan costs incurred for the refinancing were approximately $149,000. The Partnership wrote off approximately $4,000 in unamortized loan costs and paid prepayment penalties of approximately $1,000 resulting in a loss on early extinguishment of debt of approximately $5,000. On December 28, 2000, the Partnership sold Stratford Place Apartments to an unaffiliated third party that assumed the mortgage encumbering the property. The Partnership wrote off the unamortized loan costs resulting in an additional loss on early extinguishment of debt of approximately $143,000. The loss on early extinguishment of debt is included in gain from discontinued operations.
On February 28, 2000, the Partnership refinanced the mortgage encumbering Citadel Apartments. The refinancing replaced mortgage indebtedness of approximately $4,548,000 with a new mortgage of $4,710,000. The mortgage was refinanced at a rate of 8.25% compared to the prior rate of 8.38% and matures on March 1, 2020. Capitalized loan costs incurred for the refinancing were approximately $142,000. The Partnership wrote off approximately $19,000 in unamortized loan costs and paid prepayment penalties of approximately $7,000 resulting in a loss on early extinguishment of debt of approximately $26,000, which is included in interest expense.
On February 2, 2000, the Partnership refinanced the mortgage encumbering The Apartments. The refinancing replaced mortgage indebtedness of approximately $3,288,000 with a new mortgage of $4,775,000. The mortgage was refinanced at a rate of 8.37% compared to the prior rate of 8.34% and matures on March 1, 2020. Capitalized loan costs incurred for the refinancing were approximately $129,000. The Partnership wrote off approximately $11,000 in unamortized loan costs and paid prepayment penalties of approximately $22,000 resulting in a loss on early extinguishment of debt of approximately $33,000, which is included in interest expense.
On November 9, 1999, the Partnership obtained financing on Point West Apartments. An additional $20,000 of loan costs related to the 1999 transaction were incurred during the year ended December 31, 2000.
The Partnership distributed the following amounts during the years ended December 31, 2002, 2001 and 2000 (in thousands except per unit data):
(1) From refinance proceeds of Post Ridge Apartments distributed in 2002, refinancing proceeds of Lake Forest Apartments distributed in 2001 and refinancing proceeds of The Apartments, Citadel Apartments, Rivers Edge Apartments and Stratford Place Apartments distributed in 2000.
(2) From sale proceeds of Stratford Place Apartments distributed in 2001 and sale proceeds of Overlook Apartments distributed in 2000.
In conjunction with the transfer of funds from their certain majority-owned sub-tier limited partnerships to the Partnership, approximately $29,000, $66,000 and $56,000 was distributed to the general partner of the majority owned sub-tier limited partnerships during the years ended December 31, 2002, 2001, and 2000, 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 further distributions to its partners in 2003 or subsequent periods.
Other
In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 193,528.50 limited partnership units in the Partnership representing 56.46% of the outstanding Units at December 31, 2002. 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 of limited partnership interest in the Partnership in exchange for cash or a combination of cash and units in the operating partnership of AIMCO either through private purchases or tender offers. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters, which would include voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. As a result of its ownership of 56.46% 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
A summary of the Partnership's significant accounting policies is included in "Note A - Organization and Significant Accounting Policies" to the consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data." The General Partner believes that the consistent application of these policies enables the Partnership to provided readers of the financial statements with useful and reliable information about the Partnership's operating results and financial condition. The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires the Partnership to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements as well as reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Judgments and assessments of uncertainties are required in applying the Partnership's accounting policies in many areas. 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 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 an impairment in 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 and the Partnership fully reserves all balances outstanding over thirty days. The Partnership will offer rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area. Concessions are charged to income as incurred.
Item 7a.
Item 7a. Market Risk Factors
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 December 31, 2002, a 100 basis point increase or decrease in market interest rates would have an annual impact of approximately $726,000 on the Partnership.
The following table summarizes the Partnership's debt obligations at December 31, 2002. The interest rates represent the weighted-average rates. The fair value of the debt obligations after discounting the scheduled loan payments to maturity, at the Partnership's incremental borrowing rate was approximately $75,912,000 at December 31, 2002.
Item 8.
Item 8. Financial Statements and Supplementary Data
CONSOLIDATED CAPITAL PROPERTIES IV
LIST OF FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Auditors
Consolidated Balance Sheets - December 31, 2002 and 2001
Consolidated Statements of Operations - Years ended December 31, 2002,2001 and 2000
Consolidated Statements of Changes in Partners' Deficit - Years ended December 31, 2002, 2001, and 2000
Consolidated Statements of Cash Flows - Years ended December 31, 2002, 2001 and 2000
Notes to Consolidated Financial Statements
Report of Ernst & Young LLP, Independent Auditors
The Partners Consolidated Capital Properties IV
We have audited the accompanying consolidated balance sheets of Consolidated Capital Properties IV as of December 31, 2002 and 2001, and the related consolidated statements of operations, changes in partners' deficit, and cash flows for each of the three years in the period ended December 31, 2002. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Partnership's management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Consolidated Capital Properties IV at December 31, 2002 and 2001, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States.
As discussed in Note A to the financial statements, in 2002 the Partnership adopted Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" and Statement of Financial Accounting Standards No. 145, "Rescission of FASB Statements No. 4, 44 and 64." As a result, the accompanying consolidated financial statements have been restated to conform to the presentation adopted in 2002 in accordance with accounting principles generally accepted in the Unites States.
/s/ERNST & YOUNG LLP
Greenville, South Carolina March 31, 2003
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED BALANCE SHEETS (in thousands, except unit data)
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per unit data)
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT (in thousands, except unit data)
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
Supplemental Disclosures of Cash Flow Information and Non-Cash Activities:
At December 31, 2002 and 2001, distributions payable to partners were each adjusted by approximately $3,000 and $166,000 for non-cash activity, respectively.
At December 31, 1999, distributions to partners of approximately $4,318,000 were declared and approximately $4,113,000 of this balance was paid during the year ended December 31, 2000. The remaining balance is deferred per the Partnership Agreement.
Cash paid for interest was approximately $5,401,000, $5,408,000 and $5,552,000 for the years ended December 31, 2002, 2001 and 2000, respectively.
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2002
Note A - Organization and Significant Accounting Policies
Organization: Consolidated Capital Properties IV (the "Partnership" or "Registrant"), a California limited partnership, was formed on September 22, 1981, to operate and hold real estate properties. The general partner of the Partnership is ConCap Equities, Inc. (the "General Partner" or "CEI"), a Delaware corporation. Additionally, the General Partner is a subsidiary of Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The directors and officers of the General Partner also serve as executive officers of AIMCO. The Partnership Agreement provides that the Partnership is to terminate on December 31, 2011 unless terminated prior to that date. As of December 31, 2002, the Partnership operates 15 residential properties in or near major urban areas in the United States.
Upon the Partnership's formation in 1981, Consolidated Capital Equities Corporation ("CCEC"), a Colorado corporation, was the corporate general partner and Consolidated Capital Management Company ("CCMC"), a California general partnership, was the non-corporate general partner. In 1988, through a series of transactions, Southmark Corporation ("Southmark") acquired controlling interest in CCEC. In December 1988, CCEC filed for reorganization under Chapter 11 of the United States Bankruptcy Code. In 1990, as part of CCEC's reorganization plan, CEI acquired CCEC's general partner interests in the Partnership and in 15 other affiliated public limited partnerships (the "Affiliated Partnerships") and CEI replaced CCEC as managing general partner in all 16 partnerships. The selection of CEI as the sole managing general partner was approved by a majority of the limited partners in the Partnership and in each of the Affiliated Partnerships pursuant to a solicitation of the Limited Partners dated August 10, 1990. As part of the solicitation, the Limited Partners also approved an amendment to the Partnership Agreement to limit changes of control of the Partnership, and the conversion of CCMC from a general partner to a Special Limited Partner, thereby leaving CEI as the sole general partner of the Partnership. On November 14, 1990, CCMC was dissolved and its Special Limited Partnership interest was divided among its former partners.
