0000711642-01-500200.txt : 20011119
0000711642-01-500200.hdr.sgml : 20011119
ACCESSION NUMBER: 0000711642-01-500200
CONFORMED SUBMISSION TYPE: 10QSB
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 20010930
FILED AS OF DATE: 20011106
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: CENTURY PROPERTIES FUND XVII
CENTRAL INDEX KEY: 0000356472
STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500]
IRS NUMBER: 942782037
STATE OF INCORPORATION: CA
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10QSB
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-11137
FILM NUMBER: 1776002
BUSINESS ADDRESS:
STREET 1: 55 BEATTIE PLACE
STREET 2: PO BOX 1089 C/O INSIGNIA FINANCIAL GROUP
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
10QSB
1
cpf17.txt
CPF17
FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2001
[ ] 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 0-11137
CENTURY PROPERTIES FUND XVII
(Exact name of small business issuer as specified in its charter)
California 94-2782037
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
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___
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
CENTURY PROPERTIES FUND XVII
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 2001
Assets
Cash and cash equivalents $ 1,916
Receivables and deposits 146
Restricted escrows 141
Other assets 778
Investment properties:
Land $ 7,078
Buildings and related personal property 66,255
73,333
Less accumulated depreciation (40,296) 33,037
$ 36,018
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 138
Tenant security deposit liabilities 318
Accrued property taxes 724
Other liabilities 854
Mortgage notes payable 47,249
Partners' Deficit
General partner $ (8,504)
Limited partners (75,000 units issued and
outstanding) (4,761) (13,265)
$ 36,018
See Accompanying Notes to Consolidated Financial Statements
b)
CENTURY PROPERTIES FUND XVII
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
Revenues:
Rental income $ 3,578 $ 3,564 $10,798 $10,534
Other income 300 363 1,000 850
Casualty gain 166 -- 166 --
Total revenues 4,044 3,927 11,964 11,384
Expenses:
Operating 1,321 1,172 3,973 3,565
General and administrative 116 77 402 232
Depreciation 741 710 2,263 2,111
Interest 937 962 2,830 2,899
Property taxes 220 212 712 702
Total expenses 3,335 3,133 10,180 9,509
Income before extraordinary loss 709 794 1,784 1,875
Extraordinary loss on early extinguishment
of debt -- -- -- (102)
Net income $ 709 $ 794 $ 1,784 $ 1,773
Net income allocated to
general partner (11.8%) $ 84 $ 94 $ 211 $ 209
Net income allocated to
limited partners (88.2%) 625 700 1,573 1,564
$ 709 $ 794 $ 1,784 $ 1,773
Per limited partnership unit:
Income before extraordinary loss $ 8.33 $ 9.33 $ 20.97 $ 22.05
Extraordinary loss -- -- -- (1.20)
Net income $ 8.33 $ 9.33 $ 20.97 $ 20.85
Distributions per limited partnership
unit $ 7.05 $ -- $ 31.81 $113.87
See Accompanying Notes to Consolidated Financial Statements
c)
CENTURY PROPERTIES FUND XVII
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Original capital contributions 75,000 $ -- $75,000 $ 75,000
Partners' deficit at
December 31, 2000 75,000 $(8,396) $(3,948) $(12,344)
Distributions to partners -- (319) (2,386) (2,705)
Net income for the nine months
ended September 30, 2001 -- 211 1,573 1,784
Partners' deficit at
September 30, 2001 75,000 $(8,504) $(4,761) $(13,265)
See Accompanying Notes to Consolidated Financial Statements
d)
CENTURY PROPERTIES FUND XVII
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
2001 2000
Cash flows from operating activities:
Net income $ 1,784 $ 1,773
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 2,263 2,111
Amortization of loan costs and debt discounts 44 142
Extraordinary loss on debt refinancing -- 102
Casualty gain (166) --
Change in accounts:
Receivables and deposits 138 879
Other assets (95) (47)
Accounts payable (118) (106)
Tenant security deposit liabilities (48) 53
Accrued property taxes 43 48
Other liabilities 185 125
Net cash provided by operating activities 4,030 5,080
Cash flows from investing activities:
Property improvements and replacements (1,183) (1,453)
Net (deposits to) withdrawals from restricted escrows (45) 394
Insurance proceeds received 238 --
Net cash used in investing activities (990) (1,059)
Cash flows from financing activities:
Payments on mortgage notes payable (702) (550)
Repayment of mortgage notes payable -- (21,943)
Proceeds from refinancing -- 22,800
Loan costs paid -- (296)
Prepayment penalty -- (79)
Distributions to partners (2,705) (9,084)
Net cash used in financing activities (3,407) (9,152)
Net decrease in cash and cash equivalents (367) (5,131)
Cash and cash equivalents at beginning of period 2,283 7,097
Cash and cash equivalents at end of period $ 1,916 $ 1,966
Supplemental disclosure of cash flow information:
Cash paid for interest $ 2,790 $ 2,566
See Accompanying Notes to Consolidated Financial Statements
