** **

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

 

**FORM 10-Q**

 

(Mark One)

[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2009

 

or

 

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _________to _________

 

Commission file number 0-10831

 

## CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES, LP

(Exact name of registrant as specified in its charter)

 
| Delaware                        | 94-2744492          |
|---------------------------------|---------------------|
| (State or other jurisdiction of | (I.R.S. Employer    |
| incorporation or organization)  | Identification No.) |

 

55 Beattie Place, PO Box 1089

Greenville, South Carolina  29602

(Address of principal executive offices)

 

(864) 239-1000

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  

[X] Yes  [ ] No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ ] Yes  [ ] No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 
| Large accelerated filer [ ]                                               | Accelerated filer [ ]         |
|---------------------------------------------------------------------------|-------------------------------|
| Non-accelerated filer [ ] 

(Do not check if a smaller reporting company) | Smaller reporting company [X] |

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes  [X] No

 

### PART I – FINANCIAL INFORMATION
 

 

Item 1.     Financial Statements.

 

 

CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES, LP

CONSOLIDATED BALANCE SHEETS

 (in thousands, except unit data)

 

 

 

June 30,

December 31,

 

2009

2008

 

(Unaudited)

(Note)

Assets

 

 

Cash and cash equivalents

$    467

$  4,777

Receivables and deposits 

     836

     775

Deferred tax asset (Note F)

     443

     391

Other assets

   2,521

   1,755

Investment in affiliated partnerships (Note C)

     513

     566

Investment properties:

 

 

Land

  12,955

  12,955

Buildings and related personal property

  97,680

  97,351

 

 110,635

 110,306

Less accumulated depreciation

 (47,190)

 (43,724)

 

  63,445

  66,582

Assets held for sale (Notes A & H)

   6,311

   7,173

 

$74,536

$82,019

 

 

 

Liabilities and Partners' Capital (Deficiency)

 

 

Liabilities

 

 

Accounts payable

$    495

$  1,128

Tenant security deposit liabilities

     901

     865

Accrued property taxes

     312

      55

Other liabilities

   1,219

   1,384

Due to affiliates (Note B)

   1,690

     226

Mortgage notes payable 

 121,405

 122,401

Liabilities related to assets held for sale

 

 

  (Notes A and H)

   3,220

   3,271

 

 129,242

 129,330

 

 

 

Partners' Capital (Deficiency)

 

 

General partner

     134

     171

Limited partners (199,041.2 units issued and

 

 

outstanding)

 (54,840)

 (47,482)

 

 (54,706)

 (47,311)

 

$74,536

$82,019

 

Note: The consolidated balance sheet at December 31, 2008 has been derived from the audited financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements.

 

See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES, LP 
CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 (in thousands, except per unit data)

 

 

 

Three Months Ended

Six Months Ended

 

June 30,

June 30,

 

2009

2008

2009

2008

Revenues:

 

 

 

 

Rental income

 $ 4,920

 $ 5,102

 $ 9,964

 $10,208

Other income

    545

    511

    989

  1,006

Total revenues

  5,465

  5,613

 10,953

 11,214

Expenses:

 

 

 

 

Operating

   2,170

   2,245

   4,583

   4,482

General and administrative

     100

     163

     266

     328

Depreciation

   1,746

   1,687

   3,472

   3,363

Interest

   1,886

   1,866

   3,736

   3,746

Property taxes

    365

    374

    762

    779

Total expenses

  6,267

  6,335

 12,819

 12,698

 

 

 

 

 

Loss before income taxes, discontinued

 

 

 

 

operations, casualty gain, distributions in excess of

 

 

 

 

investment, equity in loss

 

 

 

 

from investment and impairment loss

    (802)

    (722)

  (1,866)

  (1,484)

Income taxes (expense) benefit (Note F):

 

 

 

 

Current

      (5)

     (27)

      (9)

     (52)

Deferred

      41

      30

      52

      30

Casualty gain (Note E)

      --

      --

      11

      --

Distributions in excess of investment

 

 

 

 

  (Note C)

      --

      --

     454

      --

Equity in loss from investment (Note C)

     (15)

      (2)

     (33)

      (8)

Impairment loss (Note H)

   (400)

     --

   (900)

     --

Loss before discontinued operations

  (1,181)

    (721)

  (2,291)

  (1,514)

(Loss) income from discontinued

 

 

 

 

  operations (Notes A, G and H)

   (375)

     85

 (1,439)

     57

Net loss 

 $(1,556)

 $  (636)

 $(3,730)

 $(1,457)

 

 

 

 

 

Net loss allocated to general partner

 $   (15)

 $    (7)

 $   (37)

 $   (15)

Net loss allocated to limited partners

      --

    (282)

      --

  (1,095)

     (Series A) (Note A)

    (500)

     (96)

    (793)

     (96)

     (Series B) (Note A)

    (669)

    (212)

  (1,475)

    (212)

     (Series C) (Note A)

   (372)

    (39)

 (1,425)

    (39)

 

 $(1,556)

 $  (636)

 $(3,730)

 $(1,457)

 

 

 

 

 

Per limited partnership unit:

 

 

 

 

Loss before discontinued operations

 $    --

 $ (1.70)

 $    --

 $ (5.64)

     (Series A) (Note A)

   (2.51)

   (0.80)

   (3.98)

   (0.80)

     (Series B) (Note A)

   (3.36)

   (1.07)

   (7.41)

   (1.07)

     (Series C) (Note A)

      --

      --

      --

      --

Income from discontinued operations

      --

    0.29

      --

    0.15

Income from discontinued operations 

      --

    0.32

      --

    0.32

  (Series A)

 

 

 

 

Loss from discontinued operations 

  (1.87)

  (0.20)

  (7.16)

  (0.20)

  (Series C)

 

 

 

 

Net loss

 $(7.74)

 $(3.16)

 $(18.55)

 $(7.24)

Distribution per limited partnership unit

 

 

 

 

 

 $    --

 $    --

 $18.41

 $  3.77

 

See Accompanying Notes to Consolidated Financial Statements

CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES, LP
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIENCY)

(Unaudited)

(in thousands, except unit data)

 

 

 

 

Limited

 

Limited

Limited

Limited

Subtotal

 

 

Partnership

General

Partners

Partners

Partners

Limited

 

 
UnitsPartner(Series A)
(Series B)

(Series C)

Partners

Total

 
   
 

 

 

 

 

 

 

 

 

 

 

 

Partners’ capital 

 

 

 

 

 

 

 

  (deficiency) at

 

 

 

 

 

 

 

   December 31,

   2008

199,041.2

 $ 171

$(23,852)

$(20,558)

 $(3,072)

$(47,482)

$(47,311)

 

 

 

 

 

 

 

 

Distribution to

 

 

 

 

 

 

 

  partners

       --

    --

  (3,665)

      --

      --

  (3,665)

  (3,665)

 

 

 

 

 

 

 

 

Net loss for the

  six months

 

 

 

 

 

 

 

  ended June 30,

 

 

 

 

 

 

 

  2009

       --

  (37)

    (793)

  (1,475)

  (1,425)

  (3,693)

  (3,730)

 

 

 

 

 

 

 

 

Partners’ capital 

 

 

 

 

 

 

 

  (deficiency) at

 

 

 

 

 

 

 

  June 30, 2009

199,041.2

 $134

$(28,310)

$(22,033)

 $(4,497)

$(54,840)

$(54,706)

 

See Accompanying Notes to Consolidated Financial Statements

CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES, LP 
CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

 

 

 

Six Months Ended

 

June 30,

 

2009

2008

Cash flows from operating activities:

 

 

Net loss

 $ (3,730)

 $ (1,457)

Adjustments to reconcile net loss to net cash

 

 

provided by operating activities:

 

 

Depreciation 

   3,729

   3,867

Amortization of loan costs, lease commissions and

 

 

 mortgage premiums

      22

      15

Equity in loss from investment

      33

       8

Impairment loss

   2,100

      --

Write off of redevelopment costs

     232

      --

Casualty gain

      (11)

      --

Distributions in excess of investment

     (454)

      --

   Change in accounts:

 

 

Receivables and deposits

      (48)

      (58)

Deferred tax asset

      (52)

      (30)

Other assets

     (843)

     (906)

Accounts payable

     (108)

       6

Tenant security deposit liabilities 

      23

      92

Accrued property taxes

     319

     504

Other liabilities

     (166)