All of CEI's outstanding stock is owned by Insignia Properties Trust ("IPT"), which is an affiliate of AIMCO. In December 1994, the parent of GII Realty, Inc., entered into a transaction (the "Insignia Transaction") in which an affiliate of Insignia acquired an option (exercisable in whole or in part from time to time) to purchase all of the stock of GII Realty, Inc. and, pursuant to a partial exercise of such option, acquired 50.5% of that stock. As part of the Insignia Transaction, the Insignia affiliate also acquired all of the outstanding stock of Partnership Services, Inc., an asset management entity, and a subsidiary of Insignia acquired all of the outstanding stock of Coventry Properties, Inc., a property management entity. In addition, confidentiality, non-competition, and standstill arrangements were entered into between certain of the parties. Those arrangements, among other things, prohibit GII Realty's former sole shareholder from purchasing Partnership Units for a period of three years. On October 24, 1995, the Insignia affiliate exercised the remaining portion of its option to purchase all of the remaining outstanding capital stock of GII Realty, Inc.
Consolidation: The consolidated financial statements include the Partnership's majority interest in a joint venture which owns South Port Apartments. The Partnership has the ability to control the major operating and financial policies of the joint venture. No minority interest has been reflected for the joint venture because minority interests are limited to the extent of their equity capital, and losses in excess of the minority interest equity capital are charged against the Partnership's interest. Should the losses reverse, the Partnership would be credited with the amount of minority interest losses previously absorbed. The other partner of this joint venture is AIMCO Properties, LP, an affiliate of the General Partner.
The Partnership's consolidated financial statements also include the accounts of the Partnership, its wholly-owned partnerships, and its 99% limited partnership interest in Briar Bay Apartments Associates, Ltd., Post Ridge Associates, Ltd., Concap River's Edge Associates, Ltd., Foothill Chimney Associates, L.P., and ConCap Stratford Associates, Ltd. The Partnership may remove the general partner of its 99% owned partnerships; therefore, the partnerships are deemed controlled and therefore consolidated by the Partnership. All significant interpartnership balances have been eliminated.
Cash and Cash Equivalents: Cash and cash equivalents include cash on hand and in banks. At certain times, the amount of cash deposited at a bank may exceed the limit on insured deposits. Cash balances include approximately $1,916,000 and $2,504,000 at December 31, 2002 and 2001, respectively, that are maintained by the affiliated management company on behalf of affiliated entities in a cash concentration account.
Security Deposits: The Partnership requires security deposits from lessees for the duration of the lease and such deposits are included in receivables and deposits. Deposits are refunded when the tenant vacates, provided the tenant has not damaged its space and is current on its rental payments.
Restricted Escrows:
Capital Improvement Reserves - At the time of the refinancings of the mortgage notes payable encumbering Nob Hill Villa Apartments, the Arbours of Hermitage Apartments, Briar Bay Apartments, Chimney Hill Apartments, Citadel Village Apartments, Foothill Place Apartments, Knollwood Apartments, Village East Apartments, Lake Forest Apartments and South Port Apartments, approximately $1,638,000 was designated for certain capital improvements. At December 31, 2002, the total remaining escrow balance is approximately $36,000 and $230,000 for Lake Forest Apartments and South Port Apartments, respectively. The capital improvement reserves for Nob Hill Villa Apartments, Arbours of Hermitage Apartments, Briar Bay Racquet Club Apartments, Chimney Hill Apartments, Citadel Village Apartments, Foothill Place Apartments, Knollwood Apartments and Village East Apartments had been fully utilized as of December 31, 2002.
Replacement Reserve Account - At the time of the refinancings of the mortgage notes payable encumbering the Arbours of Hermitage Apartments, Briar Bay Racquet Club Apartments, Nob Hill Villa Apartments, South Port Apartments, Chimney Hill Apartments, Citadel Village Apartments, Foothill Place Apartments, Knollwood Apartments, and Village East Apartments, $507,000 of the proceeds, ranging from $191 to $325 per unit, were designated for replacement reserves. These funds were established to cover necessary repairs and replacements of existing improvements. At December 31, 2002, the total remaining reserve balance was approximately $390,000.
Investments in Real Estate: Investment properties consist of fifteen apartment complexes, which are stated at cost. Expenditures in excess of $250 that maintain an existing asset which has a useful life of more than one year are capitalized as capital replacement expenditures and depreciated over the estimated useful life of the asset. Expenditures for ordinary repairs, maintenance and apartment turnover costs are expensed as incurred. The Partnership capitalized interest costs of approximately $107,000, tax and insurance of approximately $31,000 and other construction period expenses of approximately $65,000 during the year ended December 31, 2002 with respect to the renovation project that is currently in process at Chimney Hill Apartments. In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets ", the Partnership records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. The impairment loss is measured by comparing the fair value of the assets to its carrying amount. Costs of apartment properties that have been permanently impaired have been written down to appraised value. No adjustments for impairment of value were recorded in any of the years ended December 31, 2002, 2001 or 2000.
During 2001, AIMCO, an affiliate of the General Partner, commissioned a project to study process improvement ideas to reduce operating costs. The result of the study led to a re-engineering of business processes and eventual redeployment of personnel and related capital spending. The implementation of these plans during 2002, accounted for as a change in accounting estimate, resulted in a refinement of the Partnership's process for capitalizing certain direct and indirect project costs (principally payroll related costs) and increased capitalization of such costs by approximately $316,000 in 2002 compared to 2001.
Depreciation: Depreciation is provided by the straight-line method over the estimated lives of the investment properties and related personal property. For Federal income tax purposes, the accelerated cost recovery method is used (1) for real property over 18 years for additions after March 15, 1984, and before May 9, 1985, and 19 years for additions after May 8, 1985 and before January 1, 1987. As a result of the Tax Reform Act of 1986, for additions after December 31, 1986, the modified accelerated cost recovery method is used for depreciation of (1) real property over 27 1/2 years and (2) personal property additions over 5 years.
Leases: The Partnership generally leases apartment units for twelve-month terms or less. The Partnership recognizes income as earned on its leases and fully reserves all balances outstanding over thirty days. In addition, the General Partner's policy is to offer rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area. Concessions are charged against rental income as incurred.
Loan Costs: Loan costs of approximately $2,345,000 and $2,226,000, net of accumulated amortization of approximately $1,198,000 and $1,080,000, are amortized using the straight-line method over the lives of the related mortgage notes at December 31, 2002 and 2001, respectively. Unamortized loan costs are included in other assets. Amortization of loan costs is included in interest expense. Amortization expense is expected to be approximately $211,000 for each of the years 2003 and 2004, approximately $183,000 in 2005 and approximately $70,000 for each of the years 2006 and 2007.
Fair Value of Financial Statements: SFAS No. 107, "Disclosures about Fair Value of Financial Instruments", as amended by SFAS No. 119, "Disclosures about Derivative Financial Instruments and Fair Value of Financial Instruments", requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate fair value. Fair value is defined in the SFAS as the amount at which the instruments could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The Partnership believes that the carrying amount of its financial instruments (except for long term debt) approximates their fair value due to the short term maturity of these instruments. The fair value of the Partnership's long term debt, after discounting the scheduled loan payments to maturity, at the Partnership's incremental borrowing rate was approximately $75,912,000 at December 31, 2002.
