-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S8WgZxGdtUOZwStB9OKchRO+v11y9dU4LIP7aWQhkQfD73ij7LyQM5sKKV05iWfQ mbkbd1/ox/99C+0lGdczKA== 0000711642-00-000027.txt : 20000309 0000711642-00-000027.hdr.sgml : 20000309 ACCESSION NUMBER: 0000711642-00-000027 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000308 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTURY PROPERTIES FUND XVI CENTRAL INDEX KEY: 0000351931 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 942704651 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: SEC FILE NUMBER: 000-10435 FILM NUMBER: 563638 BUSINESS ADDRESS: STREET 1: 55 BEATTIE PLACE STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8642391000 MAIL ADDRESS: STREET 1: 55 BEATTIE PLACE STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10KSB 1 YEAR END REPORT 10-KSB March 8, 2000 United States Securities and Exchange Commission Washington, D.C. 20549 RE: Century Properties XVI Form 10-KSB File No. 0-10435 To Whom it May Concern: The accompanying Form 10-KSB for the year ended December 31, 1999 describes a change in the method of accounting to capitalize exterior painting and major landscaping, which would have been expensed under the old policy. The Partnership believes that this accounting principle change is preferable because it provides a better matching of expenses with the related benefit of the expenditures and it is consistent with industry practice and the policies of the Managing General Partner. Please do not hesitate to contact the undersigned with any questions or comments that you might have. Very truly yours, Stephen Waters Real Estate Controller ------------------------------------------------------------------------------ FORM 10-KSB -- ANNUAL OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) Form 10-KSB (Mark One) [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required] For the fiscal year ended December 31, 1999 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required] For the transition period from _________to _________ Commission file number 0-10435 CENTURY PROPERTIES FUND XVI (Name of small business issuer in its charter) California 94-2704651 (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) Issuer's telephone number (864) 239-1000 Securities registered under Section 12(b) of the Exchange Act: None Securities registered under Section 12(g) of the Exchange Act: Limited Partnership Units (Title of class) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No___ Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of the registrant's knowledge in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. State issuer's revenues for its most recent fiscal year. $3,061,000 State the aggregate market value of the voting partnership interests held by non-affiliates computed by reference to the price at which the partnership interests were sold, or the average bid and asked prices of such partnership interests, as of December 31, 1999. No market exists for the limited partnership interests of the Registrant, and, therefore, no aggregate market value can be determined. DOCUMENTS INCORPORATED BY REFERENCE None - -------------------------------------------------------------------------------- PART I Item 1. Description of Business Century Properties Fund XVI (the "Partnership" or the "Registrant") was organized in December 1980, as a California limited partnership under the Uniform Limited Partnership Act of the California Corporations Code. Fox Capital Management Corporation (the "Managing General Partner" or "FCMC"), a California corporation, and Fox Realty Investors ("FRI"), a California general partnership, are the general partners of the Registrant. NPI Equity Investments II Inc., a Florida Corporation ("NPI Equity"), is the managing partner of FRI. Both FCMC and NPI Equity are subsidiaries of Apartment Investment and Management Company ("AIMCO") (see "Transfer of Control"). The partnership agreement provides that the Partnership is to terminate on December 31, 2025 unless terminated prior to such date. Beginning in August 1981 through April 1982, the Registrant offered and sold 130,000 Limited Partnership Units for an aggregate of $65,000,000. The net proceeds of this offering were used to acquire ten income-producing real estate properties. The Registrant's original property portfolio was geographically diversified with properties acquired in six states. The Registrant's acquisition activities were completed in 1983, and since then, the principal activity of the Registrant has been managing its portfolio. During the period from 1986 through 1991, eight multi-family residential properties were either sold or otherwise disposed. The Registrant continues to own and operate two of its originally acquired properties. See "Item 2. Description of Properties." The Partnership has no full time employees. The Managing General Partner is vested with full authority as to the general management and supervision of the business and affairs of the Partnership. The non-managing general partner and the limited partners have no right to participate in the management or conduct of such business and affairs. An affiliate of the Managing General Partner provides day-to-day property management services to the Partnership's investment properties. The real estate business in which the Partnership is engaged is highly competitive. There are other residential properties within the market area of the Registrant's properties. The number and quality of competitive properties, including those which may be managed by an affiliate of the Managing General Partner in such market area, could have a material effect on the rental market for apartments at the Registrant's properties and the rents that may be charged for such apartments. While the Managing General Partner and its affiliates own and/or control a significant number of apartment units in the United States such units represent an insignificant percentage of total apartment units in the United States and, competition for apartments is local. Both the income and expenses of operating the properties owned by the Partnership are subject to factors outside of the Partnership's control, such as changes in the supply and demand for similar properties resulting from various market conditions, increases/decreases in unemployment or population shifts, changes in the availability of permanent mortgage financing, changes in zoning laws, or changes in patterns or needs of users. In addition, there are risks inherent in owning and operating residential properties because such properties are susceptible to the impact of economic and other conditions outside of the control of the Partnership. There have been, and it is possible there may be other, Federal, state and local legislation and regulations enacted relating to the protection of the environment. The Partnership is unable to predict the extent, if any, to which such new legislation or regulations might occur and the degree to which such existing or new legislation or regulations might adversely affect the properties owned by the Partnership. The Partnership monitors its properties for evidence of pollutants, toxins and other dangerous substances, including the presence of asbestos. In certain cases environmental testing has been performed, which resulted in no material adverse conditions or liabilities. In no case has the Partnership received notice that it is a potentially responsible party with respect to an environmental clean up site. A further description of the Partnership's business is included in "Management's Discussion and Analysis or Plan of Operations" included in "Item 6" of this Form 10-KSB. Transfer of Control Pursuant to a series of transactions which closed on October 1, 1998 and February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust merged into AIMCO, a publicly traded real estate investment trust, with AIMCO being the surviving corporation (the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in the Managing General Partner and NPI Equity. The Managing General Partner does not believe that this transaction has had or will have a material effect on the affairs and operations of the Partnership. Item 2. Description of Properties: The following table sets forth the Registrant's investment in properties:
Date of Property Purchase Type of Ownership Use Ralston Place (formerly 06/82 Fee ownership subject Apartments The Landings Apartments) to first mortgage (1) 200 units Tampa, Florida Woods of Inverness 07/82 Fee ownership subject Apartments Apartments to first mortgage (1) 272 units Houston, Texas
(1) Property is held by a Limited Partnership which is wholly-owned by the Registrant. 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.