     (115)

Due to affiliates

     122

     117

Net cash provided by operating activities

   1,168

   2,043

 

 

 

Cash flows from investing activities:

 

 

Property improvements and replacements

   (2,622)

   (2,517)

Distributions from affiliated partnerships

     474

      --

Insurance proceeds received

      33

      --

Net cash used in investing activities 

  (2,115)

  (2,517)

 

 

 

Cash flows from financing activities:

 

 

Payments on mortgage notes payable

   (1,039)

   (1,067)

Lease commissions paid

       (1)

      (50)

Distributions to partners

   (3,665)

     (750)

Advances from affiliate

   2,383

      --

Repayment of advances from affiliate

   (1,041)

      --

Net cash used in financing activities

  (3,363)

  (1,867)

 

 

 

Net decrease in cash and cash equivalents

   (4,310)

   (2,341)

Cash and cash equivalents at beginning of period

   4,777

   2,961

Cash and cash equivalents at end of period

$    467

$    620

 

 

 

Supplemental disclosure of cash flow information:

 

 

Cash paid for interest, net of capitalized interest

$  3,851

$  4,060

Supplemental disclosure of non-cash activity:

 

 

Property improvements and replacements included in 

 

 

 accounts payable

$    139

$    211

 

Included in property improvements and replacements for the six months ended June 30, 2009 and 2008 are approximately $664,000 and $489,000 of property improvements and replacements which were included in accounts payable at December 31, 2008 and 2007, respectively.

 

See Accompanying Notes to Consolidated Financial Statements

CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES, LP
 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 
Note A – Basis of Presentation
 

As used herein, the term “Partnership” or “Registrant” refers to Consolidated Capital Institutional Properties, a California limited partnership, for all periods prior to April 25, 2008, and Consolidated Capital Institutional Properties, LP, a Delaware limited partnership, for all periods from and after April 25, 2008.  The accompanying unaudited consolidated financial statements of the Partnership have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In the opinion of ConCap Equities, Inc. (the "General Partner"), the Partnership’s general partner, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the three and six month periods ended June 30, 2009 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2009.  For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership's Annual Report on Form 10-K for the fiscal year ended December 31, 2008.  The General Partner is ultimately owned by Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust.

 

The Partnership’s management evaluated for subsequent events through the time this Quarterly Report on Form 10-Q was filed on August 13, 2009.

 

In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, the accompanying consolidated statements of operations for the three and six months ended June 30, 2008 have been restated to reflect the operations of Palm Lake Apartments and The Dunes Apartments as discontinued operations as a result of the sale of Palm Lake Apartments during December 2008 and The Dunes Apartments as a result of the property being classified as held for sale at June 30, 2009. The accompanying consolidated statements of operations for the three and six months ended June 30, 2008 also include the operations of The Loft Apartments, which was classified as held for sale during 2008 and was sold during December 2008. The Partnership entered into a sale contract on June 1, 2009 to sell The Dunes Apartments to a third party, with an expected closing during the third quarter of 2009. Included in loss from discontinued operations for the three and six months ended June 30, 2009 are operations of The Dunes Apartments. As a result of The Dunes Apartments being held for sale, its assets and liabilities are classified as held for sale as of June 30, 2009 and December 31, 2008. Included in (loss) income from discontinued operations for the six months ended June 30, 2009 and 2008 are (loss) income and revenues as noted in the table below. 

 

 

2009

2009

2008

2008

 

Loss

Revenues

(Loss) income

Revenues

 

 

 

 

 

The Dunes Apartments

$(1,439,000)

  $798,000

    $(70,000)

$  795,000

Palm Lake Apartments

        --

        --

     (57,000)

   713,000

The Loft Apartments

        --

        --

     184,000

   814,000

 

$(1,439,000)

  $798,000

    $ 57,000

$2,322,000

 
Organization: On April 25, 2008, the Partnership changed its domicile from California to Delaware by merging with and into Consolidated Capital Institutional Properties, LP, a Delaware limited partnership, with the Delaware partnership as the surviving entity in the merger. The merger was undertaken pursuant to an Agreementand Plan of Merger, dated as of March 19, 2008, by and between the California partnership and the Delaware partnership. 
 

Under the merger agreement, each unit of limited partnership interest in the California partnership was converted into an identical unit of limited partnership in the Delaware partnership and the general partnership interest in the California partnership previously held by the General Partner was converted into a general partnership interest in the Delaware partnership. All interests in the Delaware partnership outstanding immediately prior to the merger were cancelled in the merger. 

 

The voting and other rights of the limited partners provided for in the partnership agreement were not changed as a result of the merger. In the merger, the partnership agreement of the California partnership was adopted as the partnership agreement of the Delaware partnership, with the following changes: (i) references therein to the California Uniform Limited Partnership Act were amended to refer to the Delaware Revised Uniform Limited Partnership Act; (ii) a description of the merger was added; (iii) the name of the partnership was changed to “Consolidated Capital Institutional Properties, LP” and (iv) a provision was added that gives the general partner authority to establish different designated series of limited partnership interests that have separate rights with respect to specified partnership property, and profits and losses associated with such specified property. 

 

On April 30, 2008, the General Partner amended the Partnership Agreement to establish, and convert existing limited partnership interests into, different designated series of limited partnership interests that have separate rights with respect to specified partnership property. Effective as of the close of business on April 30, 2008 (the “Establishment Date”), each then outstanding Unit of limited partnership interest in the Partnership was converted into one Series A Unit, one Series B Unit and one Series C Unit. Except as described below, the Series A Units, Series B Units and Series C Units entitle the holders thereof to the same rights as the holders of units of limited partnership interests had prior to the Establishment Date.

 

Holders of the Series A Units are entitled to receive distributions of all income and allocation of all profits and losses relating to the Partnership’s interests in any entity in which the Partnership owns an interest, other than the Series B Subsidiary and Series C Subsidiary (as defined below). 

 

Holders of the Series B Units are entitled to receive distributions of all income and allocation of all profits and losses relating to  the Partnership’s membership interest in CCIP Knolls, L.L.C., a Delaware limited liability company (the “Series B Subsidiary”).  The Series B Subsidiary holds a 100% ownership interest in The Knolls Apartments. 

 

Holders of the Series C Units are entitled to receive distributions of all income and allocation of all profits and losses relating to the Partnership’s membership interest in CCIP Society Park East, L.L.C., a Delaware limited liability company (the “Series C Subsidiary”).  The Series C Subsidiary holds a 100% ownership interest in The Dunes Apartments.

 

Reclassifications: Certain reclassifications have been made to the 2008 balances to conform to the 2009 presentation.

 

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.  SFAS No. 131 also established standards for related disclosures about products and services, geographic areas, and major customers. (See "Note D" for detailed disclosure of the Partnership's segments).

 

Recent Accounting Pronouncements

 

In June 2009, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 168,*The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162*, or SFAS No. 168, which is effective for financial statements issued for interim and annual periods ending after September 15, 2009.  Upon the effective date of SFAS No. 168, the FASB Accounting Standards Codification, or the Codification, will become the single source of authoritative GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission, or SEC, under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The Codification will supersede all then-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification will become non-authoritative.  Following SFAS No. 168, the FASB will issue Accounting Standards Updates that serve to update the Codification. The Partnership does not anticipate that SFAS No. 168 will have a significant effect on its consolidated financial statements.
 
Note B – Transactions with Affiliated Parties
 

The Partnership has no employees and depends on the General Partner and its affiliates for the management and administration of all Partnership activities.  The Partnership Agreement provides for certain payments to affiliates for services and reimbursement of certain expenses incurred by affiliates on behalf of the Partnership.  

 

Affiliates of the General Partner 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 $582,000 and $660,000 for the six months ended June 30, 2009 and 2008, respectively, which are included in operating expenses and (loss) income from discontinued operations. 

 

Affiliates of the General Partner charged the Partnership for reimbursement of accountable administrative expenses amounting to approximately $442,000 and $401,000 for the six months ended June 30, 2009 and 2008, respectively, which are included in general and administrative expenses, (loss) income from discontinued operations, investment properties and assets held for sale. The portion of these reimbursements included in investment properties and assets held for sale for the six months ended June 30, 2009 and 2008 are construction management services provided by an affiliate of the General Partner of approximately $223,000 and $173,000, respectively. At June 30, 2009 and December 31, 2008, approximately $208,000 and $100,000, respectively of these expenses are outstanding and included in due to affiliates. 