e)
CENTURY PROPERTIES FUND XVII
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Century
Properties Fund XVII (the "Partnership" or the "Registrant") have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310(b)
of Regulation S-B. 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 Fox Capital Management Corporation
("FCMC" or the "Managing General Partner") the managing general partner of 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 nine month periods ended September 30, 2001
are not necessarily indicative of the results that may be expected for the
fiscal year ending December 31, 2001. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Partnership's Annual Report on Form 10-KSB for the fiscal year ended December
31, 2000. The Managing General Partner is an affiliate of Apartment Investment
and Management Company ("AIMCO"), a publicly traded real estate investment
trust.
Principles of Consolidation
The financial statements include all of the accounts of the Partnership and
Apartment CCG 17, L.P., which owns Cherry Creek Gardens Apartments, Apartment
Creek 17, LLC, which owns Creekside Apartments and Apartment Lodge 17, LLC,
which owns The Lodge Apartments. The Partnership ultimately holds a 100%
interest in Apartment CCG 17, L.P., Apartment Creek 17, LLC, and Apartment Lodge
17, LLC. All intra-entity balances have been eliminated.
The financial statements include all of the accounts of the Partnership and its
wholly owned partnerships.
Segment Reporting
SFAS No. 131, "Disclosure about Segments of an Enterprise and Related
Information" established standards for the way that public business enterprises
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports. It also established standards for related
disclosures about products and services, geographic areas, and major customers.
As defined in SFAS No. 131, the Partnership has only one reportable segment. The
Managing General Partner believes that segment-based disclosures will not result
in a more meaningful presentation than the consolidated financial statements as
currently presented.
Note B - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
Partnership activities. The Partnership Agreement provides for payments to
affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership.
The following payments were made to the Managing General Partner and affiliates
during the nine months ended September 30, 2001 and 2000:
2001 2000
(in thousands)
Property management fees (included in operating expenses) $601 $565
Reimbursement for services of affiliates (included in
investment properties, general and administrative
expense and operating expense) 236 151
Partnership Management Fee (included in general partner
distributions) 271 370
During the nine months ended September 30, 2001 and 2000, 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 $601,000 and $565,000 for the
nine months ended September 30, 2001 and 2000, respectively.
An affiliate of the Managing General Partner received reimbursement of
accountable administrative expenses amounting to approximately $236,000 and
$151,000 for the nine months ended September 30, 2001 and 2000, respectively,
including reimbursement of construction oversight costs of approximately $43,000
and $26,000 for the nine months ended September 30, 2001 and 2000, respectively.
Pursuant to the Partnership Agreement, for managing the affairs of the
Partnership, the general partner is entitled to receive a Partnership management
fee equal to 10% of the Partnership's adjusted cash from operations as
distributed. Approximately $271,000 and $370,000 in Partnership management fees
were paid along with the distributions form operations made during the nine
months ended September 30, 2001 and 2000, respectively.
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.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates currently own 43,782 limited partnership
units in the Partnership representing 58.38% of the outstanding units. A number
of these units were acquired pursuant to tender offers made by AIMCO or its
affiliates or affiliates of the Managing General Partner. It is possible that
AIMCO or its affiliates will acquire additional limited partnership interests in
the Partnership for cash or in exchange for units in the operating partnership
of AIMCO either through private purchases or tender offers. Under the
Partnership Agreement, unitholders holding a majority of the Units are entitled
to take action with respect to a variety of matters, which would include voting
on certain amendments to the Partnership Agreement and voting to remove the
Managing General Partner. As a result of its ownership of 58.38% of the
outstanding units, AIMCO is in a position to influence all voting decisions with
respect to the Registrant. 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 its affiliation with the Managing General Partner.