Gross Carrying Accumulated Federal Property Value Depreciation Rate Method Tax Basis - -------- ----- ------------ ---- ------ --------- (in thousands) (in thousands) Ralston Place (formerly $ 6,315 $ 3,302 5-30 yrs (1) $ 1,272 The Landings Apartments) Woods of Inverness 9,739 5,040 5-30 yrs (1) $ 1,998 ------ ------ ------ Apartments $16,054 $ 8,342 $ 3,270 ====== ====== ======
(1) Straight - line See "Item 7. Financial Statements, Note A" for a description of the Partnership's depreciation policy and " Item 7. Financial Statements, Note J Change in Accounting Principle". Schedule of Property Indebtedness: - --------------------------------- The following table sets forth certain information relating to the loans encumbering the Registrant's properties.
Principal Principal Balance At Balance December 31, Interest Period Maturity Due At Property 1999 Rate Amortized Date Maturity -------- ---- ---- --------- ---- -------- (in thousands) (in thousands) Ralston Place (formerly The Landings Apartments) $ 2,213 7.88% 30 years 1/2006 $ 2,016 Woods of Inverness Apartments 5,052 7.88% 30 years 1/2006 4,602 ------ ------ $ 7,265 $ 6,618 ====== ======
Each mortgage note payable is non-recourse and secured by a pledge of the applicable Partnership property and the rental revenues derived therefrom. See "Item 7. Financial Statements - Note C" for information with respect to the Registrant's ability to prepay these loans and other specific details as to the terms of the loans. Rental Rates and Occupancy: Average annual rental rate and occupancy for 1999 and 1998 for each property: Average Annual Average Annual Rental Rates Occupancy ------------ --------- (per unit) Property 1999 1998 1999 1998 -------- ---- ---- ---- ---- Ralston Place (formerly $ 5,606 $ 5,374 96% 95% The Landings Apartments) Woods of Inverness Apartments 7,227 7,098 96% 97% As noted under "Item 1. Description of Business", the real estate industry is highly competitive. All of the properties of the Partnership are subject to competition from other apartment complexes in the area. The Managing 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, 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 1999 for each property were: 1999 1999 Billing Rate (in thousands) Ralston Place (formerly The Landings Apartments) $ 75 2.50% Woods of Inverness Apartments 169 2.75% Capital Improvements: Ralston Place (formerly The Landings Apartments): The Partnership completed approximately $286,000 in capital expenditures at Ralston Place as of December 31, 1999, consisting primarily of flooring, appliances, recreation facility additions, structural improvements, parking lot enhancements, landscaping and a roofing project. These improvements were funded from cash flow and replacement reserves. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year. The minimum amount to be budgeted is expected to be $300 per unit or $60,000. Additional improvements may be considered and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. The Woods of Inverness Apartments: The Partnership completed approximately $204,000 in capital expenditures at The Woods of Inverness Apartments as of December 31, 1999, consisting primarily of flooring, structural improvements, plumbing, fencing, electrical improvements, and landscaping. These improvements were funded from cash flow and replacement reserves. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year. The minimum amount to be budgeted is expected to be $300 per unit or $81,600. Additional improvements may be considered and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. The additional capital expenditures will be incurred only if cash is available from operations and Partnership reserves. To the extent that such budgeted capital improvements are completed, the Registrant's distributable cash flow, if any, may be adversely affected at least in the short term. 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. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, the Managing 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 the acquisition by Insignia Financial Group, Inc. ("Insignia") and entities which were, at one time, affiliates of Insignia ("Insignia Affiliates") of interests in certain general partner entities, past tender offers by Insignia Affiliates to acquire limited partnership units, the management of partnerships by Insignia Affiliates and the Insignia Merger (see "Item 7. Financial Statements, Note B - Transfer of Control"). The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the Managing General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs have filed an amended complaint. The Managing 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 final court approval, on behalf of the Partnership and all limited partners who own units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Superior Court of the State of California, County of San Mateo, 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 class plaintiffs' counsel to enter the settlement. On December 14, 1999, the Managing General Partner and its affiliates terminated the proposed settlement. Certain plaintiffs have filed a motion to disqualify some of the plaintiffs' counsel in the action. The Managing General Partner does not anticipate that costs associated with this case 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. Submission of Matters to a Vote of Security Holders --------------------------------------------------- During the quarter ended December 31, 1999, no matters were submitted to a vote of security holders through the solicitation of proxies or otherwise. PART II Item 5. Market for the Partnership's Common Equity and Related Partner Matters The Partnership, a publicly-held limited partnership, offered and sold in 1981 and 1982, 130,000 Limited Partnership Units (the "Units") aggregating $65,000,000. The Partnership currently has 130,000 Units outstanding held by 4,021 Limited Partners of record. Affiliates of the Managing General Partner own 66,851.01 Units or 51.42% at December 31, 1999. No public trading market has developed for the Units, and it is not anticipated that such a market will develop in the future. The following table sets forth the distributions made by the Partnership for the years ended December 31, 1998 and 1999: Distributions Per Limited Aggregate Partnership Unit 1/1/98 - 12/31/98 -- -- 1/1/99 - 12/31/99 $225,000 (1) $1.61 (1) Distribution was made from cash from operations. See "Item 7. Financial Statements, Note H" for more information. 