 

In accordance with the Partnership Agreement, AIMCO Properties, L.P., an affiliate of the General Partner, advanced the Partnership approximately $2,383,000 to fund operations at The Sterling Apartment Homes, The Knolls Apartments, Regency Oaks Apartments and Plantation Gardens Apartments and capital expenditures at The Dunes Apartments during the six months ended June 30, 2009.  There were no such advances to the Partnership during the six months ended June 30, 2008. Interest was charged at either the prime rate or the prime rate plus 2% (prime rate was 3.25% at June 30, 2009) and interest expense was approximately $22,000 for the six months ended June 30, 2009.  During the six months ended June 30, 2009, the Partnership made payments on the outstanding loans and accrued interest of approximately $1,049,000 from operations. There were no such payments made during the six months ended June 30, 2008.  At June 30, 2009 and December 31, 2008, the amount of the outstanding advances and accrued interest was approximately $1,482,000 and $126,000, respectively, and is included in due to affiliates. The Partnership may receive additional advances of funds from AIMCO Properties, L.P. although AIMCO Properties, L.P. is not obligated to provide such advances.  For more information on AIMCO Properties, L.P., including copies of its audited balance sheet, please see its reports filed with the Securities and Exchange Commission.

 

The Partnership insures its properties up to certain limits through coverage provided by AIMCO which is generally self-insured for a portion of losses and liabilities related to workers’ compensation, property casualty, general liabilityand vehicle liability.  The Partnership insures its properties above the AIMCO limits through insurance policies obtained by AIMCO from insurers unaffiliated with the General Partner. During the six months ended June 30, 2009, the Partnership was charged by AIMCO and its affiliates approximately $425,000 for insurance coverage and fees associated with policy claims administration. Additional charges will be incurred by the Partnership during 2009 as other insurance policies renew later in the year. The Partnership was charged by AIMCO and its affiliates approximately $577,000 for insurance coverage and fees associated with policy claims administration during the year ended December 31, 2008.
 
Note C - Investment in Affiliated Partnerships
 

 

 

 

Investment Balance at

 

 

Ownership

June 30,

December 31,

Partnership

Type of Ownership

Percentage

2009

2008

 

 

 

(in thousands)

Consolidated Capital

Special Limited

 

 

 

  Growth Fund

Partner

0.40%

$   --

$   --

Consolidated Capital

Special Limited

 

 

 

  Properties III

Partner

1.86%

     1

     3

Consolidated Capital

Special Limited

 

 

 

  Properties IV

Partner

1.86%

   512

   563

 

 

 

$  513

$  566

 

These investments are accounted for using the equity method of accounting. Distributions from the affiliated partnerships are accounted for as a reduction of the investment balance until the investment balance is reduced to zero. When the investment balance has been reduced to zero, subsequent distributions received are recognized as income in the accompanying consolidated statements of operations. During the three months ended June 30, 2009, the Partnership received a distribution of approximately $20,000 from operations from one of its affiliated partnerships, Consolidated Capital Properties IV, which was recognized as a reduction in the investment balance.During the six months ended June 30, 2009, the Partnership received approximately $454,000 of distributions from sale proceeds of one of its affiliated partnerships, Consolidated Capital Growth Fund, which was recognized as income on the accompanying consolidated statements of operations. There were no distributions received during the six months ended June 30, 2008. During the three and six months ended June 30, 2008, the Partnership recognized approximately $2,000 and $8,000, respectively, in equity in loss from investments related to its allocated share of the loss from one of the affiliated partnerships. The Partnership recognized approximately $15,000 and $33,000 in equity in loss from investments related to its allocated share of the loss from two of the affiliated partnerships during the three and six months ended June 30, 2009, respectively. 

 

**Note D – Segment Reporting**

 

Description of the types of products and services from which the reportable segment derives its revenues: The Partnership has two reportable segments: residential properties and commercial property.  The Partnership’s property segments consist of four apartment complexes, one in Colorado, three in Florida, one of which is classified as held for sale, and one multiple use facility consisting of apartment units and commercial space in Pennsylvania.   The Partnership rents apartment units to tenants for terms that are typically less than twelve months.  The commercial property leases space to various medical offices, career service facilities, and retail shops at terms ranging from month to month to ten years.

 

Measurement of segment profit and loss:  The Partnership evaluates performance based on segment profit (loss) before depreciation.  The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies included in the Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008.

 
Factors management used to identify the Partnership's reportable segment: The Partnership’s reportable segments are business units (investment properties) that offer different products and services.  The reportable segments are each managed separately because they provide distinct services with different types of products and customers.

 

Segment information for the three and six months ended June 30, 2009 and 2008 is shown in the tables below (in thousands). The "Other" column includes Partnership administration related items and income and expense not allocated to reportable segments.

 

 

For the three months ended

 

June 30, 2009

 

 

Residential

Commercial

Other

Totals

Rental income

  $ 4,469

 $   451

$   --

 $ 4,920

Other income

      493

      52

    --

     545

Loss from discontinued operations

     (327)

      --

   (48)

    (375)

Equity in loss from investment

       --

      --

   (15)

     (15)

Impairment loss

     (400)

      --

    --

    (400)

Interest expense

    1,672

     172

    42

   1,886

Depreciation

    1,678

      68

    --

   1,746

General and administrative 

 

 

 

 

  expenses

       --

      --

   100

     100

Current income tax expense

        5

      --

    --

       5

Deferred income tax benefit

      (41)

      --

    --

     (41)

Segment loss

   (1,309)

     (42)

  (205)

  (1,556)

 

 

For the six months ended

 

June 30, 2009

 
 
Residential

Commercial

Other

Totals

Rental income

$ 9,043

$   921

$    --

$ 9,964

Other income

    893

     98

     (2)

    989

Casualty gain

     11

     --

     --

     11

Loss from discontinued

  operations

 

  (1,338)

 

     --

 

   (101)

 

  (1,439)

Distributions in excess of

 

 

 

 

  investment

     --

     --

    454

    454

Equity in loss from investment

     --

     --

    (33)

     (33)

Impairment loss

    (900)

     --

     --

    (900)

Interest expense

  3,350

    344

     42

  3,736

Depreciation

  3,340

    132

     --

  3,472

General and administrative 

 

 

 

 

  expenses

     --

     --

    266

    266

Current income tax expense

      9

     --

     --

      9

Deferred income tax benefit

     (52)

     --

     --

     (52)

Segment (loss) profit

  (3,722)

     (18)

     10

  (3,730)

Total assets

 71,901

  2,015

    620

 74,536

Capital expenditures for

 

 

 

 

  investment properties 

  1,721

    376

     --

  2,097

 

 

For the three months ended

 

June 30, 2008

 

 

Residential

Commercial

Other

Totals

 

 

 

 

 

Rental income

  $ 4,694

 $   408

$   --

 $ 5,102

Other income

      445

      65

     1

     511

Income from discontinued

  operations

 

       93

 

      --

 

    (8)

 

      85

Equity in loss from investment 

       --

      --

    (2)

      (2)

Interest expense

    1,692

     174

    --

   1,866

Depreciation

    1,641

      46

    --

   1,687

General and administrative 

 

 

 

 

  expenses

       --

      --

   163

     163

Current income tax expense

       27

      --

    --

      27

Deferred income tax benefit

      (30)

      --

    --

     (30)

Segment loss

     (424)

     (40)

  (172)

    (636)

 

 

For the six months ended

 

June 30, 2008

 
 
Residential

Commercial

Other

Totals
 
 

 

 

 

Rental income

$ 9,435

$   773

$    --

$10,208

Other income

    847

    112

     47

  1,006

Income from discontinued

  operations

 

     65

 

     --

 

     (8)

 

     57

Equity in loss from investment

     --

     --

     (8)

      (8)

Interest expense

  3,393

    348

      5

  3,746

Depreciation

  3,270

     93

     --

  3,363

General and administrative 

 

 

 

 

  expenses

     --

     --

    328

    328

Current income tax expense

     52

     --

     --

     52

Deferred income tax benefit

     (30)

     --

     --

     (30)

Segment loss

  (1,001)

    (154)

   (302)

  (1,457)

Total assets

 88,551

  1,565

  1,077

 91,193

Capital expenditures for

 

 

 

 

  investment properties 

  1,820

    419

     --

  2,239

 

 
Note E – Casualty Event
 

In December 2008, The Knolls Apartments sustained damages of approximately $70,000 from a water main break in the parking area, including approximately $41,000 of clean up costs. During the six months ended June 30, 2009, the Partnership recognized a casualty gain of approximately $11,000 as a result of the receipt of insurance proceeds of approximately $33,000 net of the write off of undepreciated damaged assets of approximately $22,000.