However, DeForest Ventures I L.P., from whom AIMCO, through its merger with
Insignia Financial Group, Inc., acquired 25,833.5 (approximately 34.45%) of its
units, had agreed for the benefit of non-tendering unitholders, that it would
vote such Units: (i) against any increase in compensation payable to the
Managing General Partner or to affiliates; and (ii) on all other matters
submitted by it or its affiliates, in proportion to the votes cast by non
tendering unit holders. Except for the foregoing, no other limitations are
imposed on AIMCO and its affiliates right to vote each Unit acquired.
Note C - Distributions to Partners
Cash distributions from operations of approximately $2,705,000 (approximately
$2,386,000 to the limited partners or $31.81 per limited partnership unit) were
paid to the partners during the nine months ended September 30, 2001. Subsequent
to September 30, 2001, a distribution was declared from operations of
approximately $1,220,000 (approximately $1,076,000 to the limited partners or
$14.35 per limited partnership unit). During the nine months ended September 30,
2000, the Partnership declared and paid distributions of approximately
$9,084,000 (approximately $8,540,000 to the limited partners or $113.87 per
limited partnership unit) to its partners. The distributions consisted of
approximately $3,695,000 (approximately $3,259,000 to the limited partners or
$43.46 per limited partnership unit) from operations and approximately
$5,389,000 (approximately $5,281,000 to the limited partners or $70.41 per
limited partnership unit) from the proceeds of the refinancing of Cherry Creek
Gardens Apartments in December 1999 and the refinancing of Cooper's Pond
Apartments in February 2000.
Note D - Refinancing and Extraordinary Loss
On December 10, 1999, the Partnership refinanced the mortgage encumbering Cherry
Creek Gardens Apartments. The refinancing replaced indebtedness of approximately
$7,320,000 with a new mortgage in the amount of $12,415,000. The new mortgage
carries a stated interest rate of 7.99%. Interest on the old mortgage was 8.63%.
Payments on the mortgage loan are due monthly until the loan matures on January
1, 2020. In addition, the Partnership was required to establish a repair escrow
of $110,000 with the lender for certain capital replacements. Total capitalized
loan costs were approximately $92,000 at December 31, 1999. Additional loan
costs of approximately $6,000 were capitalized during the nine months ended
September 30, 2000.
On January 28, 2000, the Partnership refinanced the mortgage encumbering The
Village in the Woods Apartments. The refinancing replaced indebtedness of
approximately $14,421,000 with a new mortgage in the amount of $14,500,000. The
new mortgage carries a stated interest rate of 8.56%. The refinanced mortgage
was a zero coupon note which was discounted at an effective interest rate of
10.247%. Payments of principal and interest on the mortgage loan are due monthly
until the loan matures on February 1, 2020. Total capitalized loan costs were
approximately $143,000 at September 30, 2000.
On February 15, 2000, the Partnership refinanced the first and second mortgages
encumbering Cooper's Pond Apartments. The refinancing replaced indebtedness of
approximately $7,522,000 with a new mortgage in the amount of $8,300,000. The
new mortgage carries a stated interest rate of 8.47%. Interest rates on the
refinanced mortgages were 8.0% and 8.5%. Payments of principal and interest on
the mortgage loan are due monthly until the loan matures on March 1, 2020 at
which time the loan is scheduled to be fully amortized. Total capitalized loan
costs were approximately $147,000 at September 30, 2000. The Partnership
recognized an extraordinary loss on the early extinguishment of debt of
approximately $102,000 due to the write-off of unamortized loan costs and a
prepayment penalty.
Note E - Casualty Event
During the nine months ended September 30, 2001, a net casualty gain was
recorded at Cooper's Pond Apartments. The casualty gain related to a fire that
occurred which destroyed nine units of the complex in January 2001. The gain was
the result of insurance proceeds received as of September 30, 2001 of
approximately $238,000 less the net book value of the damaged property of
approximately $72,000.