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. The Partnership's distribution policy is reviewed on a semi-annual basis. There can be no assurance, however, that the Partnership will generate sufficient funds from operations, after required capital expenditures, to permit any distributions to its partners in 2000 or subsequent periods. See "Item 2. Description of Properties - Capital Improvements" for information relating to anticipated capital expenditures at the properties. Several tender offers were made by various parties, including affiliates of the Managing General Partner, during the years ended December 31, 1999 and 1998. As a result of these tender offers, AIMCO and its affiliates currently own 66,851.01 units of limited partnership units in the Partnership representing 51.42% of the outstanding units. It is possible that AIMCO or its affiliates will make one or more additional offers to acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO. Consequently, AIMCO is in a position to influence all voting decisions with respect to the Registrant. Under the Partnership Agreement, unitholders holding a majority of the units are entitled to take action with respect to a variety of matters. When voting on matters, AIMCO would in all likelihood vote the units it acquired in a manner favorable to the interest of the Managing General Partner because of their affiliation with the Managing General Partner. Item 6. Management's Discussion and Analysis or Plan of Operation The matters discussed in this Form 10-KSB contain certain forward-looking statements and involve risks and uncertainties (including changing market conditions, competitive and regulatory matters, etc.) detailed in the disclosures contained in this Form 10-KSB and the other filings with the Securities and Exchange Commission made by the Registrant from time to time. The discussion of the Registrant's business and results of operations, including forward-looking statements pertaining to such matters, does not take into account the effects of any changes to the Registrant's business and results of operation. Accordingly, actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including those identified herein. This item should be read in conjunction with the consolidated financial statements and other items contained elsewhere in this report. Results of Operations The Registrant's net income for year ended December 31, 1999 was approximately $256,000 as compared to approximately $127,000 for the year ended December 31, 1998. (See "Item 7. Financial Statements, Note D" for a reconciliation of these amounts to the Registrant's federal taxable income (loss)). The increase in net income was due to an increase in total revenues and a decrease in total expenses. The increase in total revenues is primarily attributable to an increase in rental income as a result of an increase in average annual rental rates at both investment properties, a decrease in rental concessions offered at Woods of Inverness Apartments and an increase in occupancy at Ralston Place, which more than offset a slight decrease in occupancy at Woods of Inverness Apartments. Other income remained relatively consistent. Total expenses decreased primarily due to a reduction in operating expenses, which was partially offset by increases in general and administrative, depreciation and property tax expenses. Interest expense remained relatively constant for the comparable periods. Operating expenses decreased due to reductions in maintenance, insurance and advertising expenses. Maintenance expense decreased primarily due to the completion of exterior building and tennis court repairs and various projects performed to enhance the appearance of Woods of Inverness Apartments, and the completion of exterior building improvements and parking lot resurfacing at Ralston Place during the year ended December 31, 1998. Insurance expense decreased due to a refund of prior premiums paid at Woods of Inverness Apartments upon cancellation of the prior policy and reduced premiums at both properties due to a change in insurance carriers late in 1998. Advertising expense decreased at the Woods of Inverness due to a decrease in referral fees paid. The increase in general and administrative expenses is primarily due to increased legal costs related to the Nuanes matter and costs associated with other legal matters which were closed during 1999 as disclosed in prior quarters. The increase in depreciation expense is the result of the amounts spent on capital improvements and replacements during 1999 and 1998. Property taxes increased resulting from an increase in the assessment value of Woods of Inverness Apartments. Included in general and administrative expense at both December 31, 1999 and 1998 are management reimbursements to the Managing General Partner allowed under the Partnership Agreement. In addition, costs associated with the quarterly and annual communications with investors and regulatory agencies and the annual audit required by the Partnership Agreement are also included. Effective January 1, 1999, the Partnership changed its method of accounting to capitalize the cost of exterior painting and major landscaping on a prospective basis. The Partnership believes that this accounting principle change is preferable because it provides a better matching of expenses with the related benefit of the expenditures and it is consistent with industry practice and the policies of the Managing General Partner. The effect of the change in 1999 was to increase net income by $33,000 ($.24 per limited partnership unit). The cumulative effect, had this change been applied to prior periods, is not material. The accounting principle change will not have an effect on cash flow, funds available for distributions or fees payable to the Managing General Partner or affiliates. As part of the ongoing business plan of the Partnership, the Managing 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 Managing 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 Managing General Partner will be able to sustain such a plan. Liquidity and Capital Resources At December 31, 1999, the Registrant had cash and cash equivalents of approximately $468,000 as compared to approximately $366,000 at December 31, 1998. Cash and cash equivalents increased approximately $102,000 for the year ended December 31, 1999. The increase in cash and cash equivalents is due to approximately $828,000 of cash provided by operating activities, partially offset by approximately $419,000 of cash used in investing activities and approximately $307,000 of cash used in financing activities. Cash used in investing activities consisted primarily of capital improvements and replacements and, to a lesser extent, net deposits to restricted escrow accounts maintained by the mortgage lender. Cash used in financing activities consisted primarily of distributions to partners and, to a lesser extent, payments of principal made on the mortgages encumbering the Registrant's properties. The Registrant invests its working capital reserves in money market accounts. An affiliate of the Managing General Partner has made available to the Partnership a credit line of up to $150,000 per property owned by the Partnership. The Partnership has no outstanding amounts due under this line of credit. Based on present plans, the Managing General Partner does not anticipate the need to borrow in the near future. Other than cash and cash equivalents, the line of credit is the Partnership's only unused source of liquidity. 