 

**Note F – Partnership Income Taxes**

 

In conjunction with the payment of local income taxes with respect to The Sterling Apartment Homes and Commerce Center, the Partnership has recorded a deferred tax asset in the amount of approximately $443,000.  The deferred tax asset consists primarily of temporary differences related to land, buildings and accumulated depreciation. The Partnership believes that it is more likely than not that the full value of the deferred tax asset will be realized through future taxable income of the property. Accordingly, an additional benefit of approximately $41,000 and $52,000 was recognized during the three and six months ended June 30, 2009, respectively, compared to a benefit of approximately $30,000 which was recognized during the three and six months ended June 30, 2008. During the three and six months ended June 30, 2009 and 2008, the Partnership recognized approximately $5,000 and $9,000 and $27,000 and $52,000, respectively, in current income tax expense relatedto local income taxes with respect to The Sterling Apartment Homes and Commerce Center.
 

**Note G - Sale of Investment Properties**

 

On December 29, 2008, the Partnership sold The Loft Apartments, located in Raleigh, North Carolina, to a third party for a sales price of $9,325,000. After payment of closing costs, the Partnership received net proceeds of approximately $9,212,000.  The Partnership used a portion of the proceeds to repay the mortgage encumbering the property and a prepayment penalty of approximately $4,368,000 and $588,000, respectively. The sale resulted in a gain of approximately $6,501,000 during the fourth quarter of 2008.  In addition, the Partnership recorded a loss on early extinguishment of debt of approximately $623,000 during the fourth quarter of 2008 as a result of the write off of unamortized loan costs and a prepayment penalty. 

 

On December 9, 2008, the Partnership sold Palm Lake Apartments, located in Tampa, Florida, to a third party for a sales price of $7,000,000. After payment of closing costs, the Partnership received net proceeds of approximately $6,499,000. The Partnership used a portion of the proceeds to repay the mortgage encumbering the property and a prepayment penalty of approximately $2,301,000 and $107,000, respectively. The sale resulted in a gain of approximately $1,210,000 during the fourth quarter of 2008. In addition, the Partnership recorded a loss on early extinguishment of debt of approximately $77,000 during the fourth quarter of 2008 as a result of a prepayment penalty, partially offset by the write off of the unamortized mortgage premium. 

 

Included in loss from discontinued operations for the six months ended June 30, 2009 and 2008 are (loss) income and revenues as noted in the table below.

 

 

2009

2009

2008

2008

 

Loss

Revenues

(Loss) income

Revenues

 

 

 

 

 

The Dunes Apartments

$(1,439,000)

  $798,000

    $(70,000)

$  795,000

Palm Lake Apartments

        --

        --

     (57,000)

   713,000

The Loft Apartments

        --

        --

     184,000

   814,000

 

$(1,439,000)

  $798,000

    $ 57,000

$2,322,000

 

**Note H – Investment Properties**

 

On May 12, 2009, the Partnership entered into a sale contract with a third party relating to the sale of The Knolls Apartments. On June 26, 2009 that contract was terminated. Subsequent to June 30, 2009, the contract was reinstated. The sale is expected to close during the third quarter of 2009 for approximately $13,350,000. The Partnership determined that certain criteria of SFAS No. 144 were not met at June 30, 2009 and therefore continues to report the assets and liabilities of the investment property as held for investment and its respective operations as continuing operations. In accordance with the Partnership’s impairment policy and SFAS No. 144, during the three and six months ended June 30, 2009, the Partnership recorded impairment losses of approximately $400,000 and $900,000, respectively, to write the carrying amount of the property down to the expected sale price.

 

On June 1, 2009, the Partnership entered into a sale contract with a third party relating to the sale of The Dunes Apartments which is expected to close during the third quarter of 2009 for approximately $6,300,000. The Partnership determined that the criteria of SFAS No. 144 were met at June 30, 2009 and therefore the assets and liabilities of the investment property are classified as assets held for sale as of June 30, 2009 and December 31, 2008 and its respective operations as discontinued operations. In accordance with the Partnership’s impairment policy and SFAS No. 144, during the three and six months ended June 30, 2009, the Partnership recorded impairment losses of approximately $300,000 and $1,200,000, respectively, to write the carrying amount of the property down to the expected sale price, which is included in loss from discontinued operations.

 

During the six months ended June 30, 2009, the Partnership wrote off redevelopment costs of approximately $232,000. The write off represents capitalized costs incurred in a prior year related to a potential redevelopment project at Plantation Gardens Apartments, which is no longer being considered as of June 30, 2009.
 

**Note I – Fair Value of Financial Instruments**

 

SFAS No. 107, "Disclosures about 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 Partnership estimates the fair value of its long-term debt by discounting future cash flows using a discount rate commensurate with that currently believed to be available to the Partnership for similar term, long-term debt. At June 30, 2009, the fair value of the Partnership's long-term debt at the Partnership's incremental borrowing rate approximated its carrying value.

 
Note J – Contingencies
 

As previously disclosed, AIMCO Properties, L.P. and NHP Management Company, both affiliates of the General Partner, were defendants in a lawsuit, filed as a collective action in August 2003 in the United States District Court for the District of Columbia, alleging that they willfully violated the Fair Labor Standards Act (“FLSA”) by failing to pay maintenance workers overtime for time worked in excess of 40 hours per week (“overtime claims”).  The plaintiffs also contended that AIMCO Properties, L.P. and NHP Management Company failed to compensate maintenance workers for time that they were required to be "on-call" (“on-call claims”).  In March 2007, the court in the District of Columbia decertified the collective action.  In July 2007, plaintiffs’ counsel filed individual cases in Federal court in 22 jurisdictions.  In the second quarter of 2008, AIMCO Properties, L.P. settled the overtime cases involving 652 plaintiffs and established a framework for resolving the 88 remaining “on-call” claims and the attorneys’ fees claimed by plaintiffs’ counsel.  As a result, the lawsuits asserted in the 22 Federal courts have been dismissed. During the fourth quarter of 2008, the Partnership paid approximately $8,000 for settlement amounts for alleged unpaid overtime to employees who had worked at the Partnership’s investment properties. At this time, the 88 remaining “on-call” claims and the attorneys’ fees claimed by plaintiffs’ counsel are not resolved. The parties have selected six “on-call” claims that will proceed forward through the arbitration process and have selected arbitrators. The arbitrations have not yet been scheduled. The General Partner is uncertain as to the amount of any additional loss that may be allocable to the Partnership. Therefore, the Partnership cannot estimate whether any additional loss will occur or a potential range of loss.

 

The Partnership is unaware of any other pending or outstanding litigation matters involving it or its investment properties that are not of a routine nature arising in the ordinary course of business.

 

Environmental

 

Various Federal, state and local laws subject property owners or operators to liability for management, and the costs of removal or remediation, of certain hazardous substances present on a property, including lead-based paint.  Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release or presence of the hazardous substances. The presence of, or the failure to manage or remedy properly, hazardous substances may adversely affect occupancy at affected apartment communities and the ability to sell or finance affected properties. In addition to the costs associated with investigation and remediation actions brought by government agencies, and potential fines or penalties imposed by such agencies in connection therewith, the presence of hazardous substances on a property could result in claims by private plaintiffs forpersonal injury, disease, disability or other infirmities. Various laws also impose liability for the cost of removal, remediation or disposal of hazardous substances through a licensed disposal or treatment facility. Anyone who arranges for the disposal or treatment of hazardous substances is potentially liable under such laws. These laws often impose liability whether or not the person arranging for the disposal ever owned or operated the disposal facility. In connection with the ownership, operation and management of its properties, the Partnership could potentially be liable for environmental liabilities or costs associated with its properties.  
 

Mold

 

The Partnership is aware of lawsuits against owners and managers of multifamily properties asserting claims of personal injury and property damage caused by the presence of mold, some of which have resulted in substantial monetary judgments or settlements.  The Partnership has only limited insurance coverage for property damage loss claims arising from the presence of mold and for personal injury claims related to mold exposure.  Affiliates of the General Partner have implemented policies, procedures, third-party audits and training and the General Partner believes that these measures will prevent or eliminate mold exposure and will minimize the effects that mold may have on residents.  To date, the Partnership has not incurred any material costs or liabilities relating to claims of mold exposure or to abate mold conditions.  Because the law regarding mold is unsettled and subject to change the General Partner can make no assurance that liabilities resulting from the presence of or exposure to mold will not have a material adverse effect on the Partnership’s consolidated financial condition or results of operations.

ITEM 2.     Management's Discussion and Analysis Of Financial Condition and Results of Operations
 

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements in certain circumstances. Certain information included in this Quarterly Report contains or may contain information that is forward-looking, including, without limitation, statements regarding the effect of redevelopments, the Partnership’s future financial performance, including the Partnership’s ability to maintain current or meet projected occupancy and rent levels, and the effect of government regulations. Actual results may differ materially from those described in these forward-looking statements and, in addition, will be affected by a variety of risks and factors some of which are beyond the Partnership’s control including, without limitation: financing risks, including the availability and cost of financing and the risk that the Partnership’s cash flows from operations may be insufficient to meet required payments of principal and interest; natural disasters and severe weather such as hurricanes; national and local economic conditions; the general level of interest rates; energy costs; the terms of governmental regulations that affect the Partnership’s properties and interpretations of those regulations; the competitive environment in which the Partnership operates; real estate risks, including fluctuations inreal estate values and the general economic climate in local markets and competition for tenantsin such markets; insurance risk; development risks; litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; and possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by the Partnership. Readers should carefully review the Partnership’s consolidated financial statements and the notes thereto and the other documents the Partnership files from time to time with the Securities and Exchange Commission.
 

The Partnership's investment properties consist of four properties and one property which is classified as held for sale at June 30, 2009.  The Sterling is a multiple-use facility which consists of an apartment complex and commercial space. The following table sets forth the average occupancy of the properties for the six months ended June 30, 2009 and 2008:

 

 

Average Occupancy

Property

2009

2008

 

 

 

The Sterling Apartment Homes (1)

92%

97%

The Sterling Commerce Center

82%

80%

  Philadelphia, Pennsylvania 

 

 

The Knolls Apartments

97%

96%

Colorado Springs, Colorado

 

 

Plantation Gardens Apartments 

95%

97%

Plantation, Florida

 

 

Regency Oaks Apartments (1) 

89%

94%

Fern Park, Florida

 

 

 

(1)      The General Partner attributes the decrease in occupancy at both The Sterling Apartment Homes and Regency Oaks Apartments to the soft rental market in the local areas.

 

The Partnership’s financial results depend upon a number of factors including the ability to attract and maintain tenants at the investment properties, interest rates on mortgage loans, costs incurred to operate the investment properties, general economic conditions and weather. As part of the ongoing business plan of the Partnership, the General Partner monitors the rental market environment of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasingrents and maintaining a high overall occupancy level. However, the General Partner may use rental concessions and rental rate reductions to offset softening market conditions; accordingly, there is no guarantee that the General Partner will be able to sustain such a plan. Further, a number of factors that are outside the control of the Partnership, such as the local economic climate and weather, can adversely or positively affect the Partnership’s financial results.
 

Results of Operations

 

The Partnership recognized net loss of approximately $1,556,000 and $3,730,000 for the three and six months ended June 30, 2009, respectively, compared to net loss of approximately $636,000 and $1,457,000 for the three and six months ended June 30, 2008, respectively.In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, the consolidated statements of operations included in “Item 1. Financial Statements” for the three and six months ended June 30, 2008 reflect the operations of two properties as discontinued operations as a result of the sale of the respective properties during 2008 and the operations of one property as discontinued operations as it meets the criteria of SFAS No. 144 to be classified as held for sale at June 30, 2009. Included in (loss) income from discontinued operations for the six months ended June 30, 2009 and 2008 are (loss) income and revenues as noted in the table below.

 

 

2009

2009

2008

2008

 

Loss

Revenues

(Loss) income

Revenues

 

 

 

 

 

The Dunes Apartments

$(1,439,000)

  $798,000

    $(70,000)

$  795,000

Palm Lake Apartments

        --

        --

     (57,000)

   713,000

The Loft Apartments

        --

        --

     184,000

   814,000

 

$(1,439,000)

  $798,000

    $ 57,000

$2,322,000

 

On December 29, 2008, the Partnership sold The Loft Apartments, located in Raleigh, North Carolina, to a third party for a sales price of $9,325,000. After payment of closing costs, the Partnership received net proceeds of approximately $9,212,000. The Partnership used a portion of the proceeds to repay the mortgage encumbering the property and a prepayment penalty of approximately $4,368,000 and $588,000, respectively.  The sale resulted in a gain of approximately $6,501,000 during the fourth quarter of 2008.  In addition, the Partnership recorded a loss on early extinguishment of debt of approximately $623,000, during the fourth quarter of 2008, as a result of the write off of unamortized loan costs and a prepayment penalty.

 

On December 9, 2008, the Partnership sold Palm Lake Apartments, located in Tampa, Florida, to a third party for a sales price of $7,000,000. After payment of closing costs the Partnership received net proceeds of approximately $6,499,000. The Partnership used a portion of the proceeds to repay the mortgage encumbering the property and a prepayment penalty of approximately $2,301,000 and $107,000, respectively. The sale resulted in a gain of approximately $1,210,000 during the fourth quarter of 2008. In addition, the Partnership recorded a loss on early extinguishment of debt of approximately $77,000 during the fourth quarter of 2008, as a result of a prepayment penalty, partially offset by the write off of the unamortized mortgage premium. 

 

On June 1, 2009, the Partnership entered into a sale contract with a third party relating to the sale of The Dunes Apartments, which is expected to close during the third quarter of 2009 for approximately $6,300,000. The Partnership determined that the criteria of SFAS No. 144 were met at June 30, 2009 and therefore the assets and liabilities of the investment property are classified as assets held for sale as of June 30, 2009 and December 31, 2008 and its respective operations as discontinued operations. In accordance with the Partnership’s impairment policy and SFAS No. 144, during the three and six months ended June 30, 2009, the Partnership recorded impairment losses of approximately $300,000 and $1,200,000, respectively, to write the carrying amount of the property down to the expected sale price, which is included in loss from discontinued operations.

 
On May 12, 2009, the Partnership entered into a sale contract with a third party relating to the sale of The Knolls Apartments. On June 26, 2009 that contract was terminated. Subsequent to June 30, 2009, the contract was reinstated. The sale is expected to close during the third quarter of 2009 for approximately $13,350,000. The Partnership determined that certain criteria of SFAS No. 144 were not met at June 30, 2009 and therefore continues to report the assets and liabilities of the investment property as held for investment and its respective operations as continuing operations. In accordance with the Partnership’s impairment policy and SFAS No. 144, during the three and six months ended June 30, 2009, the Partnership recorded impairment losses of approximately $400,000 and $900,000, respectively, to write the carrying amount of the property down to the expected sale price.

 

The Partnership recognized loss before discontinued operations of approximately $1,181,000 and $2,291,000 for the three and six months ended June 30, 2009, respectively, compared to loss before discontinued operations of approximately $721,000 and $1,514,000 for the three and six months ended June 30, 2008, respectively. The increase in loss before discontinued operations for the three months ended June 30, 2009 is due to a decrease in total revenues and increases in impairment loss and equity in loss from investment, partially offset by a decrease in total expenses, a decrease in current income tax expense and an increase in the recognition of a deferred tax benefit. The increase in loss before discontinued operations for the six months ended June 30, 2009, is due to increases in impairment loss, total expenses and equity in loss from investment and a decrease in total revenues, partially offset by increases in distributions received in excess of investment, casualty gain and the recognition of a deferred tax benefit and a decrease in current income tax expense.

 

The decrease in total expenses for the three months ended June 30, 2009 is due to decreases in operating and general and administrative expenses, partially offset by an increase in depreciation expense.  The increase in total expenses for the six months ended June 30, 2009 is due to increases in operating and depreciation expenses, partially offset by a decrease in general and administrative expenses. Interest and property tax expenses remained relatively constant for the comparable periods. The decrease in operating expenses for the three months ended June 30, 2009, is primarily due to decreases in utilities at The Sterling Apartment Homes and repair costs associated with water damage from multiple broken pipes and storm damages at The Sterling Apartment Homes, Regency Oaks Apartments and Plantation Gardens Apartments. The increase in operating expenses for the six months ended June 30, 2009, is primarily due to increases in contract services at The Sterling Apartment Homes and Commerce Center and salaries and related benefits at The Sterling Apartment Homes and the write off of capitalized costs incurred in a prior year related to a potential redevelopment project at Plantation Gardens Apartments, which is no longer being considered as of June 30, 2009. These increases are partially offset by a decrease in utilities at The Sterling Apartment Homes. The increase in depreciation expense for both the three and six month periods is due to property improvements and replacements placed into service during the past twelve months, primarily at three of the Partnership’s investment properties.

 

General and administrative expenses decreased for both the three and six months ended June 30, 2009 primarily due to a decrease in reimbursements to the General Partner as allowed under the Partnership Agreement. Also included in general and administrative expenses for the three and six months ended June 30, 2009 and 2008, are costs associated with the quarterly and annual communications with investors and regulatory agencies and the annual audit required by the Partnership Agreement.

 

The decrease in total revenues for the three and six months ended June 30, 2009, is primarily due to a decrease in rental income. The decrease in total revenues for the three months ended June 30, 2009, is partially offset by an increase in other income. Other income remained relatively constant for the six months ended June 30, 2009. Rental income decreased for the three month period due to decreases in occupancy at three of the residential properties and the commercial property and decreases in average rental rates at two of the residential properties and the commercial property, partially offset by an increase in occupancy at one residentialproperty and average rental rates at two residential properties.  The decrease in rental income for the six month period is primarily due to a decrease in the occupancy at three of the  residential properties and average rental rates at two of the residential properties and the commercial property, partially offset by increases in occupancy at one of the residential properties and the commercial property and increases in the average rental rates at two of the residential properties. The increase in other income for the three months ended June 30, 2009 is primarily due to an increase in resident utility reimbursements, partially offset by a decrease in parking income at The Sterling Apartment Homes.
 

In conjunction with the payment of local income taxes with respect to The Sterling Apartment Homes and Commerce Center, the Partnership has recorded a deferred tax asset in the amount of approximately $443,000.  The deferred tax asset consists primarily of temporary differences related to land, buildings and accumulated depreciation. The Partnership believes that it is more likely than not that the full value of the deferred tax asset will be realized through future taxable income of the property. Accordingly, an additional benefit of approximately $41,000 and $52,000 was recognized during the three and six months ended June 30, 2009, respectively, compared to a benefit of approximately $30,000 which was recognized during the three and six months ended June 30, 2008. During the three and six months ended June 30, 2009 and 2008, the Partnership recognized approximately $5,000 and $9,000 and $27,000 and $52,000, respectively, in current income tax expense related to local income taxes with respect to The Sterling Apartment Homes and Commerce Center.

 

In December 2008, The Knolls Apartments sustained damages of approximately $70,000 from a water main break in the parking area, including approximately $41,000 of clean up costs. During the six months ended June 30, 2009, the Partnership recognized a casualty gain of approximately $11,000 as a result of the receipt of insurance proceeds of approximately $33,000 net of the write off of undepreciated damaged assets of approximately $22,000.

 

During the three and six months ended June 30, 2008, the Partnership recognized approximately $2,000 and $8,000, respectively, in equity in loss from investments related to its allocated share of the loss from one of the affiliated partnerships. During the three and six months ended June 30, 2009, the Partnership recognized approximately $15,000 and $33,000, respectively, in equity in loss from investments related to its allocated share of the loss from two of the affiliated partnerships. These investments are accounted for using the equity method of accounting. Distributions from the affiliated partnerships are accounted for as a reduction of the investment balance until the investment balance is reduced to zero. When the investment balance has been reduced to zero, subsequent distributions received are recognized as income in the consolidated statements of operations included in “Item 1. Financial Statements”. During the three months ended June 30, 2009, the Partnership received a distribution of approximately $20,000 from operations from one of its affiliated partnerships, Consolidated Capital Properties IV, which was recognized as a reduction in the investment balance.During the six months ended June 30, 2009, the Partnership received approximately $454,000 of distributions from sale proceeds of one of its affiliated partnerships, Consolidated Capital Growth Fund, which was recognized as income as that investment balance had been reduced to zero. There were no distributions received during the six months ended June 30, 2008.

 

Liquidity and Capital Resources  

 

At June 30, 2009, the Partnership had cash and cash equivalents of approximately $467,000, compared to approximately $620,000 at June 30, 2008.  Cash and cash equivalents decreased approximately $4,310,000 from December 31, 2008 due to approximately $2,115,000 and $3,363,000 of cash used in investing and financing activities, respectively, partially offset by approximately $1,168,000 of cash provided by operating activities. Cash used in investing activities consisted of property improvements and replacements, partially offset by distributions received from affiliated partnerships and insurance proceeds received. Cash used in financing activities consisted of principal payments made on the mortgages encumbering thePartnership's properties, a distribution to partners, repayment of advances from affiliate and lease commissions paid, partially offset by advances received from affiliate. The Partnership invests its working capital reserves in interest bearing accounts.
 

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.  Capital improvements planned for each of the Partnership’s properties are detailed below. 

 

The Sterling Apartment Homes and Commerce Center

 

During the six months ended June 30, 2009, the Partnership completed approximately $582,000 of capital improvements at the property consisting primarily of tenant improvements, heating upgrades, structural improvements and floor covering replacement.  These improvements were funded from operating cash flow. The Partnership regularly evaluates the capital improvement needs of the property.  While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during the remainder of 2009. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.

 

The Knolls Apartments

 

During the six months ended June 30, 2009, the Partnership completed approximately $126,000 of capital improvements at the property consisting primarily of exterior door and floor covering replacements and reconstruction related to damages to the property caused by a water main break in the parking area. These improvements were funded from operating cash flow and insurance proceeds. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during the remainder of 2009. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.

 

Plantation Gardens Apartments

 

During the six months ended June 30, 2009, the Partnership completed approximately $528,000 of capital improvements at the property consisting primarily of elevator upgrades, air conditioning unit replacements, kitchen and bath upgrades and floor covering replacement.  These improvements were funded from operating cash flow. During the six months ended June 30, 2009 the Partnership wrote off approximately $232,000 of capitalized costs incurred in a prior year related to a potential redevelopment project, which is no longer being considered as of June 30, 2009. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during the remainder of 2009. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.

 

The Dunes Apartments

 

During the six months ended June 30, 2009, the Partnership completed approximately $608,000 of capital improvements at the property consisting primarily of interior and exterior doors, fire safety upgrades and appliance and floor covering replacements. These improvements were funded from operating cash flow and advances from affiliates. This property is classified as held for sale at June 30, 2009.

 

Regency Oaks Apartments

 

During the six months ended June 30, 2009, the Partnership completed approximately $253,000 of capital improvements at the property consisting primarily of roof replacement, air conditioning unit replacements, kitchen and bath upgrades and floor covering replacement.These improvements were funded from operating cash flow. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during the remainder of 2009. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.
 

Capital expenditures will be incurred only to the extent of cash available from operations, advances from AIMCO Properties, L.P., although AIMCO Properties, L.P. does not have an obligation to fund such advances, or from Partnership reserves.  To the extent that 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 generally sufficient for any near-term needs (exclusive of capital improvements and repayment of advances from affiliates) of the Partnership.  The mortgage indebtedness encumbering the Partnership’s properties of approximately $121,405,000 requires monthly payments of principal and interest and balloon payments of approximately $7,105,000 and $97,297,000 during 2010 and 2017, respectively.  The General Partner will attempt to refinance such indebtedness and/or sell the properties prior to such maturity dates.  If the properties cannot be refinanced or sold for a sufficient amount, the Partnership will risk losing such properties through foreclosure.

 

The Partnership distributed the following amounts during the six months ended June 30, 2009 and 2008 (in thousands, except per unit data):

 

 

Six Months

 

Six Months

 

 

Ended

Per Limited

Ended

Per Limited

 

June 30,

Partnership

June 30,

Partnership

 

2009

Unit (Series A)

2008

Unit

 

 

 

 

 

Surplus Funds (1)

    $3,665

    $18.41

    $  750

    $3.77

 

(1)   Distribution consists of the release of funds previously reserved from the November 2007 refinance of The Sterling Apartment Homes.

 

Future cash distributions will depend on the levels of net cash generated from operations, the timing of 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 planned capital improvement expenditures, to permit additional distributions to its partners, which hold Series A Units, in 2009 or subsequent periods. In light of the amounts accrued and payable to affiliates of the General Partner by the Series B and C Subsidiaries, there can also be no assurance that the Partnership will generate sufficient funds from operations of the Series B and C Subsidiaries, after planned capital improvement expenditures, to permit any additional distributions to its partners, which hold Series B and C Units, in 2009 or subsequent periods.

 

Other

 

In addition to its indirect ownership of the general partner interests in the Partnership, AIMCO and its affiliates owned 152,648.05 limited partnership units (the "Units") in the Partnership representing 76.69% of the outstanding Units at June 30, 2009.  A number of these Units were acquired pursuant to tender offers made by AIMCO or its affiliates.  It is possible that AIMCO or its affiliates will acquire additional Units in exchange for cash or a combination of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO, either through private purchases or tender offers.  Pursuant to the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to avariety of matters that would include, but are not limited to, voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. As a result of its ownership of 76.69% of the outstanding Units, AIMCO and its affiliates are in a position to control all such voting decisions with respect to the Partnership. Although the General Partner owes fiduciary duties to the limited partners of the Partnership, the General Partner also owes fiduciary duties to AIMCO as its sole stockholder.   As a result, the duties of the General Partner, as general partner, to the Partnership and its limited partners may come into conflict with the duties of the General Partner to AIMCO as its sole stockholder.
 

Critical Accounting Policies and Estimates

 

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require the Partnership to make estimates and assumptions. The Partnership believes that of its significant accounting policies, the following may involve a higher degree of judgment and complexity.

 

Impairment of Long-Lived Assets

 

Investment properties are recorded at cost less accumulated depreciation, unless the carrying amount of the asset is not recoverable, and the investment properties foreclosed upon were recorded at fair market value at the time of the foreclosures. If events or circumstances indicate that the carrying amount of a property may not be recoverable, the Partnership will make an assessment of its recoverability by comparing the carrying amount to the Partnership’s estimate of the undiscounted future cash flows, excluding interest charges, of the property. If the carrying amount exceeds the aggregate undiscounted future cash flows, the Partnership would recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property.

 

Real property investment is subject to varying degrees of risk.  Several factors may adversely affect the economic performance and value of the Partnership’s investment properties.  These factors include, but are not limited to, general economic climate; competition from other apartment communities and other housing options; local conditions, such as loss of jobs or an increase in the supply of apartments that might adversely affect apartment occupancy or rental rates; changes in governmental regulations and the related cost of compliance; increases in operating costs (including real estate taxes) due to inflation and other factors, which may not be offset by increased rents; and changes in tax laws and housing laws, including the enactment of rent control laws or other laws regulating multi-family housing.  Any adverse changes in these factors could cause impairment of the Partnership’s assets.

 

Revenue Recognition

 

The Partnership generally leases apartment units for twelve-month terms or less.  The Partnership will offer rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area.  Rental income attributable to leases, net of any concessions, is recognized on a straight-line basis over the term of the lease.  The Partnership evaluates all accounts receivable from residents and establishes an allowance, after the application of security deposits, for accounts greater than 30 days past due on current tenants and all receivables due from former tenants.

 

The Partnership leases certain commercial space to tenants under various lease terms.  The leases are accounted for as operating leases in accordance with SFAS No. 13, "Accounting for Leases".  Some of the leases contain stated rental increases during their term.  For leases with fixed rental increases, rents are recognized on a straight-line basis over the terms of the leases.  For all other leases, minimum rents are recognized over the terms of the leases.

 
****
**Item 4T.**    **Controls and Procedures.**
** **

**(a)   Disclosure Controls and Procedures.**

 

The Partnership’s management, with the participation of the principal executive officer and principal financial officer of the General Partner, who are the equivalent of the Partnership’s principal executive officer and principal financial officer, respectively, has evaluated the effectiveness of the Partnership’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the principal executive officer and principal financial officer of the General Partner, who are the equivalent of the Partnership’s principal executive officer and principal financial officer, respectively, have concluded that, as of the end of such period, the Partnership’s disclosure controls and procedures are effective.

 

**(b)   Changes in Internal Control Over Financial Reporting.**

 

There has been no change in the Partnership’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that has materially affected, or is reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

 
****
**PART II - OTHER INFORMATION**
** **

Item 1.     Legal Proceedings.

 

As previously disclosed, AIMCO Properties, L.P. and NHP Management Company, both affiliates of the General Partner, were defendants in a lawsuit, filed as a collective action in August 2003 in the United States District Court for the District of Columbia, alleging that they willfully violated the Fair Labor Standards Act (“FLSA”) by failing to pay maintenance workers overtime for time worked in excess of 40 hours per week (“overtime claims”).  The plaintiffs also contended that AIMCO Properties, L.P. and NHP Management Company failed to compensate maintenance workers for time that they were required to be "on-call" (“on-call claims”).  In March 2007, the court in the District of Columbia decertified the collective action.  In July 2007, plaintiffs’ counsel filed individual cases in Federal court in 22 jurisdictions.  In the second quarter of 2008, AIMCO Properties, L.P. settled the overtime cases involving 652 plaintiffs and established a framework for resolving the 88 remaining “on-call” claims and the attorneys’ fees claimed by plaintiffs’ counsel.  As a result, the lawsuits asserted in the 22 Federal courts have been dismissed. During the fourth quarter of 2008, the Partnership paid approximately $8,000 for settlement amounts for alleged unpaid overtime to employees who had worked at the Partnership’s investment properties. At this time, the 88 remaining “on-call” claims and the attorneys’ fees claimed by plaintiffs’ counsel are not resolved. The parties have selected six “on-call” claims that will proceed forward through the arbitration process and have selected arbitrators. The arbitrations have not yet been scheduled.  The General Partner is uncertain as to the amount of any additional loss that may be allocable to the Partnership. Therefore, the Partnership cannot estimate whether any additional loss will occur or a potential range of loss.

**** 

Item 6.     Exhibits.

 

See Exhibit Index Attached.

 

The agreements included as exhibits to this Form 10-Q contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:

 
- should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; 

 
- have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; 

 
- may apply standards of materiality in a way that is different from what may be viewed as material to an investor; and 

 
- were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. 

 

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. The Partnership acknowledges that, notwithstanding the inclusion of the foregoing cautionary statements, it is responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this Form 10-Q not misleading. Additional information about the Partnership may be found elsewhere in this Form 10-Q and the Partnership’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.        

** **
**SIGNATURES**

** **

** **

** **

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES, LP

 

 

 

By:   ConCap Equities, Inc.

 

      General Partner

 

 

Date: August 13, 2009

By:  /s/Steven D. Cordes

 

      Steven D. Cordes

 

      Senior Vice President

 

 

Date: August 13, 2009

By:  /s/Stephen B. Waters

 

      Stephen B. Waters

 

      Senior Director

 

 

 

 

**CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES, LP**
** **

**EXHIBIT INDEX**

** **

 

Exhibit

Number        Description

 

 

3           Certificates of Limited Partnership, as amended to date. (Incorporated by reference to the Annual Report on Form 10-K for the fiscal year ended December 31, 1991 ("1991 Annual Report")).

 

3.1        Certificate of Limited Partnership of Registrant, dated March 19, 2008 (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, dated April 30, 2008).

 

3.2         Amendment to Certificate of Limited Partnership of Registrant, dated April 30, 2008 (incorporated herein by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K, dated April 30, 2008).

 

3.3        Limited Partnership Agreement of Registrant, dated April 28, 1981 (incorporated herein by reference to Appendix A to the Prospectus included in the Registrant’s Registration Statement on Form S-11 (Reg. No. 2-72384)).

 

3.4        First Amendment to the Limited Partnership Agreement of Registrant, dated July 11, 1985.

 

3.5        Second Amendment to the Limited Partnership Agreement of Registrant, dated October 23, 1990.

 

3.6        Third Amendment to the Limited Partnership Agreement of Registrant, dated October 17, 2000 (incorporated herein by reference to Exhibit 10.23 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001).

 

3.7        Fourth Amendment to the Limited Partnership Agreement of Registrant, dated May 25, 2001 (incorporated herein by reference to Exhibit 10.24 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001).

 

3.8        Fifth Amendment to the Limited Partnership Agreement of Registrant, dated March 19, 2008 (incorporated herein by reference to Exhibit 3.3 to the Registrant’s Current Report on Form 8-K, dated April 30, 2008).

 

3.9        Sixth Amendment to the Limited Partnership Agreement of Registrant, dated April 30, 2008 (incorporated herein by reference to Exhibit 3.4 to the Registrant’s Current Report on Form 8-K, dated April 30, 2008).

 

10.28       Form of Amended Order Setting Foreclosure Sale Date pursuant to amending the foreclosure date filed on September 25, 2003. (Incorporated herein by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2003.)

 

10.30       Form of Certificate of Sale as to Property "2" pursuant to sale of Regency Oaks Apartments to CCIP Regency Oaks, L.L.C. filed October 28, 2003. (Incorporated herein by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2003.)

 

10.31       Form of Certificate of Sale as to Property "3" pursuant to sale of The Dunes Apartments (formerly known as Society Park East Apartments) toCCIP Society Park East, L.L.C. filed October 28, 2003. (Incorporated herein by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2003.)
 

10.32       Form of Certificate of Sale as to Property "4" pursuant to sale of Plantation Gardens Apartments to CCIP Plantation Gardens, L.L.C. filed October 28, 2003. (Incorporated herein by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2003.)

 

10.47       Multifamily Note dated September 28, 2000 between Consolidated Capital Equity Partners, a California Limited Partnership, and GMAC Commercial Mortgage Corporation, incorporated herein by reference to Current Report on Form 8-K dated September 29, 2000.

 

10.51       Multifamily Note dated October 6, 2000 between Consolidated Capital Equity Partners, a California Limited Partnership, and GMAC Commercial Mortgage Corporation, incorporated herein by reference to Current Report on Form 8-K dated September 29, 2000.

 

10.53       Amended and Restated Multifamily Note, dated September 28, 2007 between CCIP Plantation Gardens, L.L.C., a Delaware limited liability company, and Capmark Bank, a Utah industrial bank. Filed on Current Report on Form 8-K dated September 28, 2007 and incorporated herein by reference.

 

10.54       Amended and Restated Multifamily Mortgage, Assignment of Rents and Security Agreement, dated September 28, 2007 between CCIP Plantation Gardens, L.L.C., a Delaware limited liability company, and Capmark Bank, a Utah industrial bank. Filed on Current Report on Form 8-K dated September 28, 2007 and incorporated herein by reference.

 

10.55       Amended and Restated Multifamily Note, dated September 28, 2007 between CCIP Regency Oaks, L.L.C., a Delaware limited liability company, and Capmark Bank, a Utah industrial bank. Filed on Current Report on Form 8-K dated September 28, 2007 and incorporated herein by reference.

 

10.56       Amended and Restated Multifamily Mortgage, Assignment of Rents and Security Agreement, dated September 28, 2007 between CCIP Regency Oaks, L.L.C., a Delaware limited liability company, and Capmark Bank, a Utah industrial bank. Filed on Current Report on Form 8-K dated September 28, 2007 and incorporated herein by reference.

 

10.57       Multifamily Note, dated November 30, 2007 between CCIP Sterling, L.P., a Pennsylvania limited partnership, and Wachovia Multifamily Capital, Inc., a Delaware corporation. Filed on Current Report on Form 8-K dated November 30, 2007 and incorporated herein by reference.

 

10.58       Multifamily Mortgage, Assignment of Rents and Security Agreement, dated November 30, 2007 between CCIP Sterling, L.P., a Pennsylvania limited partnership, and Wachovia Multifamily Capital, Inc., a Delaware corporation. Filed on Current Report on Form 8-K dated November 30, 2007 and incorporated herein by reference.

 

10.65       Purchase and Sale Contract between CCIP Palm Lake, L.L.C., a Delaware limited liability company, and Blackhawk Apartments Opportunity Fund II LLC, an Illinois limited liability company, dated October 24, 2008.Incorporated by reference to the Partnership’s Current Report on Form 8-K dated October 24, 2008.
 

10.66       Purchase and Sale Contract between CCIP Loft, L.L.C., a Delaware limited liability company, and The Embassy Group LLC, a New York limited liability company, dated October 28, 2008.  Incorporated by reference to the Partnership’s Current Report on Form 8-K dated October 28, 2008.

 

10.69       First Amendment to Purchase and Sale Contract between CCIP Palm Lake, L.L.C., a Delaware limited liability company, and Blackhawk Apartments Opportunity Fund II LLC, an Illinois limited liability company, dated November 24, 2008. Incorporated by reference to the Partnership's Current Report on Form 8-K dated November 24, 2008.

 

10.70       First Amendment of Purchase and Sale Contract between CCIP Loft, L.L.C., a Delaware limited liability company, and The Embassy Group, LLC, a New York limited liability company, dated November 26, 2008. Incorporated by reference to the Partnership’s Current Report on Form 8-K dated November 26, 2008.

 

10.71       Second Amendment to Purchase and Sale Contract between CCIP Palm Lake, L.L.C., a Delaware limited liability company and Blackhawk Apartments Opportunity Fund II LLC, an Illinois limited liability company, dated November 26, 2008. Incorporated by reference to the Partnership's Current Report on Form 8-K dated December 9, 2008.

 

10.72       Third Amendment to Purchase and Sale Contract between CCIP Palm Lake, L.L.C., a Delaware limited liability company and Blackhawk Apartments Opportunity Fund II LLC, an Illinois limited liability company, dated December 9, 2008. Incorporated by reference to the Partnership's Current Report on Form 8-K dated December 9, 2008.

 

10.73       Second Amendment of Purchase and Sale Contract between CCIP Loft, L.L.C., a Delaware limited liability company and TEG Lofts LLC, a North Carolina limited liability company, dated December 10, 2008. Incorporated by reference to the Partnership’s Current Report on Form 8-K dated December 29, 2008.

 

10.74       Purchase and Sale Contract between CCIP Society Park East, L.L.C., a Delaware limited liability company, and CD Group, LLC, a Florida limited liability company, dated April 21, 2009.  Incorporated by reference to the Partnership’s Current Report on Form 8-K dated April 21, 2009.

 

10.75       Purchase and Sale Contract between CCIP Knolls, L.L.C., a Delaware limited liability company, and Hamilton Zanze & Company, a California corporation, dated May 12, 2009.  Incorporated by reference to the Partnership’s Current Report on Form 8-K dated May 12, 2009.

 

10.76       Reinstatement of and Amendment to Purchase and Sale Contract between CCIP Society Park East, L.L.C., a Delaware limited liability company, and CD Group, LLC, a Florida limited liability company, dated June 1, 2009. Incorporated by reference to the Partnership's Current Report on Form 8-K dated June 1, 2009.

 

10.77       First Amendment to Purchase and Sale Contract between CCIP Knolls, L.L.C., a Delaware limited liability company, and Hamilton Zanze & Company, a California corporation, dated June 4, 2009. Incorporated by reference to the Partnership's Current Report on Form 8-K dated June 4, 2009.

 

10.78       Reinstatement and Second Amendment to Purchase and Sale Contract between CCIP Knolls, L.L.C., a Delaware limited liability company, and Hamilton Zanze & Company, a California corporation, dated July 1, 2009. Incorporated by reference to the Partnership's Current Report on Form 8-K dated June 26, 2009.
 

10.79       Third Amendment to Purchase and Sale Contract between CCIP Knolls, L.L.C., a Delaware limited liability company, and Hamilton Zanze & Company, a California corporation, dated July 10, 2009. Incorporated by reference to the Partnership's Current Report on Form 8-K dated July 10, 2009.

 

10.80       Fourth Amendment to Purchase and Sale Contract between CCIP Knolls, L.L.C., a Delaware limited liability company, and Hamilton Zanze & Company, a California corporation, dated July 20, 2009. Incorporated by reference to the Partnership's Current Report on Form 8-K dated July 20, 2009.

 

10.81       Fifth Amendment to Purchase and Sale Contract between CCIP Knolls, L.L.C., a Delaware limited liability company, and Hamilton Zanze & Company, a California corporation, dated July 23, 2009. Incorporated by reference to the Partnership's Current Report on Form 8-K dated July 23, 2009.

 

31.1        Certification of equivalent of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

31.2        Certification of equivalent of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

32.1        Certification of the equivalent of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.