Note F - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its 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, among other
things, the acquisition of interests in certain general partner entities by
Insignia Financial Group, Inc. ("Insignia") and entities which were, at one
time, affiliates of Insignia; past tender offers by the Insignia affiliates to
acquire limited partnership units; management of the partnerships by the
Insignia affiliates; and the series of transactions which closed on October 1,
1998 and February 26, 1999 whereby Insignia and Insignia Properties Trust,
respectively, were merged into AIMCO. The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998, the Managing General Partner filed a motion seeking dismissal of the
action. In lieu of responding to the motion, the plaintiffs 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 court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, at which time
the Court set a final approval hearing for December 10, 1999. Prior to the
December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Managing General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case and an appeal was taken from the order on
October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff
Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the
putative class. Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001, the Managing General Partner and its affiliates filed a
demurrer to the third amended complaint. On May 14, 2001, the Court heard the
demurrer to the third amended complaint. On July 10, 2001, the Court issued an
order sustaining defendants' demurrer on certain grounds. On July 20, 2001,
plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
plaintiffs filed a fourth amended class and derivative action complaint. On
September 12, 2001, the Court denied plaintiffs' motion for reconsideration. On
October 5, 2001, the Managing General Partner and affiliated defendants filed a
demurrer to the fourth amended complaint, which, together with a demurrer filed
by other defendants, is currently scheduled to be heard on November 15, 2001.
The Court has set the matter for trial in January 2003.
During the third quarter of 2001, a complaint (the "Heller action") was filed
against the same defendants that are named in the Nuanes action, captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended complaint. The first amended complaint in the Heller action is
brought as a purported derivative action, and asserts claims for among other
things breach of fiduciary duty; unfair competition; conversion, unjust
enrichment; and judicial dissolution. Plaintiffs in the Nuanes action filed a
motion to consolidate the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed without leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the Managing General Partner and affiliated
defendants moved to strike the first amended complaint in its entirety for
violating the Court's July 10, 2001 order granting in part and denying in part
defendants' demurrer in the Nuanes action, or alternatively, to strike certain
portions of the complaint based on the statute of limitations. Other defendants
in the action demurred to the fourth amended complaint, and, alternatively,
moved to strike the complaint. The matters are currently scheduled to be heard
on November 15, 2001.
The Managing General Partner does not anticipate that any costs, whether legal
or settlement costs, associated with these cases will be material to the
Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this Form 10-QSB 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-QSB 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
operations. 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.
The Partnership's investment properties consist of five apartment complexes. The
following table sets forth the average occupancy of the properties for the nine
months ended September 30, 2001 and 2000:
Average Occupancy
Property 2001 2000
Cherry Creek Gardens Apartments 90% 95%
Englewood, Colorado
Creekside Apartments 95% 97%
Denver, Colorado
The Lodge Apartments 96% 98%
Denver, Colorado
The Village in the Woods Apartments 93% 90%
Cypress, Texas
Cooper's Pond Apartments 95% 97%
Tampa, Florida
The Managing General Partner attributes the decrease in occupancy at Cherry
Creek Gardens Apartments to an increase in home purchases and the increase in
occupancy at The Village in the Woods Apartments to increased marketing and
advertising efforts.
Results of Operations
The Partnership realized net income for the nine months ended September 30, 2001
of approximately $1,784,000 as compared to net income of approximately
$1,773,000 for the corresponding period of 2000. The Partnership's net income
for the three months ended September 30, 2001 was approximately $709,000
compared to approximately $794,000 for the three months ended September 30,
2000. The increase in net income for the nine month period ended September 30,
2001 was due to an increase in total revenues and the recognition during the
nine months ended September 30, 2000 of an extraordinary loss on the early
extinguishment of debt partially offset by an increase in total expenses. The
extraordinary loss on the early extinguishment of debt relates to the
refinancing of the mortgage at Cooper's Pond Apartments (see discussion in
"Liquidity and Capital Resources"). The decrease in net income for the three
month period ended September 30, 2001 was due to an increase in total expenses
largely offset by an increase in total revenues.