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 Registrant and to comply with Federal, state, and local legal and regulatory requirements. The Partnership is currently evaluating the capital improvement needs of the properties for the upcoming year. The minimum to be budgeted is expected to be $300 per unit or $141,600. Additional improvements may be considered 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 Registrant's distributable cash flow, if any, may be adversely affected at least in the short term. The Registrant's current assets are thought to be sufficient for any near-term needs (exclusive of capital improvements) of the Registrant. The mortgage indebtedness of approximately $7,265,000 is amortized over 360 months with a balloon payment of approximately $6,618,000 due January 1, 2006. The Managing General Partner will attempt to refinance such indebtedness and/or sell the properties prior to such maturity date. If the properties cannot be refinanced or sold for a sufficient amount, the Registrant will risk losing such properties through foreclosure. A cash distribution from operations of approximately $225,000 was paid during the year ended December 31, 1999, of which approximately $209,000 was paid to limited partners ($1.61 per limited partnership unit). No cash distributions were made during the year ended December 31, 1998. Future 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. The Partnership's distribution policy is reviewed on a semi-annual 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 2000 or subsequent periods. Tender Offer Several tender offers were made by various parties, including affiliates of the Managing General Partner, during the years ended December 31, 1999 and 1998. As a result of these tender offers, AIMCO and its affiliates currently own 66,851.01 units of limited partnership units in the Partnership representing 51.42% of the outstanding units. It is possible that AIMCO or its affiliates will make one or more additional offers to acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO. Consequently, AIMCO is in a position to influence all voting decisions with respect to the Registrant. Under the Partnership Agreement, unitholders holding a majority of the units are entitled to take action with respect to a variety of matters. When voting on matters, AIMCO would in all likelihood vote the units it acquired in a manner favorable to the interest of the Managing General Partner because of their affiliation with the Managing General Partner. Year 2000 Compliance General Description The Year 2000 issue is the result of computer programs being written using two digits rather than four digits to define the applicable year. The Partnership is dependent upon the Managing General Partner and its affiliates for management and administrative services ("Managing Agent"). Any of the Managing Agent's computer programs or hardware that had date-sensitive software or embedded chips might have recognized a date using "00" as the year 1900 rather than the year 2000. This could have resulted in a system failure or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process transactions, send invoices, or engage in similar normal business activities. Computer Hardware, Software and Operating Equipment In 1999, the Managing Agent completed all phases of its Year 2000 program by completing the replacement and repair of any hardware or software system or operating equipment that was not yet Year 2000 compliant. The Managing Agent's hardware and software systems and its operating equipment are now Year 2000 compliant. No material failure or erroneous results have occurred in the Managing Agent's computer applications related to the failure to reference the Year 2000 to date. Third Parties To date, the Managing Agent is not aware of any significant supplier or subcontractor (external agent) or financial institution of the Partnership that has a Year 2000 issue that would have a material impact on the Partnership's results of operations, liquidity or capital resources. However, the Managing Agent has no means of ensuring or determining the Year 2000 compliance of external agents. At this time, the Managing Agent does not believe that a Year 2000 issue of any non-compliant external agent will have a material impact on the Partnership's financial position or results of operations. Costs The total cost of the Managing Agent's Year 2000 project was approximately $3.2 million and was funded from operating cash flows. Risks Associated with the Year 2000 The Managing Agent completed all necessary phases of its Year 2000 program in 1999, and did not experience system or equipment malfunctions related to a failure to reference the Year 2000. The Managing Agent or Partnership have not been materially adversely effected by disruptions in the economy generally resulting from the Year 2000 issue. At this time, the Managing Agent does not believe that the Partnership's businesses, results of operations or financial condition will be materially adversely effected by the Year 2000 issue. Contingency Plans Associated with the Year 2000 The Managing Agent has not had to implement contingency plans such as manual workarounds or selecting new relationships for its banking or elevator operation activities in order to avoid the Year 2000 issue. Item 7. Financial Statements CENTURY PROPERTIES FUND XVI LIST OF FINANCIAL STATEMENTS Report of Ernst & Young, LLP Independent Auditors Consolidated Balance Sheet - December 31, 1999 Consolidated Statements of Operations - Years ended December 31, 1999 and 1998 Consolidated Statements of Changes in Partners' (Deficit) Capital - Years ended December 31, 1999 and 1998 Consolidated Statements of Cash Flows - Years ended December 31, 1999 and 1998 Notes to Consolidated Financial Statements Report of Ernst & Young LLP, Independent Auditors The Partners Century Properties Fund XVI We have audited the accompanying consolidated balance sheet of Century Properties Fund XVI as of December 31, 1999, and the related consolidated statements of operations, changes in partners' (deficit) capital and cash flows for each of the two years in the period ended December 31, 1999. 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 Century Properties Fund XVI at December 31, 1999, and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. As discussed in Note J to the consolidated financial statements, the Partnership changed its method of accounting to capitalize the cost of exterior painting and major landscaping effective January 1, 1999. /s/ ERNST & YOUNG LLP Greenville, South Carolina February 21, 2000 CENTURY PROPERTIES FUND XVI CONSOLIDATED BALANCE SHEET (in thousands, except unit data) December 31, 1999
Assets Cash and cash equivalents $ 468 Receivables and deposits 324 Restricted escrows 110 Other assets 231 Investment properties (Notes C and F): Land $ 1,409 Buildings and related personal property 14,645 ------- 16,054 Less accumulated depreciation (8,342) 7,712 ------- ------ $ 8,845 Liabilities and Partners' (Deficit) Capital Liabilities Accounts payable $ 114 Accrued property taxes 180 Tenant security deposit liabilities 42 Other liabilities 192 Mortgage notes payable (Notes C and F) 7,265 Partners' (Deficit) Capital General partners $ (3,832) Limited partners (130,000 units issued and outstanding) 4,884 1,052 ------ ----- $8,845