Allocation of Net Income and Net Loss: The Partnership Agreement provides for net income (losses) and distributions of distributable cash from operations to be allocated generally 96% to the Limited Partners and 4% to the General Partner.
Net Income (Loss) Per Limited Partnership Unit: Net income (loss) per Limited Partnership Unit is computed by dividing net income (loss) allocated to the Limited Partners by the number of Units outstanding. Per Unit information has been computed based on the number of Units outstanding at the beginning of each year.
Segment Reporting: SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information" established standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. It also established standards for related disclosures about products and services, geographic areas, and major customers. As defined in SFAS No. 131, the Partnership has only one reportable segment.
Advertising Costs: Advertising costs of approximately $542,000, $469,000 and $543,000 in 2002, 2001 and 2000, respectively, are charged to operating expense as incurred.
Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Reclassification: Certain reclassifications have been made to the 2000 and 2001 balances to conform to the 2002 presentation.
Recent Accounting Pronouncements: Effective January 1, 2002, the Partnership adopted Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", which established standards for the way that public business enterprises report information about long-lived assets that are either being held for sale or have already been disposed of by sale or other means. The standard requires that results of operations for a long-lived asset that is being held for sale or has already been disposed of be reported as a discontinued operation on the statement of operations. As a result, the accompanying consolidated statements of operations have been restated as of January 1, 2001 and 2000, respectively, to reflect the operations of Stratford Place Apartments and Overlook Apartments as gain from discontinued operations due to their sales ranging from December 1999 to December 2000. The gain from the sale of discontinued operations recognized during the year ended December 31, 2000 was approximately $3,440,000. The income from discontinued operations recognized during the years ended December 31, 2001 and 2000 was approximately $84,000 and $21,000, respectively.
Effective April 1, 2002, the Partnership adopted SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64". SFAS No. 4 "Reporting Gains and Losses from Extinguishment of Debt," required that all gains and losses from extinguishment of debt be aggregated and, if material, classified as an extraordinary item. SFAS No. 145 rescinds SFAS No. 4, and accordingly, gains and losses from extinguishment of debt should only be classified as extraordinary if they are unusual in nature and occur infrequently. Neither of these criteria applies to the Partnership. As a result, the accompanying consolidated statements of operations have been restated as of January 1, 2001 and 2000, respectively, to reflect the loss on early extinguishment of debt of approximately $142,000 at Post Ridge Apartments and approximately $40,000 at Lake Forest Apartments in interest expense in 2001, approximately $26,000 at Citadel Apartments and approximately $33,000 at the Apartments in total expenses in 2000 and approximately $148,000 at Stratford Place Apartments in income from discontinued operations rather than as an extraordinary item in 2000.
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 of the Partnership activities. The Partnership Agreement provides for certain payments to affiliates for services and for reimbursements of certain expenses incurred by affiliates on behalf of the Partnership.
During the years ended December 31, 2002, 2001 and 2000, affiliates of the General Partner were entitled to receive 5% of gross receipts from all of the Partnership's properties as compensation for providing property management services. The Partnership paid to such affiliates approximately $1,382,000, $1,569,000 and $1,515,000 for the years ended December 31, 2002, 2001 and 2000, respectively. An affiliate of the General Partner owed the Partnership approximately $38,000 at December 31, 2002 for overpayment of property management fees during 2002.
Affiliates of the General Partner received reimbursement of accountable expenses amounting to approximately $906,000, $2,172,000 and $1,103,000, for the years ended December 31, 2002, 2001 and 2000, respectively. Included in these amounts are fees related to construction management services provided by an affiliate of the General Partner of approximately $55,000, $1,208,000 and $159,000 for the years ended December 31, 2002, 2001 and 2000, respectively. The construction management service fees are calculated based on a percentage of current additions to investment properties. The first three quarters of 2002 were based on estimated amounts and in the fourth quarter of 2002 the reimbursements were adjusted by $111,000 to actual costs. At December 31, 2002, an affiliate of the General Partner owed the Partnership approximately $111,000 for overpayment of management reimbursements during 2002.
The Limited Partnership Agreement ("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. Affiliates of the General Partner paid approximately $477,000, $430,000 and $535,000 under this provision of the Partnership Agreement to the General Partner during the years ended December 31, 2002, 2001 and 2000, respectively.
In addition to reimbursement for services of affiliates, the Partnership paid an affiliate of the General Partner approximately $110,000 and $180,000 in 2001 and 2000, respectively, for loan costs which are capitalized and included with other assets on the consolidated balance sheets. These loan costs were associated with the refinancing of two of the Partnership's properties in 2001 and four of the Partnership's properties in 2000.
For acting as real estate broker in connection with the sale of Stratford Place Apartments, a real estate commission of approximately $228,000 was accrued as of December 31, 2000 and was paid to the General Partner during the year ended December 31, 2001. For acting as real estate broker in connection with the sale of Overlook Apartments in December 1999, the General Partner was paid a real estate commission of approximately $40,000 during the year ended December 31, 2000. When the Partnership terminates, the General Partner will have to return these commissions if the limited partners do not receive their original invested capital plus a 6% per annum cumulative return.
Beginning in 2001, the Partnership began insuring 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 years ended December 31, 2002 and 2001, respectively, the Partnership paid AIMCO and its affiliates approximately $423,000 and $313,000 for insurance coverage and fees associated with policy claims administration.
In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 193,528.50 limited partnership units in the Partnership representing 56.46% of the outstanding Units at December 31, 2002. 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 of limited partnership interest in the Partnership in exchange for cash or a combination of cash and units in the operating partnership of AIMCO either through private purchases or tender offers. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters, which would include voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. As a result of its ownership of 56.46% 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.
Note C - Mortgage Notes Payable
The principle terms of mortgage notes payable are as follows:
(a) Monthly payments of interest only at the stated rate until maturity. (b) Debt was obtained effective February 2, 2000 (see below for further explanation). (c) Debt was obtained effective February 28, 2000 (see below for further explanation). (d) Debt was obtained effective August 31, 2000 (see below for further explanation). (e) Debt was obtained effective September 28, 2001 (see below for further explanation). (f) Debt was obtained effective December 21, 2001 (see below for further explanation).
On December 21, 2001, the Partnership refinanced the mortgage encumbering Post Ridge Apartments. The refinancing replaced mortgage indebtedness of approximately $4,050,000 with a new mortgage of $4,500,000. The mortgage was refinanced at a rate of 6.63% compared to the prior rate of 7.33% and matures on January 1, 2022. Capitalized loan costs incurred for the refinancing were approximately $254,000. The Partnership wrote off approximately $32,000 in unamortized loan costs and paid prepayment penalties of approximately $110,000 resulting in a loss on early extinguishment of debt of approximately $142,000, which is included in interest expense.
On September 27, 2001, the Partnership refinanced the mortgage encumbering Lake Forest Apartments. The refinancing replaced mortgage indebtedness of approximately $4,700,000 with a new mortgage of $6,500,000. The mortgage was refinanced at a rate of 7.13% compared to the prior rate of 7.33% and matures on October 1, 2021. Capitalized loan costs incurred for the refinancing were approximately $217,000. The Partnership wrote off unamortized loan costs, which resulted in a loss on early extinguishment of debt of approximately $40,000 which is included in interest expense.
On August 31, 2000, the Partnership refinanced the mortgage encumbering Rivers Edge Apartments. The refinancing replaced mortgage indebtedness of approximately $1,895,000 with a new mortgage of $4,000,000. The mortgage was refinanced at a rate of 7.82% compared to a prior rate of 8.40% and matures on September 1, 2020. Capitalized loan costs incurred for the refinancing were approximately $90,000. There was no loss recognized due to the refinancing occurring at the maturity of the prior mortgage.
On May 31, 2000, the Partnership refinanced the mortgage encumbering Stratford Place Apartments. The refinancing replaced mortgage indebtedness of approximately $2,493,000 with a new mortgage of $4,550,000. The mortgage was refinanced at a rate of 8.48% compared to the prior rate of 8.65% and matures on June 1, 2020. Capitalized loan costs incurred for the refinancing were approximately $149,000. The Partnership wrote off approximately $4,000 in unamortized loan costs and paid prepayment penalties of approximately $1,000 resulting in a loss on early extinguishment of debt of approximately $5,000. On December 28, 2000, the Partnership sold Stratford Place Apartments to an unaffiliated third party whom assumed the mortgage encumbering the property. The Partnership wrote off the unamortized loan costs resulting in an additional loss on early extinguishment of debt of approximately $143,000. The loss on early extinguishment of debt of approximately $148,000 is included in gain from discontinued operations.
On February 28, 2000, the Partnership refinanced the mortgage encumbering Citadel Apartments. The refinancing replaced mortgage indebtedness of approximately $4,548,000 with a new mortgage of $4,710,000. The mortgage was refinanced at a rate of 8.25% compared to the prior rate of 8.38% and matures on March 1, 2020. Capitalized loan costs incurred for the refinancing were approximately $142,000. The Partnership wrote off approximately $19,000 in unamortized loan costs and paid prepayment penalties of approximately $7,000 resulting in a loss on early extinguishment of debt of approximately $26,000, which is included in interest expense.
On February 2, 2000, the Partnership refinanced the mortgage encumbering The Apartments. The refinancing replaced mortgage indebtedness of approximately $3,288,000 with a new mortgage of $4,775,000. The mortgage was refinanced at a rate of 8.37% compared to the prior rate of 8.34% and matures on March 1, 2020. Capitalized loan costs incurred for the refinancing were approximately $129,000. The Partnership wrote off approximately $11,000 in unamortized loan costs and paid prepayment penalties of approximately $22,000 resulting in a loss on early extinguishment of debt of approximately $33,000, which is included in interest expense.
The notes payable represent borrowings on the properties purchased by the Partnership. The notes are non-recourse, and are collateralized by deeds of trust on the investment properties. The notes mature between 2004 and 2022 with balloon payments of approximately $4,119,000 and $42,280,000 due in 2004 and 2005, respectively, and bear interest at rates ranging from 6.63% to 9.20%. Various mortgages require prepayment penalties if repaid prior to maturity. Further, the properties may not be sold subject to existing indebtedness.
Future annual principal payments required under the terms of the mortgage notes payable subsequent to December 31, 2002, are as follows (in thousands):
2003 $ 923 2004 5,112 2005 43,138 2006 875 2007 945 Thereafter 21,637 Total $72,630
Note D - Disposition of Investment Property
On December 28, 2000, ConCap Stratford Associated, Ltd. sold Stratford Place Apartments to an unaffiliated third party for $7,600,000. After payment of closing costs of approximately $587,000, the net proceeds received by the Partnership were approximately $2,508,000. The purchaser assumed the mortgage encumbering the property of approximately $4,505,000. The gain on the sale recognized during the fourth quarter of 2000 was approximately $3,440,000 and is included in gain on sale of discontinued operations.
The sales transactions are summarized as follows (amounts in thousands):
Net sale price, net of selling costs $ 7,013 Less: Net real estate (1) (3,574) Net other assets 1 Gain from sale of discontinued operations $ 3,440
(1) Net of accumulated depreciation of approximately $4,851,000.
Note E - Distributions
During 2002, the Partnership declared distributions of approximately $5,591,000 (approximately $5,367,000 to the limited partners or $15.66 per limited partnership unit) consisting of approximately $5,515,000 (approximately $15,294,000 or $15.45 per limited partnership unit) from operations and approximately $76,000 (approximately $73,000 to the limited partners or $.21 per limited partnership unit) of refinancing proceeds from Post Ridge Apartments. Approximately $3,000 of these distributions from proceeds is payable at December 31, 2002 to the General Partner and special limited partners as this portion is subordinated and deferred per the Partnership Agreement until the limited partners receive 100% of their original capital contributions from surplus cash. In conjunction with the transfer of fund from their certain majority-owned sub-tier limited partnerships to the Partnership, approximately $29,000 was distributed to the general partner of the majority owned sub-tier limited partnerships.
During 2001, the Partnership declared distributions of approximately $9,139,000 (approximately $8,773,000 to the limited partners or $25.59 per limited partnership unit) consisting of approximately $4,981,000 (approximately $4,782,000 to the limited partners or $13.95 per limited partnership unit) from operations and approximately $4,158,000 (approximately $3,991,000 to the limited partners or $11.64 per limited partnership unit) of refinance proceeds for Lake Forest Apartments and sale proceeds of Stratford Place Apartments, which sold in December of 2000. Approximately $166,000 of these distributions from proceeds is payable at December 31, 2002 to the General Partner and special limited partners as this portion is subordinated and deferred per the Partnership Agreement until the limited partners receive 100% of their original capital contributions from surplus cash. In conjunction with the transfer of funds from their certain majority-owned sub-tier limited partnerships to the Partnership, approximately $66,000 was distributed to the general partner of the majority owned sub-tier limited partnerships.
During 2000, the Partnership declared distributions of approximately $11,183,000 (approximately $10,736,000 to the limited partners or $31.32 per limited partnership unit) consisting of approximately $6,194,000 (approximately $5,947,000 to the limited partners or $17.35 per limited partnership unit) from operations and approximately $4,989,000 (approximately $4,789,000 to the limited partners or $13.97 per limited partnership unit) of refinancing proceeds from The Apartments, Citadel Apartments, Rivers Edge Apartments, and Stratford Place Apartments and sale proceeds from Overlook Apartments which sold December 1999. Approximately $197,000 of the distribution from proceeds is payable at December 31, 2002 to the General Partner and special limited partners as this distribution is subordinated and deferred per the Partnership Agreement until the limited partners receive 100% of their original capital contributions from surplus funds. In conjunction with the transfer of funds from their certain majority-owned sub-tier limited partnerships to the Partnership, approximately $56,000 was distributed to the general partner of the majority owned sub-tier limited partnerships.
As of December 31, 1999, the Partnership had a distribution payable of approximately $4,318,000 (approximately $3,921,000 to the limited partners or $11.44 per limited partnership unit) consisting of cash from operations of approximately $1,874,000 (approximately $1,679,000 to the limited partners or $4.90 per limited partnership unit) and a distribution of refinance proceeds representing funds from the financing of Point West Apartments of approximately $2,444,000 (approximately $2,242,000 to the limited partners or $6.54 per limited partnership unit). In January 2000, approximately $4,113,000 of this distribution was paid and the remainder of approximately $205,000 is payable at December 31, 2002.
Note F - Investment Properties and Accumulated Depreciation
Initial Cost To Partnership (in thousands)
Gross Amount At Which Carried At December 31, 2002 (in thousands)
Reconciliation of "investment properties and accumulated depreciation":
Years Ended December 31, 2002 2001 2000 (in thousands) Investment Properties Balance at beginning of year $135,208 $131,514 $134,633 Additions 2,565 3,895 5,624 Property dispositions - other (116) (201) (8,743) Balance at end of year $137,657 $135,208 $131,514
Accumulated Depreciation Balance at beginning of year $107,215 $103,272 $104,057 Additions charged to expense 3,770 4,082 4,161 Property dispositions - other (68) (139) (4,946) Balance at end of year $110,917 $107,215 $103,272
The aggregate cost of the real estate for Federal income tax purposes at December 31, 2002, 2001 and 2000, is approximately $149,635,000, $153,587,000 and $149,980,000, respectively. The accumulated depreciation taken for Federal income tax purposes at December 31, 2002, 2001 and 2000, is approximately $118,176,000, $120,682,000 and $116,415,000, respectively.
Note G - Casualty Events
In March 2000, South Port Apartments had wind and hail damage, which damaged the majority of the 240 rental units. The repairs included roof replacements to the majority of units. Insurance proceeds of approximately $168,000 and $182,000 were received during the years ended December 31, 2002 and 2001, respectively. The Partnership recognized casualty gains of approximately $120,000 and $128,000 during the years ended December 31, 2002 and 2001, which represents the excess of the proceeds received as of December 31, 2002 and 2001 over the write-off of the undepreciated damaged assets.
In April 2001, The Arbours of Hermitage had a fire, which damaged one apartment building. Insurance proceeds of approximately $83,000 were received during the year ended December 31, 2001. The Partnership recognized a casualty gain of approximately $83,000 for the year ended December 31, 2001 as the damaged assets were fully depreciated at the time of the fire.
In May 2000, Nob Hill Villa Apartments had a fire, which damaged two apartment units. Insurance proceeds of approximately $33,000 were received during the year ended December 31, 2002. The Partnership recognized a casualty gain of approximately $25,000 for the year ended December 31, 2001 which represents the excess of the proceeds received as of December 31, 2001 over the write-off of the undepreciated damaged assets.
In January 2000, Stratford Place Apartments had a fire which damaged 12 apartment units and 30% of the roof. Insurance proceeds of approximately $354,000 were received during the year ended December 31, 2000. The General Partner successfully completed the repairs prior to the sale of the property on December 20, 2000. The Partnership recognized a casualty gain of approximately $154,000 for the year ended December 31, 2000 and is included in gain from sale of discontinued operations.
Note H - Income Taxes
The Partnership is classified as a partnership for Federal income tax purposes. Accordingly, no provision for income taxes is made in the consolidated financial statements of the Partnership. Taxable income or loss of the Partnership is reported in the income tax returns of its partners.
The following is a reconciliation between net income as reported in the consolidated financial statements and Federal taxable income allocated to the partners in the Partnership's information return for the years ended December 31, 2002, 2001 and 2000 (in thousands, except per unit data):
2002 2001 2000
Net income as reported $ 4,264 $ 4,158 $ 8,474 (Deduct) add: Deferred revenue and other liabilities 150 (89) (151) Depreciation differences 130 (185) 15 Accrued expenses (35) 20 30 Minority interest (305) (255) (302) Other (283) (22) 41 Gain (loss) on casualty/ disposition/foreclosure (119) (343) 412
Federal taxable income $ 3,802 $ 3,284 $ 8,519 Federal taxable income per Limited Partnership unit $ 10.65 $ 9.20 $ 23.86
The following is a reconciliation between the Partnership's reported amounts and Federal tax basis of net liabilities (in thousands):
Net liabilities as reported $(44,056) Land and Buildings 11,978 Accumulated depreciation (7,259) Syndication fees 18,871 Other 4,776
Net liabilities - Federal tax basis $(15,690)
Note I - 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 purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which 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 which 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 seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs filed an amended complaint. The General Partner filed demurrers to the amended complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to court approval, on behalf of the Partnership and all limited partners who owned units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Court, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing, the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of prior lead counsel to enter the settlement. On December 14, 1999, the General Partner and its affiliates terminated the proposed settlement. In February 2000, counsel for some of the named plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated the settlement. On June 27, 2000, the Court entered an order disqualifying them from the case and an appeal was taken from the order on October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the putative class. Plaintiffs filed a third amended complaint on January 19, 2001. On March 2, 2001, the General Partner and its affiliates filed a demurrer to the third amended complaint. On May 14, 2001, the Court heard the demurrer to the third amended complaint. On July 10, 2001, the Court issued an order sustaining defendants' demurrer on certain grounds. On July 20, 2001, Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order granting in part and denying in part defendants' demurrer. On September 7, 2001, Plaintiffs filed a fourth amended class and derivative action complaint. On September 12, 2001, the Court denied Plaintiffs' motion for reconsideration. On October 5, 2001, the General Partner and affiliated defendants filed a demurrer to the fourth amended complaint, which was heard on December 11, 2001. On February 2, 2002, the Court served its order granting in part the demurrer. The Court has dismissed without leave to amend certain of the plaintiffs' claims. On February 11, 2002, plaintiffs filed a motion seeking to certify a putative class comprised of all non-affiliated persons who own or have owned units in the partnerships. The General Partner and affiliated defendants oppose the motion. On April 29, 2002, the Court held a hearing on plaintiffs' motion for class certification and took the matter under submission after further briefing, as ordered by the court, was submitted by the parties. On July 10, 2002, the Court entered an order vacating the current trial date of January 13, 2003 (as well as the pre-trial and discovery cut-off dates) and stayed the case in its entirety through November 7, 2002 so that the parties could have an opportunity to discuss settlement. On October 30, 2002, the court entered an order extending the stay in effect through January 10, 2003.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed settlement of the Nuanes action and the Heller action described below. The Court has scheduled the hearing on preliminary approval for April 4, 2003 and the hearing on final approval for June 2, 2003.
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 a tender offer 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 provides 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. If the Court grants preliminary approval of the proposed settlement in April, a notice will be distributed to partners providing detail on the terms of the proposed settlement.
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 first amended complaint in the Heller action is brought as a purported derivative action, and asserts claims for among other things breach of fiduciary duty; unfair competition; conversion, unjust enrichment; and judicial dissolution. Plaintiffs in the Nuanes action filed a motion to consolidate the Heller action with the Nuanes action and stated that the Heller action was filed in order to preserve the derivative claims that were dismissed without leave to amend in the Nuanes action by the Court order dated July 10, 2001. On October 5, 2001, the General Partner and affiliated defendants moved to strike the first amended complaint in its entirety for violating the Court's July 10, 2001 order granting in part and denying in part defendants' demurrer in the Nuanes action, or alternatively, to strike certain portions of the complaint based on the statute of limitations. Other defendants in the action demurred to the fourth amended complaint, and, alternatively, moved to strike the complaint. On December 11, 2001, the court heard argument on the motions and took the matters under submission. On February 4, 2002, the Court served notice of its order granting defendants' motion to strike the Heller complaint as a violation of its July 10, 2001 order in the Nuanes action. On March 27, 2002, the plaintiffs filed a notice appealing the order striking the complaint. Before completing briefing on the appeal, the parties stayed further proceedings in the appeal pending the Court's review of the terms of the proposed settlement described above.
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.
The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature arising in the ordinary course of business.
Note J - Selected Quarterly Financial Data (unaudited)
The following is a summary of the unaudited quarterly results of operations for the Partnership (in thousands, except per unit data):
Note K - Subsequent Event
On March 28, 2003, the Partnership sold South Port Apartments to an unrelated third party for approximately $8,625,000. South Port Apartments had revenues of approximately $1,690,000, $1,753,000 and $1,596,000 and net income of approximately $498,000, $536,000, and $524,000 for the years ended December 31, 2002, 2001 and 2000, respectively. The Partnership will determine distribution to partners in April of 2003.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
None.
PART III
Item 10.
Item 10. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act
Consolidated Capital Properties IV (the "Registrant" or "Partnership") has no officers or directors. ConCap Equities, Inc. ("CEI" or the "General Partner") manages and controls the Partnership and has general responsibility and authority in all matters affecting its business.
The names of the director, and executive officers of the General Partner, their ages and the nature of all positions presently held by them are set forth below.
Name Age Position
Patrick J. Foye 45 Executive Vice President and Director
Paul J. McAuliffe 46 Executive Vice President and Chief Financial Officer
Thomas C. Novosel 44 Senior Vice President and Chief Accounting Officer
Patrick J. Foye has been Executive Vice President and Director of the General Partner since October 1, 1998. Mr. Foye has served as Executive Vice President of AIMCO since May 1998, where he is responsible for continuous improvement, acquisitions of partnership securities, consolidation of minority interests, and corporate and other acquisitions. Prior to joining AIMCO, Mr. Foye was a Merger and Acquisitions Partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to 1998.
Paul J. McAuliffe has been Executive Vice President and Chief Financial Officer of the General Partner since April 1, 2002. Mr. McAuliffe has served as Executive Vice President of AIMCO since February 1999 and Chief Financial Officer of AIMCO since October 1999. From May 1996 until he joined AIMCO, Mr. McAuliffe was Senior Managing Director of Secured Capital Corp.
Thomas C. Novosel has been Senior Vice President and Chief Accounting Officer of the General Partner since April 1, 2002. Mr. Novosel has served as Senior Vice President and Chief Accounting Officer of AIMCO since April 2000. From October 1993 until he joined AIMCO, Mr. Novosel was a partner at Ernst & Young LLP, where he served as the director of real estate advisory services for the southern Ohio Valley area offices but did not work on any assignments related to AIMCO or the Partnership.
One or more of the above persons are also directors and/or officers of a general partner (or general partner of a general partner) of limited partnerships which either have a class of securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, or are subject to the reporting requirements of Section 15(d) of such Act. Further, one or more of the above persons are also directors and/or officers of Apartment Investment and Management Company and the general partner of AIMCO Properties, L.P., entities that have a class of securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, or are subject to the reporting requirements of Section 15 (d) of such Act.
The executive officers and director of the General Partner fulfill the obligations of the Audit Committee and oversee the Partnership's financial reporting process on behalf of the General Partner. Management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the executive officers and director of the General Partner reviewed the audited financial statements with management including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.
The executive officers and director of the General Partner reviewed with the independent auditors, who are responsible for expressing an opinion on the conformity of those audited financial statements with accounting principles generally accepted in the United States, their judgments as to the quality, not just the acceptability, of the Partnership's accounting principles and such other matters as are required to be discussed with the Audit Committee or its equivalent under auditing standards generally accepted in the United States. In addition, the Partnership has discussed with the independent auditors the auditors' independence from management and the Partnership including the matters in the written disclosures required by the Independence Standards Board and considered the compatibility of non-audit services with the auditors' independence.
The executive officers and director of the General Partner discussed with the Partnership's independent auditors the overall scope and plans for their audit. In reliance on the reviews and discussions referred to above, the executive officers and director of the General Partner have approved the inclusion of the audited financial statements in the Form 10-K for the year ended December 31, 2002 for filing with the Securities and Exchange Commission.
The General Partner has reappointed Ernst & Young LLP as independent auditors to audit the financial statements of the Partnership for the 2003. Fees for 2002 were audit services of approximately $123,000 and non-audit services (principally tax-related) of approximately $66,000.
Item 11.
Item 11. Executive Compensation
Neither the director nor officers of the General Partner received any remuneration from the Registrant during the year ended December 31, 2002.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
Except as provided below, as of December 31, 2002, no person or group was known to CEI to own of record or beneficially more than five percent of the Units of the Partnership:
Entity Number of Units Percentage
Insignia Properties, LP 67,033.50 19.55% (an affiliate of AIMCO) IPLP Acquisition I, LLC 29,612.50 8.64% (an affiliate of AIMCO) AIMCO Properties, LP 96,882.50 28.27% (an affiliate of AIMCO)
Insignia Properties, LP and IPLP Acquisition I, LLC are indirectly, ultimately owned by AIMCO. Their business address is 55 Beattie Place, Greenville, SC 29602.
AIMCO Properties, L.P. is indirectly ultimately controlled by AIMCO. Its business address is Stanford Place 3, 4582 S. Ulster St. Parkway, Suite 1100, Denver, Colorado 80237.
(b) Beneficial Owners of Management
Neither CEI nor any of the directors or officers or associates of CEI own any Units of the Partnership of record or beneficially.
(c) Changes in Control
Beneficial Owners of CEI
As of December 31, 2002, the following persons were known to CEI to be the beneficial owners of more than five percent (5%) of its common stock:
Number of Percent Name and Address CEI Shares Of Total
Insignia Properties Trust ("IPT") 100,000 100% 55 Beattie Place, Greenville, SC 29602
Effective February 26, 1999, IPT was merged with and into AIMCO. As of December 31, 2002, AIMCO owns 51% of the outstanding common shares of beneficial interest of IPT.
Item 13.
Item 13. Certain Relationships and Related Transactions
The Partnership has no employees and is dependent on the General Partner and its affiliates for the management and administration of all of the Partnership activities. The Partnership Agreement provides for certain payments to affiliates for services and for reimbursements of certain expenses incurred by affiliates on behalf of the Partnership.
During the years ended December 31, 2002, 2001 and 2000, affiliates of the General Partner were entitled to receive 5% of gross receipts from all of the Partnership's properties as compensation for providing property management services. The Partnership paid to such affiliates approximately $1,382,000, $1,569,000 and $1,515,000 for the years ended December 31, 2002, 2001 and 2000, respectively. An affiliate of the General Partner owed the Partnership approximately $38,000 at December 31, 2002 for overpayment of property management fees during 2002.
Affiliates of the General Partner received reimbursement of accountable expenses amounting to approximately $906,000, $2,172,000 and $1,103,000, for the years ended December 31, 2002, 2001 and 2000, respectively. Included in these amounts are fees related to construction management services provided by an affiliate of the General Partner of approximately $55,000, $1,208,000 and $159,000 for the years ended December 31, 2002, 2001 and 2000, respectively. The construction management service fees are calculated based on a percentage of current additions to investment properties. The first three quarters of 2002 were based on estimated amounts and in the fourth quarter of 2002 the reimbursements were adjusted by $111,000 to actual costs. At December 31, 2002, an affiliate of the General Partner owed the Partnership approximately $111,000 for overpayment of management reimbursements during 2002.
The Limited Partnership Agreement ("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. Affiliates of the General Partner paid approximately $477,000, $430,000 and $535,000 under this provision of the Partnership Agreement to the General Partner during the years ended December 31, 2002, 2001 and 2000, respectively.
In addition to reimbursement for services of affiliates, the Partnership paid an affiliate of the General Partner approximately $110,000 and $180,000 in 2001 and 2000, respectively, for loan costs which are capitalized and included with other assets on the consolidated balance sheets. These loan costs were associated with the refinancing of two of the Partnership's properties in 2001 and four of the Partnership's properties in 2000.
For acting as real estate broker in connection with the sale of Stratford Place Apartments, a real estate commission of approximately $228,000 was accrued as of December 31, 2000 and was paid to the General Partner during the year ended December 31, 2001. For acting as real estate broker in connection with the sale of Overlook Apartments in December 1999, the General Partner was paid a real estate commission of approximately $40,000 during the year ended December 31, 2000. When the Partnership terminates, the General Partner will have to return these commissions if the limited partners do not receive their original invested capital plus a 6% per annum cumulative return.
Beginning in 2001, the Partnership began insuring 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 years ended December 31, 2002 and 2001, respectively, the Partnership paid AIMCO and its affiliates approximately $423,000 and $313,000 for insurance coverage and fees associated with policy claims administration.
In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 193,528.50 limited partnership units in the Partnership representing 56.46% of the outstanding Units at December 31, 2002. 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 of limited partnership interest in the Partnership in exchange for cash or a combination of cash and units in the operating partnership of AIMCO either through private purchases or tender offers. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters, which would include voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. As a result of its ownership of 56.46% 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.
Item 14.
Item 14. Controls and Procedures
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, within 90 days of the filing date of this annual report, evaluated the effectiveness of the Partnership's disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d-14(c)) and have determined that such disclosure controls and procedures are adequate. There have been no significant changes in the Partnership's internal controls or in other factors that could significantly affect the Partnership's internal controls since the date of evaluation. The Partnership does not believe any significant deficiencies or material weaknesses exist in the Partnership's internal controls. Accordingly, no corrective actions have been taken.
Item 15.
Item 15. Exhibits, Financial Statements, Schedules and Reports on Form 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements
Consolidated Balance Sheets - December 31, 2002 and 2001
Consolidated Statements of Operations - Years Ended December 31, 2002, 2001 and 2000
Consolidated Statements of Changes in Partners' Deficit - Years Ended December 31, 2002, 2001 and 2000
Consolidated Statements of Cash Flows - Years Ended December 31, 2002, 2001 and 2000
Notes to Consolidated Financial Statements
2. Schedules
All schedules are omitted because either they are not required, or not applicable or the financial information is included in the financial statements or notes thereto.
3. Exhibits
S-K Reference Number Document Description
2.1 Agreement and Plan of Merger, dated as of October 1, 1999 by and between AIMCO and IPT; incorporated by reference to Registrant's Current Report on Form 8-K dated October 1, 1999.
3 Certificate of Limited Partnership, as amended to date.
10.1 Property Management Agreement No. 105 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).
10.2 Property Management Agreement No. 106 dated October 23, 1990, by and between the LeTourneau Associates, Ltd. and CCEC (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990).
10.3 Property Management Agreement No. 107 dated October 23, 1990, by and between Overlook Associates, Ltd. and CCEC (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990).
10.4 Property Management Agreement No., 108 dated October 23, 1990, by and between Park 77 Associates, Ltd. and CCEC (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990).
10.5 Property Management Agreement No., 205 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).
10.6 Property Management Agreement No., 306 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).
10.7 Property Management Agreement No., 307 dated October 23, 1990, by and between Point West Associates, Ltd. and CCEC (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990).
10.8 Property Management Agreement No., 403 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).
10.9 Property Management Agreement No., 404 dated October 23, 1990, by and between Denbigh Village Associates, Ltd. and CCEC (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990).
10.10Property Management Agreement No., 405 dated October 23, 1990, by and between Stratford Place Associates, Ltd. and CCEC (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990).
10.11 Bill of Sale and Assignment dated October 23, 1990, by and between CCEC and ConCap Services Company (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990).
10.12 Assignment and Assumption Agreement dated October 23, 1990, by and between CCEC and ConCap Management Limited Partnership ("CCMLP") (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990).
10.13 Assignment and Assumption Agreement as to Certain Property Management Services dated October 23, 1990, by and between CCMLP and ConCap Capital Company (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990).
10.14 Assignment and Assumption Agreement dated October 23, 1990, by and between CCMLP and The Hayman Company (100 Series of Property Management Contracts) (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990).
10.15 Assignment and Assumption Agreement dated October 23, 1990, by and between CCMLP and Horn-Barlow Companies (200 Series of Property Management Contracts). (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990).
10.16 Assignment and Assumption Agreement dated October 23, 1990, by and between CCMLP and Metro ConCap, Inc. (300 Series of Property Management Contracts). (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990).
10.17 Assignment and Assumption Agreement dated October 23, 1990, by and between CCMLP and R&B Realty Group (400 Series of Property Management Contracts). (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990).
10.18 Assignment and Assumption Agreement dated February 21, 1991, by and between the Partnership and Greenbriar Apartments Associates Limited Partnership (Property Management Agreement No. 403). CCMLP and Horn-Barlow Companies (200 Series of Property Management Contracts). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991).
10.19 Assignment and Assumption Agreement dated April 1, 1991, by and between the Partnership and ConCap Village East Apartments Associates, L.P. (Property Management Agreement No. 205). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991).
10.20Assignment and Assumption Agreement dated April 1, 1991, by and between the Partnership and Nob Hill Apartments Associates, L.P. (Property Management Agreement No. 306). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991).
10.21Assignment and Assumption Agreement dated April 1, 1991, by and between the Partnership and Barnett Regency Tower Associates, Limited Partnership (Property Management Agreement No. 105). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991).
10.22 Assignment and Assumption of Property Management Agreement dated August 1, 1991, by and between R & B Realty Group and R & B Apartment Management Company, Inc. (Property Management Agreement with Denbigh Village Associates, Ltd.). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991).
10.23 Assignment and Assumption of Property Management Agreement dated August 1, 1991, by and between R & B Realty Group and R & B Apartment Management Company, Inc. (Property Management Agreement with Greenbriar Associates Limited Partnership). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991).
10.24 Assignment and Assumption of Property Management Agreement dated August 1, 1991, by and between R & B Realty Group and R & B Apartment Management Company, Inc. (Property Management Agreement with the Partnership concerning Briar Bay Racquet Club). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991).
10.25 Assignment and Assumption of Property Management Agreement dated August 1, 1991, by and between R & B Realty Group and R & B Apartment Management Company, Inc. (Property Management Agreement with Stratford Place Associates, Ltd.). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991).
10.26 Assignment and Assumption Agreement dated September 1, 1991, by and between the Partnership and CCP IV Associates, Ltd. (Property Management Agreement No. 306). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991).
10.27 Assignment and Assumption Agreement dated September 1, 1991, by and between the Partnership and CCP IV Associates, Ltd. (Property Management Agreement No. 205). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991).
10.28 Assignment and Assumption Agreement dated September 1, 1991, by and between ConCap Village East Apartments Associates, L.P. and CCP IV Associates, Ltd. (Property Management Agreement No. 205). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991).
10.29Assignment and Assumption Agreement dated September 15, 1991, by and between the Partnership and Foothill Chimney Associates Limited Partnership (Property Management Agreement No. 105). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991).
10.30Assignment and Assumption Agreement dated September 15, 1991, by and between the Partnership and Foothill Chimney Associates Limited Partnership (Property Management Agreement No. 205). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991).
10.31 Construction Management Cost Reimbursement Agreement dated January 1, 1991, by and between the Partnership and Horn-Barlow Companies (the "Horn-Barlow Construction Management Agreement") (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991).
10.33 Assignment and Assumption Agreement dated September 15, 1991, by and between the Partnership and Foothill Chimney Associates Limited Partnership (Horn-Barlow Construction Management Agreement Concerning Chimney Hill Apartments). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991).
10.34Assignment and Assumption Agreement dated September 1, 1991, by and between ConCap Village East Apartments Associates, L.P. and CCP IV Associates, Ltd. (Village East Construction Agreement). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991).
10.35 Construction Management Cost Reimbursement Agreement dated January 1, 1991, by and between the Partnership and Metro ConCap, Inc. (the "Metro Construction Management Agreement") (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991).
10.36 Assignment and Assumption Agreement dated September 1, 1991, by and between the Partnership and CCP IV Associates, Ltd. (Metro Construction Management Agreement concerning Arbour East and Knollwood Apartments). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991).
10.37 Construction Management Cost Reimbursement Agreement dated January 1, 1991, by and between the Partnership and The Hayman Company (the "Hayman Construction Management Agreement") (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991).
10.38 Assignment and Assumption Agreement dated September 15, 1991, by and between the Partnership and Foothill Chimney Associates Limited Partnership (Hayman Construction Management Agreement concerning Chimney Hill Apartments). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991).
10.39 Construction Management Cost Reimbursement Agreement dated January 1, 1991, by and between the Partnership and R & B Apartment Management Company, Inc. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991).
10.40 Construction Management Cost Reimbursement Agreement dated January 1, 1991, by and between ConCap Metro Centre Associates, L.P. and R & B Commercial Management Company, Inc. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991).
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).
10.47 Property Management Agreement No. 419 dated May 13, 1993, by and between the Partnership and Coventry Properties, Inc. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1993).
10.48Assignment and Assumption Agreement (Property Management Agreement No. 419) dated May 13, 1993, by and between Coventry Properties, Inc., R & B Apartment Management Company, Inc. and Partnership Services, Inc. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1993).
10.49Assignment and Assumption as to certain Property Management Services dated May 13, 1993, by and between Coventry Properties, Inc. and Partnership Services, Inc. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1993).
10.50Property Management Agreement No. 419A dated October 11, 1993, by and between ConCap Stratford Associates, Ltd. and Coventry Properties, Inc. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1993).
10.51Assignment and Assumption Agreement (Property Management Agreement No. 419A) dated October 11, 1993, by and between Coventry Properties, Inc., R & B Apartment Management Company, Inc. and Partnership Services, Inc. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1993).
10.52Assignment and Agreement as to Certain Property Management Services dated October 11, 1993, by and between Coventry Properties, Inc., and Partnership Services, Inc. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1993).
10.53Property Management Agreement No. 427A dated October 11, 1993, by and between ConCap River's Edge Associates, Ltd. and Coventry Properties, Inc. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1993).
10.54Assignment and Assumption Agreement (Property Management Agreement No. 427A) dated October 11, 1993, by and between Coventry Properties, Inc., R & B Apartment Management Company, Inc. and Partnership Services, Inc. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1993).
10.55Assignment and Agreement as to Certain Property Management Services dated October 11, 1993, by and between Coventry Properties, Inc., and Partnership Services, Inc. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1993).
10.56Property Management Agreement No. 513A dated August 18, 1993, by and between ConCap Citadel Associates, Ltd. and Coventry Properties, Inc.
10.57Assignment and Agreement as to Certain Property Management Services dated November 17, 1993, by and between Coventry Properties, Inc., and Partnership Services, Inc.
10.58Property Management Agreement No. 514 dated June 1, 1993, by and between the Partnership and Coventry Properties, Inc.
10.59Assignment and Agreement as to Certain Property Management Services dated November 17, 1993, by and between Coventry Properties, Inc., and Partnership Services, Inc.
10.60Stock 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.
10.63Multifamily 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.
10.64Multifamily 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.
10.65Multifamily 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.
10.66Multifamily 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.
10.67Multifamily 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.
10.68Multifamily 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.
10.69Multifamily 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.
10.70Multifamily Note dated September 30, 1996 between Foothill Post Ridge Associates, Ltd. Limited Partnership, a Tennessee Limited Partnership and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings, Inc.
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).
10.72Multifamily Note dated November 1, 1996 between Post Ridge Associates, Ltd., Limited Partnership, a Tennessee Limited Partnership and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings, Inc.
10.73Amended and Restated Multifamily note dated November 1, 1996, between Post Ridge Associates, Ltd., Limited Partnership, a Tennessee Limited Partnership and Lehman Brothers Holding, Inc. d/b/a Lehman Capital, a division of Lehman Brothers Holdings, Inc.
10.74Multifamily Note dated November 1, 1996 between Consolidated Capital Properties IV, a California Limited Partnership and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings, Inc.
10.75Mortgage 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.
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).
10.77 Purchase and Sale Contract between Registrant and Overlook Associates, Ltd, a Georgia limited partnership dated December 13, 1999, documenting sale of Overlook Apartments located in Memphis, Tennessee. (Incorporated by reference to Annual Report on Form 10-K ended December 31, 1999).
10.78Multifamily 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).
10.79Multifamily 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.)
10.81Multifamily 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.)
10.82Purchase 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.
10.83First 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.
10.84Second 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.
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.
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.
11 Statement regarding computation of Net Income per Limited Partnership Unit (Incorporated by reference to Note A of Item 8 - Financial Statements of this Form 10-K).
19.1 Chapter 11 Plan of CCP/IV Associates, Ltd. (Restated to incorporate first amended Chapter 11 Plan filed October 27, 1992 and second amendments to Chapter 11 Plan of CCP/IV Associates, Ltd. filed December 14, 1992) dated December 14, 1992, and filed December 14, 1992, in the United States Bankruptcy Court for the Middle District of Tennessee. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1992).
19.2 First amended disclosure statement to accompany Chapter 11 Plan, dated February 21, 1992, and amended October 27, 1992 filed by CCP/IV Associates, Ltd. filed October 27, 1992, in the United States Bankruptcy Court for the Middle District of Tennessee. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1992).
99 Certification of Chief Executive Officer and Chief Financial Officer.
(b) Reports on Form 8-K filed during the fourth quarter of calendar year 2002:
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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/Patrick J. Foye Patrick J. Foye Executive Vice President
By: /s/Thomas C. Novosel Thomas C. Novosel Senior Vice President and Chief Accounting Officer
Date: March 31, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.
/s/Patrick J. Foye Date: March 31, 2003 Patrick J. Foye Executive Vice President and Director
/s/Thomas C. Novosel Date: March 31, 2003 Thomas C. Novosel Senior Vice President and Chief Accounting Officer
CERTIFICATION
I, Patrick J. Foye, certify that:
1. I have reviewed this annual report on Form 10-K of Consolidated Capital Properties IV;
2. Based on my knowledge, this annual 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 annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures 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 annual report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and
c) Presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: March 31, 2003
/s/Patrick J. Foye Patrick J. Foye Executive Vice President of ConCap Equities, Inc., equivalent of the chief executive officer of the Partnership
CERTIFICATION
I, Paul J. McAuliffe, certify that:
1. I have reviewed this annual report on Form 10-K of Consolidated Capital Properties IV;
2. Based on my knowledge, this annual 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 annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual 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 annual report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures 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 annual report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and
c) Presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: March 31, 2003
/s/Paul J. McAuliffe Paul J. McAuliffe Executive Vice President and Chief Financial Officer of ConCap Equities, Inc., equivalent of the chief financial officer of the Partnership
Exhibit 99
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 Annual Report on Form 10-K of Consolidated Capital Properties IV (the "Partnership"), for the year ended December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Patrick J. Foye, as the equivalent of the chief executive officer of the Partnership, and Paul J. McAuliffe, 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/Patrick J. Foye Name: Patrick J. Foye Date: March 31, 2003
/s/Paul J. McAuliffe Name: Paul J. McAuliffe Date: March 31, 2003
This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Partnership for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.