Total revenues increased for the nine month period ended September 30, 2001 due
to an increase in rental income, other income, and a casualty gain at Cooper's
Pond Apartments due to a fire in January 2001. Total revenues increased for the
three month period ended September 30, 2001 due to an increase in rental income
and a casualty gain at Cooper's Pond Apartments which was partially offset by a
decrease in other income. The increase in rental income was due to an increase
in average rental rates at all of the Partnership's investment properties and an
increase in occupancy at The Village in the Woods Apartments. These increases
were partially offset by decreased occupancy at Cherry Creek Gardens Apartments,
Creekside Apartments, The Lodge Apartments, and Cooper's Pond Apartments,
increased bad debt expense at all of the Partnership's properties and increased
concession costs primarily at Cherry Creek Gardens Apartments and The Village in
the Woods Apartments. Other income increased for the nine month period ended
September 30, 2001 due to an increase in income from utility reimbursements at
Cherry Creek Gardens Apartments, Creekside Apartments, and The Lodge Apartments,
increased laundry income at Cherry Creek Gardens Apartments and The Lodge
Apartments, and increased late charges primarily at The Village in the Woods
Apartments. These increases were partially offset by reduced interest income due
to lower average cash balances in interest bearing accounts. Other income
decreased for the three month period ended September 30, 2001 due to a decrease
in interest income due to lower average cash balances in interest bearing
accounts.
Total expenses increased for the three and nine month periods ended September
30, 2001 due to increases in operating, depreciation, and general and
administrative expenses partially offset by reduced interest expense. Operating
expenses increased due primarily to an increase in utility expenses primarily at
Cherry Creek Gardens Apartments, Creekside Apartments, The Lodge Apartments, and
The Village in the Woods Apartments, an increase in maintenance salaries mainly
at Cooper's Pond Apartments, and an increase in insurance expense at all of the
Partnership's properties. Depreciation expense increased due to property
improvements and replacements put into service during the last twelve months.
General and administrative expenses increased due to an increase in professional
fees associated with the administration of the Partnership and an increase in
the cost of services included in the management reimbursements to the Managing
General Partner allowed under the Partnership Agreement. Also included in
general and administrative expenses at both September 30, 2001 and 2000 are the
costs associated with the quarterly communications with investors and regulatory
agencies required by the Partnership Agreement. Those increases in total
expenses were partially offset by a decrease in interest expense primarily due
to the refinancing of the mortgage at Village in the Woods during 2000 at a
lower interest rate.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from increases in
expenses. As part of this plan, the 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 September 30, 2001, the Partnership had cash and cash equivalents of
approximately $1,916,000 compared to approximately $1,966,000 at September 30,
2000. The decrease in cash and cash equivalents of approximately $367,000 from
December 31, 2000 is due to approximately $3,407,000 of cash used in financing
activities and approximately $990,000 of cash used in investing activities,
which was partially offset by approximately $4,030,000 of cash provided by
operating activities. Cash used in financing activities consisted primarily of
payments of principal made on the mortgages encumbering the Partnership's
properties and distributions to partners. Cash used in investing activities
consisted of property improvements and replacements and, to a lesser extent, net
deposits to escrow accounts maintained by the mortgage lenders partially offset
by insurance proceeds received. The Partnership invests its working capital
reserves in interest bearing accounts.
On January 28, 2000, the Partnership refinanced the mortgage encumbering The
Village in the Woods Apartments. The refinancing replaced indebtedness of
approximately $14,421,000 with a new mortgage in the amount of $14,500,000. The
new mortgage carries a stated interest rate of 8.56%. The refinanced mortgage
was a zero coupon note which was discounted at an effective interest rate of
10.247%. Payments of principal and interest on the mortgage loan are due monthly
until the loan matures on February 1, 2020. Total capitalized loan costs were
approximately $143,000 at September 30, 2000.
On February 15, 2000, the Partnership refinanced the first and second mortgages
encumbering Cooper's Pond Apartments. The refinancing replaced indebtedness of
approximately $7,522,000 with a new mortgage in the amount of $8,300,000. The
new mortgage carries a stated interest rate of 8.47%. Interest rates on the
refinanced mortgages were 8.0% and 8.5%. Payments of principal and interest on
the mortgage loan are due monthly until the loan matures on March 1, 2020 at
which time the loan is scheduled to be fully amortized. Total capitalized loan
costs were approximately $147,000 at September 30, 2000. The Partnership
recognized an extraordinary loss on the early extinguishment of debt of
approximately $102,000 due to the write-off of unamortized loan costs and a
prepayment penalty.
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 Partnership and to comply with Federal,
state, and local legal and regulatory requirements. Capital improvements planned
for each of the Partnership's properties are detailed below.