See Accompanying Notes to Consolidated Financial Statements CENTURY PROPERTIES FUND XVI CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except unit data) Years Ended December 31, 1999 1998 ---- ---- Revenues: Rental income $2,944 $2,855 Other income 117 121 ----- ----- Total revenues 3,061 2,976 ----- ----- Expenses: Operating 1,150 1,319 General and administrative 255 186 Depreciation 538 501 Interest 607 612 Property tax 255 231 ----- ----- Total expenses 2,805 2,849 ----- ----- Net income $ 256 $ 127 ===== ===== Net income allocated to general partners (6.9%) $ 18 $ 9 Net income allocated to limited partners (93.1%) 238 118 ----- ----- $ 256 $ 127 ===== ===== Net income per limited partnership unit $ 1.83 $ 0.91 ===== ===== Distributions per limited partnership unit $ 1.61 $ -- ===== ===== See Accompanying Notes to Consolidated Financial Statements CENTURY PROPERTIES FUND XVI CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL (in thousands, except unit data) Limited Partnership General Limited Units Partners Partners Total Original capital contributions 130,000 $ -- $65,000 $ 65,000 ======= ====== ====== ======= Partners' (deficit) capital at December 31, 1997 130,000 $(3,843) $ 4,737 $ 894 Net income for the year ended December 31, 1998 -- 9 118 127 ------- ------ ------ ------- Partners' (deficit) capital at December 31, 1998 130,000 $(3,834) $ 4,855 $ 1,021 Distributions to partners -- (16) (209) (225) Net income for the year ended December 31, 1999 -- 18 238 256 ------- ------ ------ ------- Partners' (deficit) capital at December 31, 1999 130,000 $(3,832) $ 4,884 $ 1,052 ======= ====== ====== ======= See Accompanying Notes to Consolidated Financial Statements CENTURY PROPERTIES FUND XVI CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
Year Ended December 31, 1999 1998 Cash flows from operating activities: Net income $ 256 $ 127 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 538 501 Amortization of loan costs 32 30 Change in accounts: Receivables and deposits 46 (63) Other assets (30) 5 Accounts payable (23) (32) Accrued property taxes (65) 8 Tenant security deposit liabilities (9) 1 Other liabilities 83 13 ----- ------ Net cash provided by operating activities 828 590 ------ ------ Cash flows from investing activities: Property improvements and replacements (409) (617) Net (deposits to) withdrawals from restricted escrows (10) 9 ------ ------ Net cash used in investing activities (419) (608) ------ ------ Cash flows from financing activities: Distributions to partners (225) -- Payments on mortgage notes payable (82) (75) ------ ------ Net cash used in financing activities (307) (75) ------ ------ Net increase (decrease) in cash and cash equivalents 102 (93) Cash and cash equivalents at beginning of year 366 459 ------ ----- Cash and cash equivalents at end of year $ 468 $ 366 ==== ==== Supplemental disclosure of cash flow information: Cash paid for interest $ 576 $ 581 ==== ==== Supplemental disclosure of non-cash activity: Property improvements and replacements included in accounts payable $ 81 $ -- === ===
See Accompanying Notes to Consolidated Financial Statements CENTURY PROPERTIES FUND XVI NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note A - Organization and Significant Accounting Policies Organization: Century Properties Fund XVI (the "Partnership" or "Registrant") is a California limited partnership organized in December 1980 to acquire and operate residential apartment properties. The Partnership's general partners are Fox Capital Management Corporation ("FCMC" or the "Managing General Partner") and Fox Realty Investors ("FRI"). As of December 31, 1999, the Partnership operates two residential apartment complexes located in Texas and Florida. The Managing General Partner is a subsidiary of Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. (See "Note B - - Transfer of Control".) The Partnership Agreement provides that the Partnership is to terminate on December 31, 2025 unless terminated prior to such date. The directors and officers of the Managing General Partner also serve as executive offers of AIMCO. Principles of Consolidation: The Partnership's consolidated financial statements include the accounts of the Partnership and its wholly owned subsidiaries. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles 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. Allocation to Partners: Net income and losses (excluding those arising from the occurrence of sales or dispositions) of the Partnership will be allocated 5% to the general partners with the remainder allocated 2% to the general partners and 98% to the limited partners. Distributions of available cash, except as discussed below, are allocated 5% to the general partners with the remainder allocated 2% to the general partners and 98% to the limited partners. In accordance with the Partnership Agreement, any gain from the sale or other disposition of Partnership properties shall be allocated: (i) to the general partners to the extent they are entitled to receive distributions of cash; (ii) 7% to the general partners and 93% to the limited partners, to the extent the general partners have a deficit capital balance; and (iii) to the limited partners. Cash from sales or other disposition, or refinancing and working capital reserves must be distributed in the following order: (i) first, an aggregate amount as discussed above to each Limited Partner which equals the total of their original invested capital contributed plus 8% per year, determined on a cumulative, noncompounded basis, on adjusted invested capital, adjusted as needed, of such Limited Partnership Unit Holder; (ii) second, to the general partners 15% of any additional cash from sales or refinancing and working capital reserve available for distribution, and (iii) the remainder shall be allocated 98% to the limited partners and 2% to the general partners. Upon sale of all properties and termination of the Partnership, the general partners may be required to contribute certain funds to the Partnership in accordance with the Partnership Agreement. Cash and Cash Equivalents: Cash and cash equivalents include cash on hand, in banks and money market accounts. At certain times, the amount of cash deposited at a bank may exceed the limit on insured deposits. Available Lines of Credit: An affiliate of the Managing General Partner has made available to the Partnership a credit line of up to $150,000 per property owned by the Partnership. The Partnership has no outstanding amounts due under this line of credit. Depreciation: Depreciation is calculated by the straight-line method over the estimated lives of the rental properties and related personal property. Effective January 1, 1999 the Partnership changed its method of accounting to capitalize the cost of exterior painting and major landscaping (Note J). Leases: The Partnership generally leases apartment units for twelve-month terms or less. The Partnership recognizes income as earned on its leases. In addition, the Managing 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. Tenant Security Deposits: The Partnership requires security deposits from lessees for the duration of the lease and such deposits are included in receivables and deposits. The security deposits are refunded when the tenant vacates, provided the tenant has not damaged its space and is current on its rental payments. Loan Costs: Loan costs of $319,000 are included in other assets in the accompanying consolidated balance sheet and are being amortized on a straight-line basis over the life of the loans. At December 31, 1999, accumulated amortization is $126,000. Amortization of loan costs is included in interest expense. Investment Properties: Investment properties consist of two apartment complexes and are stated at cost. Acquisition fees are capitalized as a cost of real estate. In accordance with Financial Accounting Standards Board Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of", 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 these assets. 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 the years ended December 31, 1999 or 1998. Fair Value: Statement of Financial Accounting Standards ("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, approximates its carrying value. Advertising Costs: The Partnership expenses the costs of advertising as incurred. Advertising costs of approximately $47,000 and $60,000 for the years ended December 31, 1999 and 1998, respectively, were charged to operating expenses. 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 establishes standards for related disclosures about products and services, geographic areas, and major customers. See "Note G" for disclosure. Note B - Transfer of Control Pursuant to a series of transactions which closed on October 1, 1998 and February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust merged into AIMCO, a publicly traded real estate investment trust, with AIMCO being the surviving corporation (the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in the Managing General Partner. The Managing General Partner does not believe that this transaction has had or will have a material effect on the affairs and operations of the Partnership. Note C - Mortgage Notes Payable The principle terms of mortgage notes payable are as follows:
Principal Monthly Principal Balance At Payment Balance December 31, Including Interest Period Maturity Due At Property 1999 Interest Rate Amortized Date Maturity -------- ---- -------- ---- --------- ---- -------- (in thousands) (in thousands) Ralston Place (formerly The $ 2,213 $ 17 7.88% 30 years 1/2006 $ 2,016 Landings Apartments) Woods of Inverness Apartments 5,052 38 7.88% 30 years 1/2006 4,602 ------ ------ ------ $ 7,265 $ 55 $ 6,618 ====== ====== ======
The mortgage notes payable are nonrecourse and are secured by pledge of the respective apartment properties and by pledge of revenues from the respective apartment properties. Prepayment penalties are required if repaid prior to maturity. Further, the properties may not be sold subject to existing indebtedness. Scheduled principal payments of mortgage notes payable subsequent to December 31, 1999 are as follows (in thousands): 2000 $ 88 2001 95 2002 103 2003 111 2004 120 Thereafter 6,748 ----- $ 7,265 Note D - Income Taxes Taxable income or loss of the Partnership is reported in the income tax returns of its partners. Accordingly, no provision for income taxes is made in the financial statements of the Partnership. Differences between the net income as reported and Federal taxable income result primarily from depreciation over different methods and lives and on differing cost basis. The following is a reconciliation of reported net income and Federal taxable income: 1999 1998 ---- ---- (in thousands, except unit data) Net income as reported $ 256 $ 127 Add (deduct): Depreciation differences 368 370 Miscellaneous (56) 155 ---- ---- Federal taxable income $ 568 $ 652 ==== ==== Federal taxable income per limited partnership unit $4.07 $4.67 ==== ==== The following is a reconciliation between the Partnership's reported amounts and Federal tax basis of net assets and liabilities (in thousands): 1999 Net assets as reported $1,052 Land and buildings 926 Accumulated depreciation (5,368) Syndication and distribution costs 8,258 Other 108 ----- Net assets - Federal tax basis $4,976 ===== Note E - Transactions with Affiliated Parties The Partnership has no employees and is dependent upon the Managing General Partner and its affiliates for the management and administration of all Partnership activities. The Partnership Agreement provides for (i) payments to affiliates for services and (ii) reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following expenses were paid to the Managing General Partner and affiliates in 1999 and in 1998: 1999 1998 ---- ---- (in thousands) Property management fees (included in operating expense) $153 $149 Reimbursement for services of affiliates (included in investment property and general and administrative and operating expenses) 101 133 During the years ended December 31, 1999 and 1998, affiliates of the Managing General Partner were entitled to receive 5% of gross receipts from all of the Registrant's properties for providing property management services. The Registrant paid to such affiliates approximately $153,000 and $149,000 for the years ended December 31, 1999 and 1998, respectively. An affiliate of the Managing General Partner received reimbursement of accountable administrative expenses amounting to approximately $101,000 and $133,000 for the years ended December 31, 1999 and 1998, respectively. Several tender offers were made by various parties, including affiliates of the Managing General Partner, during the years ended December 31, 1999 and 1998. As a result of these tender offers, AIMCO and its affiliates currently own 66,851.01 units of limited partnership units in the Partnership representing 51.42% of the outstanding units. It is possible that AIMCO or its affiliates will make one or more additional offers to acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO. Consequently, AIMCO is in a position to influence all voting decisions with respect to the Registrant. Under the Partnership Agreement, unitholders holding a majority of the units are entitled to take action with respect to a variety of matters. When voting on matters, AIMCO would in all likelihood vote the units it acquired in a manner favorable to the interest of the Managing General Partner because of their affiliation with the Managing General Partner. Note F - Investment Properties and Accumulated Depreciation Initial Cost To Partnership -------------- (in thousands)
Costs Buildings Capitalized and Related (Removed) Personal Subsequent to Description Encumbrances Land Property Acquisition ----------- ------------ ---- -------- ----------- (in thousands) (in thousands) Ralston Place (formerly The Landings Apartments) $ 2,213 $ 504 $ 4,702 $ 1,109 Woods of Inverness 5,052 1,292 10,305 (1,858) ------ ----- ------ ------ Total $ 7,265 $1,796 $15,007 $ (749) ====== ===== ====== ======
Gross Amount At Which Carried At December 31, 1999 (in thousands)
Buildings And Related Personal Accumulated Date Depreciable Description Land Property Total Depreciation Acquired Life-Years ----------- ---- -------- ----- ------------ -------- ---------- (in thousands) Ralston Place (formerly The Landings Apartments) $ 504 $ 5,811 $ 6,315 $3,302 06/82 5-30 years Woods of Inverness 905 8,834 9,739 5,040 07/82 5-30 years ----- ------ ------ ------ Total $1,409 $14,645 $16,054 $8,342 ===== ====== ====== =====
Reconciliation of Investment Properties and Accumulated Depreciation: Years Ended December 31, 1999 1998 ---- ---- (in thousands) Balance at beginning of year $15,564 $14,947 Property improvements 490 617 ------ ------ Balance at end of year $16,054 $15,564 ====== ====== Accumulated Depreciation Balance at beginning of year $ 7,804 $ 7,303 Additions charged to expense 538 501 ------ ------ Balance at end of year $ 8,342 $ 7,804 ====== ====== The aggregate cost of the investment properties for Federal income tax purposes at December 31, 1999 and 1998, is approximately $16,980,000 and $16,489,000, respectively. The accumulated depreciation taken for Federal income tax purposes at December 31, 1999 and 1998, is approximately $13,710,000 and $13,542,000, respectively. Note G - Segment Reporting Description of the types of products and services from which the reportable segment derives its revenues: The Partnership has one reportable segment: residential properties, consisting of two apartment complexes, one of which is located in Tampa, Florida and the other in Houston, Texas. The Partnership rents apartment units to tenants for terms that are typically twelve months or less. Measurement of segment profit or loss: The Partnership evaluates performance based on segment profit (loss) before depreciation. The accounting policies of the reportable segment are the same as those described in the summary of significant accounting policies. Factors management used to identify the enterprise's reportable segment: The Partnership's reportable segment consist of investment properties that offer similar products and services. Although each of the investment properties is managed separately, they have been aggregated into one segment as they provide services with similar types of products and customers. Segment information for the years 1999 and 1998 is shown in the tables below (in thousands). The "Other" column includes Partnership administration related items and income and expense not allocated to the reportable segment. 1999 Residential Other Totals - ---- ----------- ----- ------ Rental income $ 2,944 $ -- $ 2,944 Other income 106 11 117 Interest expense 607 -- 607 Depreciation 538 -- 538 General and administrative expense -- 255 255 Segment profit (loss) 500 (244) 256 Total assets 8,822 23 8,845 Capital expenditures 490 -- 490 1998 Residential Other Totals ---- ----------- ----- ------ Rental income $ 2,855 $ -- $ 2,855 Other income 105 16 121 Interest expense 612 -- 612 Depreciation 501 -- 501 General and administrative expense -- 186 186 Segment profit (loss) 297 (170) 127 Total assets 8,562 267 8,829 Capital expenditures 617 -- 617 Note H - Distributions A cash distribution from operations of approximately $225,000 was paid during the year ended December 31, 1999, of which approximately $209,000 was paid to limited partners ($1.61 per limited partnership unit). No cash distributions were made during the year ended December 31, 1998. 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. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, the Managing 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 the acquisition by Insignia Financial Group, Inc. ("Insignia") and entities which were, at one time, affiliates of Insignia ("Insignia Affiliates") of interests in certain general partner entities, past tender offers by Insignia Affiliates to acquire limited partnership units, the management of partnerships by Insignia Affiliates and the Insignia Merger (see "Note B - Transfer of Control"). The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the Managing General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs have filed an amended complaint. The Managing 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 final court approval, on behalf of the Partnership and all limited partners who own units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Superior Court of the State of California, County of San Mateo, 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 class plaintiffs' counsel to enter the settlement. On December 14, 1999, the Managing General Partner and its affiliates terminated the proposed settlement. Certain plaintiffs have filed a motion to disqualify some of the plaintiffs' counsel in the action. The Managing General Partner does not anticipate that costs associated with this case 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 - Change in Accounting Principle Effective January 1, 1999, the Partnership changed its method of accounting to capitalize the cost of exterior painting and major landscaping on a prospective basis. The Partnership believes that this accounting principle change is preferable because it provides a better matching of expenses with the related benefit of the expenditures and it is consistent with industry practice and the policies of the Managing General Partner. The effect of the change in 1999 was to increase net income by $33,000 ($.24 per limited partnership unit). The cumulative effect, had this change been applied to prior periods, is not material. The accounting principle change will not have an effect on cash flow, funds available for distributions or fees payable to the Managing General Partner or affiliates. Item 8. Changes in and Disagreements with Accountant on Accounting and Financial Disclosures None. PART III Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act Century Properties Fund XVI (the "Partnership" or the "Registrant") has no officers or directors. Fox Capital Management Corporation ("FCMC" or the "Managing General Partner"), manages and controls substantially all of the Partnership's affairs and has general responsibility in all matters affecting its business. The names and ages of, as well as the positions and offices held by, the present executive officers and director of the Managing General Partner are set forth below. There are no family relationships between or among any officers or directors. Name Age Position Patrick J. Foye 42 Executive Vice President and Director Martha L. Long 40 Senior Vice President and Controller Patrick J. Foye has been Executive Vice President and Director of the Managing General Partner since October 1, 1998. Mr. Foye has served as Executive Vice President of AIMCO since May 1998. Prior to joining AIMCO, Mr. Foye was a partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to 1998 and was Managing Partner of the firm's Brussels, Budapest and Moscow offices from 1992 through 1994. Mr. Foye is also Deputy Chairman of the Long Island Power Authority and serves as a member of the New York State Privatization Council. He received a B.A. from Fordham College and a J.D. from Fordham University Law School. Martha L. Long has been Senior Vice President and Controller of the Managing General Partner and AIMCO since October 1998, as a result of the acquisition of Insignia Financial Group, Inc. From June 1994 until January 1997, she was the Controller for Insignia, and was promoted to Senior Vice President - Finance and Controller in January 1997, retaining that title until October 1998. From 1988 to June 1994, Ms. Long was Senior Vice President and Controller for The First Savings Bank, FSB in Greenville, South Carolina. Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to the Registrant under Rule 16a-3(e) during the Registrant's most recent fiscal year and Forms 5 and amendments thereto furnished to the Registrant with respect to its most recent fiscal year, the Registrant is not aware of any director, officer, beneficial owner of more than ten percent of the units of limited partnership interest in the Registrant that failed to file on a timely basis, as disclosed in the above Forms, reports required by section 16(a) of the Exchange Act during the most recent fiscal year or prior fiscal years except as follows: AIMCO Properties, L.P. and its joint filers failed to timely file a Form 3 with respect to its acquisition of Units and AIMCO and its joint filers failed to timely file a Form 4 with respect to its acquisition of Units. Item 10. Executive Compensation No direct form of compensation or remuneration was paid by the Partnership to any officer or director of Fox Capital Management Corporation. However, fees and other payments have been made to the Partnership's Managing General Partner and its affiliates, as described in "Item 12. Certain Relationships and Related Transactions." Item 11. Security Ownership of Certain Beneficial Owners and Management Except as noted below, no person or entity was known by the Registrant to be the beneficial owner of more than 5% of the Limited Partnership Units of the Registrant as of December 31, 1999. Name of Percentage Beneficial Owner Number of Units of Class Insignia Properties, LP (an affiliate of AIMCO) 47,488.68 36.53% AIMCO Properties, LP (an affiliate of AIMCO) 19,362.33 14.89% Insignia Properties LP, is indirectly ultimately owned by AIMCO. Its business address is 55 Beattie Place, Greenville, SC 29602. AIMCO Properties LP is indirectly ultimately controlled by AIMCO. Its business address is 2000 South Colorado Blvd, Denver, Colorado 80222. No director or officer of the Managing General Partner owns any units. Item 12. Certain Relationships and Related Transactions The Partnership has no employees and is dependent upon the Managing General Partner and its affiliates for the management and administration of all Partnership activities. The Partnership Agreement provides for (i) payments to affiliates for services and (ii) reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following expenses were paid to the Managing General Partner and affiliates in 1999 and in 1998: 1999 1998 ---- ---- (in thousands) Property management fees $153 $149 Reimbursement for services of affiliates 101 133 During the years ended December 31, 1999 and 1998, affiliates of the Managing General Partner were entitled to receive 5% of gross receipts from all of the Registrant's properties for providing property management services. The Registrant paid to such affiliates approximately $153,000 and $149,000 for the years ended December 31, 1999 and 1998, respectively. An affiliate of the Managing General Partner received reimbursement of accountable administrative expenses amounting to approximately $101,000 and $133,000 for the years ended December 31, 1999 and 1998, respectively. Several tender offers were made by various parties, including affiliates of the Managing General Partner, during the years ended December 31, 1999 and 1998. As a result of these tender offers, AIMCO and its affiliates currently own 66,851.01 units of limited partnership units in the Partnership representing 51.42% of the outstanding units. It is possible that AIMCO or its affiliates will make one or more additional offers to acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO. Consequently, AIMCO is in a position to influence all voting decisions with respect to the Registrant. Under the Partnership Agreement, unitholders holding a majority of the units are entitled to take action with respect to a variety of matters. When voting on matters, AIMCO would in all likelihood vote the units it acquired in a manner favorable to the interest of the Managing General Partner because of their affiliation with the Managing General Partner. Item 13. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit 18, Independent Accountants' Preferability Letter for Change in Accounting Principle is filed as an exhibit to this report. Exhibit 27, Financial Data Schedule is filed as an exhibit to this report. (b) Reports on Form 8-K filed during the quarter ended December 31, 1999. None. SIGNATURES In accordance with section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CENTURY PROPERTIES FUND XVI By: Fox Capital Management Corporation Managing General Partner By: /s/Patrick J. Foye Patrick J. Foye Executive Vice President By: /s/Martha L. Long Senior Vice President and Controller Date: In accordance with the Exchange Act, this report has been signed below by the following persons on behalf by the registrant and in the capacities and on the date indicated. /s/Patrick J. Foye Date: - ------------------ Patrick J. Foye Executive Vice President and Director /s/Martha L. Long Date: - ----------------- Martha L. Long Senior Vice President and Controller CENTURY PROPERTIES FUND XVI EXHIBIT INDEX Exhibit Number Description of Exhibit 2.1 Agreement and Plan of Merger, dated as of October 1, 1999, by and between AIMCO and IPT (incorporated by reference to Exhibit 2.1 of IPT's Current Report or Form 8-K, file No. 1-4179, dated October 1, 1999. (Page 1) 2.5 Master Indemnity Agreement incorporated by reference to Exhibit 2.5 to Form 8-K filed by Insignia Financial Group, Inc. with the Securities and Exchange Commission on September 1, 1995. (Page 2) 3.4 Agreement of Limited Partnership incorporated by reference to Exhibit A to the Prospectus of the Registrant dated August 17, 1981 and thereafter supplemented June 25, 1979 and thereafter supplemented, included in the Registrant's Registration Statement on Form S-11 (Reg. No. 2-71473). (Page 3) 10.1 Form of First Mortgage Note dated as of December 29, 1995 from the Registrant to Secore Financial Corporation ("Secore") relating to the refinancing of the Landings and Woods of Inverness incorporated by reference to Exhibit 10.1 to the Registrant's Annual Report of Form 10-KSB for the year ended December 31, 1995. (Page 4) 10.2 Form of First Mortgage Note dated as of December 29, 1995 from the Registrant to Secore relating to the refinancing of the Landings and Woods of Inverness incorporated by reference to Exhibit 10.2 to the Registrant's Annual Report of Form 10-KSB for the year ended December 31, 1995. (Page 4) 18 Independent Accountants' Preferability Letter for Change in Accounting Principle. 27 Financial Data Schedule. Exhibit 18 February 7, 2000 Mr. Patrick J. Foye Executive Vice President Fox Capital Management Corporation Managing General Partner for Century Properties Fund XVI 55 Beattie Place P.O. Box 1089 Greenville, South Carolina 29602 Dear Mr. Foye: Note J of Notes to the Consolidated Financial Statements of Century Properties Fund XVI included in its Form 10-KSB for the year ended December 31, 1999 describes a change in the method of accounting to capitalize exterior painting and major landscaping, which would have been expensed under the old policy. You have advised us that you believe that the change is to a preferable method in your circumstances because it provides a better matching of expenses with the related benefit of the expenditures and is consistent with policies currently being used by your industry and conforms to the policies of the Managing General Partner. There are no authoritative criteria for determining a preferable method based on the particular circumstances; however, we conclude that the change in the method of accounting for exterior painting and major landscaping is to an acceptable alternative method which, based on your business judgment to make this change for the reasons cited above, is preferable in your circumstances. Very truly yours, /s/ Ernst & Young LLP EX-27 2 FDS --
5 This schedule contains summary financial information extracted fromCentury Properties XVI 1999 Fourth Quarter 10-KSB and is qualified in its entirety by reference to such 10-KSB filing. 0000351931 CENTURY PROPERTIES XVI 1,000 12-MOS DEC-31-1999 JAN-01-1999 DEC-31-1999 468 0 324 0 0 0 16,054 (8,342) 8,845 0 7,265 0 0 0 1,052 8,845 0 3,061 0 0 2,805 0 607 0 0 0 0 0 0 256 1.83 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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