Cherry Creek Gardens Apartments
During the nine months ended September 30, 2001, the Partnership completed
approximately $262,000 of budgeted and non-budgeted capital improvements at the
property, consisting primarily of garage and carport improvements, appliances,
structural improvements, air conditioning unit replacements, plumbing upgrades,
and carpet and vinyl replacements. These improvements were funded from operating
cash flow. The Partnership has evaluated the capital improvement needs of the
property for the year. The amount budgeted for 2001 is approximately $218,000,
consisting primarily of carpet replacements and garage and carport improvements.
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.
Creekside Apartments
During the nine months ended September 30, 2001, the Partnership completed
approximately $102,000 of capital improvements at the property, consisting
primarily of garage and carport improvements, plumbing upgrades, appliances,
carpet and vinyl replacements, and water heater replacements. These improvements
were funded from operating cash flow and the Partnership's reserves. The
Partnership has evaluated the capital improvement needs of the property for the
year. The amount budgeted for 2001 is approximately $129,000, consisting
primarily of carpet replacements and garage and carport improvements. 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 Lodge Apartments
During the nine months ended September 30, 2001, the Partnership completed
approximately $100,000 of capital improvements at the property, consisting
primarily of garage and carport improvements, furniture and fixtures, structural
improvements, signage, and carpet and vinyl replacements. These improvements
were funded from operating cash flow and the Partnership's reserves. The
Partnership has evaluated the capital improvement needs of the property for the
year. The amount budgeted for 2001 is approximately $194,000, consisting
primarily of carpet replacements, laundry facilities, and garage and carport
improvements. 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 Village in the Woods Apartments
During the nine months ended September 30, 2001, the Partnership completed
approximately $199,000 of budgeted and non-budgeted capital improvements at the
property, consisting primarily of buildings, electrical upgrades, plumbing
upgrades, air conditioning unit replacements, window treatments, appliances,
carpet replacements, land improvements, and structural improvements. These
improvements were funded from operating cash flow. The Partnership has evaluated
the capital improvement needs of the property for the year. The amount budgeted
for 2001 is approximately $194,000, consisting primarily of appliances, other
building improvements, and carpet replacements. 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.
Cooper's Pond Apartments
During the nine months ended September 30, 2001, the Partnership completed
approximately $520,000 of budgeted and non-budgeted capital improvements at the
property, consisting primarily of water heater replacements, building
improvements, carpet and vinyl replacements, appliances, swimming pool upgrades,
structural improvements, major landscaping, recreation facility improvements,
plumbing upgrades, and construction work related to the fire that occurred at
the property in January 2001. These improvements were funded from operating cash
flow and insurance proceeds. The Partnership has evaluated the capital
improvement needs of the property for the year. The amount budgeted for 2001 is
approximately $234,000, consisting primarily of air conditioning unit
replacement, carpet and vinyl replacements, major landscaping, interior
decoration, and appliances. 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 or from Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Partnership's distributable cash flow,
if any, may be adversely affected at least in the short term.
The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Partnership. The mortgage
indebtedness of approximately $47,249,000 is amortized over varying periods with
maturity dates ranging from September 2008 at Creekside Apartments and The Lodge
Apartments at which time balloon payments totaling approximately $11,594,000
will be due to March 2020 at Cooper's Pond Apartments. The Managing 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.
Cash distributions from operations of approximately $2,705,000 (approximately
$2,386,000 to the limited partners or $31.81 per limited partnership unit) were
paid to the partners during the nine months ended September 30, 2001. Subsequent
to September 30, 2001, a distribution was declared from operations of
approximately $1,220,000 (approximately $1,076,000 to the limited partners or
$14.35 per limited partnership unit). During the nine months ended September 30,
2000, the Partnership declared and paid distributions of approximately
$9,084,000 (approximately $8,540,000 to the limited partners or $113.87 per
limited partnership unit) to its partners. The distributions consisted of
approximately $3,695,000 (approximately $3,259,000 to the limited partners or
$43.46 per limited partnership unit) from operations and approximately
$5,389,000 (approximately $5,281,000 to the limited partners or $70.41 per
limited partnership unit) from the proceeds of the refinancing of Cherry Creek
Gardens Apartments in December 1999 and the refinancing of Cooper's Pond
Apartments in February 2000. 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 monthly basis. There can be
no assurance, however, that the Partnership will generate sufficient funds from
operations after required capital improvements, to permit further distributions
to its partners during the remainder of 2001 or subsequent periods.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates currently own 43,782 limited partnership
units in the Partnership representing 58.38% of the outstanding units. A number
of these units were acquired pursuant to tender offers made by AIMCO or its
affiliates or affiliates of the Managing General Partner. It is possible that
AIMCO or its affiliates will acquire additional limited partnership interests in
the Partnership for cash or in exchange for units in the operating partnership
of AIMCO either through private purchases or tender offers. Under the
Partnership Agreement, unitholders holding a majority of the Units are entitled
to take action with respect to a variety of matters, which would include voting
on certain amendments to the Partnership Agreement and voting to remove the
Managing General Partner. As a result of its ownership of 58.38% of the
outstanding units, AIMCO is in a position to influence all voting decisions with
respect to the Registrant. 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 its affiliation with the Managing General Partner.
However, DeForest Ventures I L.P., from whom AIMCO, through its merger with
Insignia Financial Group, Inc., acquired 25,833.5 (approximately 34.45%) of its
units, had agreed for the benefit of non-tendering unitholders, that it would
vote such Units: (i) against any increase in compensation payable to the
Managing General Partner or to affiliates; and (ii) on all other matters
submitted by it or its affiliates, in proportion to the votes cast by non
tendering unit holders. Except for the foregoing, no other limitations are
imposed on AIMCO and its affiliates right to vote each Unit acquired.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its 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, among other
things, the acquisition of interests in certain general partner entities by
Insignia Financial Group, Inc. ("Insignia") and entities which were, at one
time, affiliates of Insignia; past tender offers by the Insignia affiliates to
acquire limited partnership units; management of the partnerships by the
Insignia affiliates; and the series of transactions which closed on October 1,
1998 and February 26, 1999 whereby Insignia and Insignia Properties Trust,
respectively, were merged into AIMCO. The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998, the Managing General Partner filed a motion seeking dismissal of the
action. In lieu of responding to the motion, the plaintiffs 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 court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, at which time
the Court set a final approval hearing for December 10, 1999. Prior to the
December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Managing General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case and an appeal was taken from the order on
October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff
Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the
putative class. Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001, the Managing General Partner and its affiliates filed a
demurrer to the third amended complaint. On May 14, 2001, the Court heard the
demurrer to the third amended complaint. On July 10, 2001, the Court issued an
order sustaining defendants' demurrer on certain grounds. On July 20, 2001,
plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
plaintiffs filed a fourth amended class and derivative action complaint. On
September 12, 2001, the Court denied plaintiffs' motion for reconsideration. On
October 5, 2001, the Managing General Partner and affiliated defendants filed a
demurrer to the fourth amended complaint, which, together with a demurrer filed
by other defendants, is currently scheduled to be heard on November 15, 2001.
The Court has set the matter for trial in January 2003.
During the third quarter of 2001, a complaint (the "Heller action") was filed
against the same defendants that are named in the Nuanes action, captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended complaint. The first amended complaint in the Heller action is
brought as a purported derivative action, and asserts claims for among other
things breach of fiduciary duty; unfair competition; conversion, unjust
enrichment; and judicial dissolution. Plaintiffs in the Nuanes action filed a
motion to consolidate the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed without leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the Managing General Partner and affiliated
defendants moved to strike the first amended complaint in its entirety for
violating the Court's July 10, 2001 order granting in part and denying in part
defendants' demurrer in the Nuanes action, or alternatively, to strike certain
portions of the complaint based on the statute of limitations. Other defendants
in the action demurred to the fourth amended complaint, and, alternatively,
moved to strike the complaint. The matters are currently scheduled to be heard
on November 15, 2001.
The Managing General Partner does not anticipate that any costs, whether legal
or settlement costs, associated with these cases will be material to the
Partnership's overall operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
None.
b) Reports on Form 8-K filed during the quarter ended September
30, 2001:
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Partnership caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CENTURY PROPERTIES FUND XVII
By: FOX PARTNERS
General Partner
By: FOX CAPITAL MANAGEMENT CORPORATION
Managing General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
and Controller
Date: