-----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, AZ1fDgcE9o3RNcWS98R2/ZWc8aIxfORMUSp6qCDJOkarHa9+p42WfZv+naeXdsNj Fe4nsqvTxgOdWUklEtXPlQ== 0000711642-01-000049.txt : 20010330 0000711642-01-000049.hdr.sgml : 20010330 ACCESSION NUMBER: 0000711642-01-000049 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTURY PROPERTIES FUND XVIII CENTRAL INDEX KEY: 0000704271 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 942834149 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: SEC FILE NUMBER: 000-11934 FILM NUMBER: 1584208 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 0001.txt FORM 10-KSB 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, 2000 [ ] 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 0-11934 CENTURY PROPERTIES FUND XVIII (Name of small business issuer in its charter) California 94-2834149 (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: Units of Limited Partnership Interest (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. [X] State issuer's revenues for its most recent fiscal year. $5,183,000 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, 2000. 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 XVIII (the "Partnership" or "Registrant") was organized in July 1982 as a California limited partnership under the Uniform Limited Partnership Act of the California Corporations Code. Fox Partners, a California general partnership, is the general partner of the Registrant. The general partners of Fox Partners are Fox Capital Management Corporation (the "Managing General Partner" or "FCMC"), a California corporation, Fox Realty Investors ("FRI"), a California general partnership, and Fox Partners 82, a California general partnership. NPI Equity Investments II, Inc. ("NPI Equity"), a Florida corporation, is the managing general partner of FRI. The Managing General Partner and NPI Equity are subsidiaries of Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust (See "Transfer of Control"). The Partnership agreement provides that the Partnership is to terminate on December 31, 2020, unless terminated prior to such date. The principal business of the Registrant is to operate and hold real estate properties for investment. From February 1983 to September 1983, the Registrant offered and sold pursuant to a Registration Statement filed with the Securities and Exchange Commission, 75,000 Units of Limited Partnership Interest (the "Units") at a purchase price of $1,000 per Unit for an aggregate of $75,000,000. The net proceeds of the offering were used to acquire twelve income-producing real estate properties. The Registrant's original property portfolio was geographically diversified with properties acquired in seven states. The Registrant's acquisition activities were completed in June 1984, and since then, the principal activity of the Registrant has been managing its portfolio. In the period from 1987 through February 1994, ten properties were either sold or otherwise disposed. The Registrant continues to own and operate the two remaining 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 Limited Partners have no right to participate in the management or conduct of such business and affairs. Property management services were performed at the Partnership's properties by an affiliate of the Managing General Partner. The real estate business in which the Partnership is engaged is highly competitive. There are other residential properties within the market area of the Partnership'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 the 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 Operation" 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. 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. Item 2. Description of Properties The following table sets forth the Partnership's investment in properties: Date of Property Purchase Type of Ownership Use Overlook Point Apartments 07/83 Fee ownership subject Apartments Salt Lake City, Utah to first mortgage 304 units Oak Run Apartments 11/83 Fee ownership subject Apartments Dallas, Texas to first mortgage (1) 420 units (1) The property was held by Oak Run, LLC in which the Registrant was the sole owner. Effective December 1999, Oak Run LLC's interest in Oak Run Apartments was transferred to Oak Run, LP in which the Registrant owns, on a fully liquidated basis, a 100% interest. 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.
Carrying Accumulated Federal Property Value Depreciation Rate Method Tax Basis (in thousands) (in thousands) Overlook Point Apartments $10,970 $ 5,404 5-30 yrs S/L $ 2,167 Oak Run Apartments 17,442 6,612 5-30 yrs S/L 6,336 $28,412 $12,016 $ 8,503
See "Item 7. Financial Statements - Note A" to the consolidated financial statements included in "Item 7" for a description of the Partnership's depreciation policy. Schedule of Property Indebtedness The following table sets forth certain information relating to the loans encumbering the Registrant's properties.
Principal Principal Balance At Stated Balance December 31, Interest Period Maturity Due At Property 2000 Rate Amortized Date Maturity (1) (in thousands) (in thousands) Overlook Point Apartments $ 8,757 6.33% 30 years 09/2005 $ 8,127 Oak Run Apartments 10,255 7.36% 30 years 10/2004 9,728 $19,012 $17,855
(1) See "Item 7. Financial Statements - Note C" for information with respect to the Registrant's ability to prepay these loans and other more specific details as to the terms of the loans. Schedule of Rental Rates and Occupancy Average annual rental rate and occupancy for 2000 and 1999 for each property: Average Annual Average Annual Rental Rates Occupancy (per unit) Property 2000 1999 2000 1999 Overlook Point Apartments $7,457 $7,433 96% 96% Oak Run Apartments 7,415 7,108 93% 92% 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. The multi-family residential properties' lease terms are for one year or less. No individual 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 2000 for each property were: 2000 2000 Billing Rate (in thousands) Overlook Point Apartments $104 0.76% Oak Run Apartments 380 2.72% Capital Improvements Overlook Point Apartments: The Partnership completed approximately $323,000 in capital expenditures at Overlook Point Apartments during the year ended December 31, 2000, consisting primarily of floor covering, appliance, and plumbing replacements. These improvements were funded from operating cash flow. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year. The minimum amount to be budgeted is expected to be $275 per unit or $83,600. 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. Oak Run Apartments: The Partnership completed approximately $225,000 in capital expenditures at Oak Run Apartments during the year ended December 31, 2000, consisting primarily of floor covering and appliance replacements, structural enhancements, interior improvements and other improvements. These improvements were funded from operating cash flow and replacement reserves. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year. The minimum amount to be budgeted is expected to be $275 per unit or $115,500. 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, 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 Insignia Merger. 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. 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, 2000, no matter was submitted to a vote of unit holders through the solicitation of proxies or otherwise. PART II Item 5. Market for the Partnership's Common Equity and Related Security Holder Matters The Partnership, a publicly-held limited partnership, sold 75,000 Limited Partnership Units aggregating $75,000,000. The Partnership has 75,000 units outstanding held by 3,618 Limited Partners of record at December 31, 2000. Affiliates of the Managing General Partner owned 39,555.5 or 52.74% of the limited partnership units at December 31, 2000. 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, 1999 and 2000 subsequent to December 31, 2000 (see "Item 6. Management's Discussion and Analysis or Plan of Operation" for further details): Aggregate Per Unit (in thousands) 01/01/99 - 12/31/99 $1,620 (1) $21.39 01/01/00 - 12/31/00 703 (1) 9.28 Subsequent to 12/31/00 390 (1) 5.15 (1) Distributions were made from prior cumulative undistributed sale and refinancing proceeds. Future cash distributions will depend on the levels of net cash generated from operations, the availability of cash reserves, the timing of debt maturities, refinancings and/or property sales. The Partnership's distribution policy is reviewed on a quarterly basis. There can be no assurance that the Partnership will generate sufficient funds from operations, after required capital expenditures, to permit any additional distributions to its partners in 2001 or subsequent periods. See "Item 2. Description of Properties - Capital Improvements" for information relating to anticipated capital expenditures at the properties. In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 39,555.5 limited partnership units in the Partnership representing 52.74% of the outstanding units as of December 31, 2000. A number of these units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional 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. In this regard, on February 8, 2001, AIMCO Properties, L.P., commenced a tender offer to acquire all of the Units not owned by affiliates of AIMCO for a purchase price of $95.00 per Unit. Pursuant to this offer, AIMCO acquired an additional 342 units resulting in its total ownership being increased to 39,897.5 units or 53.20% of the total outstanding units. 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 without limitation, voting on certain amendments to the Partnership Agreement and voting to remove the Managing General Partner. As a result of its ownership of 53.20% 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. Insignia Properties L.P. ("IPLP"), an affiliate of AIMCO and the Managing General Partner indirectly, had agreed for the benefit of non-tendering unitholders, that it would vote its Units acquired in January 1996: (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 unitholders. Except for the foregoing, no other limitations are imposed on IPLP's, AIMCO's or any of their affiliates' right to vote each unit acquired. 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, 2000 was approximately $496,000 as compared to approximately $540,000 for the year ended December 31, 1999. Net income decreased due to an increase in total expenses, which more than offset an increase in total revenues. The increase in total revenues is attributable to an increase in rental and other income. The increase in rental income is the result of an increase in average annual rental rates at both investment properties as well as an increase in average occupancy at Oak Run Apartments, partially offset by an increase in concessions. Other income increased due to an increase in cable television fees received from tenants at both investment properties and late charges and utility fees at Oak Run Apartments, partially offset by a reduction in telephone commission fees at Overlook Point Apartments. Total expenses increased primarily due to increases in operating expenses and depreciation expense. Operating expenses increased primarily due to increases in employee related expenses and utilities, particularly natural gas and water costs. The increase in depreciation expense is the result of capital improvements and replacements during 2000 and 1999 now being depreciated. Included in general and administrative expenses at both December 31, 2000 and 1999 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. 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 expense. 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. Capital Resources and Liquidity At December 31, 2000, the Registrant had cash and cash equivalents of approximately $870,000 as compared to approximately $462,000 at December 31, 1999, an increase of approximately $408,000. The increase in cash and cash equivalents is primarily due to approximately $1,747,000 of cash provided by operating activities. This increase was offset by approximately $914,000 of cash used in financing activities and approximately $425,000 of cash used in investing activities. Cash used in financing activities consisted of distributions to partners and principal payments made on the mortgages encumbering the Registrant's properties. Cash used in investing activities consisted of capital improvements and replacements, offset by net withdrawals from restricted escrows maintained by the mortgage lender. The Registrant invests its working capital reserves in interest-bearing 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. At the present time, 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 $275 per unit or $199,100. 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 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 $19,012,000 is amortized over thirty years with balloon payments of approximately $9,728,000 and $8,127,000 due in October 2004 and September 2005, respectively. 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 may risk losing such properties through foreclosure. Cash distributions of prior cumulative undistributed sale and refinancing proceeds of approximately $703,000 (approximately $696,000 to the limited partners or $9.28 per limited partnership unit) and $1,620,000 (approximately $1,604,000 to the limited partners or $21.39 per limited partnership unit) were made during the years ended December 31, 2000 and 1999, respectively. Subsequent to December 31, 2000, cash distributions of prior cumulative undistributed sale and refinancing proceeds of approximately $390,000 were declared and paid (approximately $386,000 to the limited partners or $5.15 per limited partnership unit). 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 quarterly basis. There can be no assurance that the Partnership will generate sufficient funds from operations after required capital expenditures to permit any additional distributions to its partners in 2001 or subsequent periods. In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 39,555.5 limited partnership units in the Partnership representing 52.74% of the outstanding units as of December 31, 2000. A number of these units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional 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. In this regard, on February 8, 2001, AIMCO Properties, L.P., commenced a tender offer to acquire all of the Units not owned by affiliates of AIMCO for a purchase price of $95.00 per Unit. Pursuant to this offer, AIMCO acquired an additional 342 units resulting in its total ownership being increased to 39,897.5 units or 53.20% of the total outstanding units. 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 without limitation, voting on certain amendments to the Partnership Agreement and voting to remove the Managing General Partner. As a result of its ownership of 53.20% 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. Insignia Properties L.P. ("IPLP"), an affiliate of AIMCO and the Managing General Partner indirectly, had agreed for the benefit of non-tendering unitholders, that it would vote its Units acquired in January 1996: (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 unitholders. Except for the foregoing, no other limitations are imposed on IPLP's, AIMCO's or any of their affiliates right to vote each unit acquired. Item 7. Financial Statements CENTURY PROPERTIES FUND XVIII LIST OF FINANCIAL STATEMENTS Report of Ernst & Young, LLP Independent Auditors Consolidated Balance Sheet - December 31, 2000 Consolidated Statements of Operations - Years ended December 31, 2000 and 1999 Consolidated Statements of Changes in Partners' (Deficit) Capital - Years ended December 31, 2000 and 1999 Consolidated Statements of Cash Flows - Years ended December 31, 2000 and 1999 Notes to Consolidated Financial Statements Report of Ernst & Young LLP, Independent Auditors The Partners Century Properties Fund XVIII We have audited the accompanying consolidated balance sheet of Century Properties Fund XVIII as of December 31, 2000, 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, 2000. 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 XVIII at December 31, 2000, and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States. /s/ERNST & YOUNG LLP Greenville, South Carolina March 15, 2001 CENTURY PROPERTIES FUND XVIII CONSOLIDATED BALANCE SHEET (in thousands, except unit data) December 31, 2000
Assets Cash and cash equivalents $ 870 Receivables and deposits 57 Restricted escrows 31 Other assets 270 Investment properties (Notes C and F): Land $ 7,296 Buildings and related personal property 21,116 28,412 Less accumulated depreciation (12,016) 16,396 $ 17,624 Liabilities and Partners' (Deficit) Capital Liabilities Accounts payable $ 65 Other liabilities 188 Accrued property taxes 367 Tenant security deposit liabilities 76 Mortgage notes payable (Note C) 19,012 Partners' (Deficit) Capital General partner $ (6,254) Limited partners (75,000 units issued and outstanding) 4,170 (2,084) $ 17,624
See Accompanying Notes to Consolidated Financial Statements
CENTURY PROPERTIES FUND XVIII CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except unit data) Years Ended December 31, 2000 1999 Revenues: Rental income $ 4,879 $ 4,790 Other income 304 258 Total revenues 5,183 5,048 Expenses: Operating 1,749 1,623 General and administrative 277 290 Depreciation 822 721 Interest 1,377 1,404 Property tax 462 470 Total expenses 4,687 4,508 Net income $ 496 $ 540 Net income allocated to general partner $ 50 $ 53 Net income allocated to limited partners 446 487 $ 496 $ 540 Net income per limited partnership unit $ 5.95 $ 6.49 Distributions per limited partnership unit $ 9.28 $ 21.39
See Accompanying Notes to Consolidated Financial Statements CENTURY PROPERTIES FUND XVIII CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL (in thousands, except unit data)
Limited Partnership General Limited Units Partner Partners Total Original capital contributions 75,000 $ -- $75,000 $75,000 Partners' (deficit) capital at December 31, 1998 75,000 $(6,334) $ 5,537 $ (797) Distributions to partners -- (16) (1,604) (1,620) Net income for the year ended December 31, 1999 -- 53 487 540 Partners' (deficit) capital at December 31, 1999 75,000 (6,297) 4,420 (1,877) Distributions to partners -- (7) (696) (703) Net income for the year ended December 31, 2000 -- 50 446 496 Partners' (deficit) capital at December 31, 2000 75,000 $(6,254) $ 4,170 $(2,084)
See Accompanying Notes to Consolidated Financial Statements CENTURY PROPERTIES FUND XVIII CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
Years Ended December 31, 2000 1999 Cash flows from operating activities: Net income $ 496 $ 540 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 822 721 Amortization of loan costs 63 71 Change in accounts: Receivables and deposits 397 47 Other assets 4 (5) Accounts payable 3 41 Other liabilities (45) 56 Accrued property taxes 1 18 Tenant security deposit liabilities 6 (16) Net cash provided by operating activities 1,747 1,473 Cash flows from investing activities: Property improvements and replacements (548) (721) Net withdrawals from restricted escrows 123 87 Net cash used in investing activities (425) (634) Cash flows from financing activities: Payments on mortgage notes payable (211) (234) Distributions to partners (703) (1,620) Net cash used in financing activities (914) (1,854) Net increase (decrease) in cash and cash equivalents 408 (1,015) Cash and cash equivalents at beginning of year 462 1,477 Cash and cash equivalents at end of year $ 870 $ 462 Supplemental disclosure of cash flow information: Cash paid for interest $ 1,207 $ 1,443
See Accompanying Notes to Consolidated Financial Statements CENTURY PROPERTIES FUND XVIII NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note A - Organization and Significant Accounting Policies Organization: Century Properties Fund XVIII (the "Partnership" or "Registrant") is a California limited partnership organized in July 1982 to acquire and operate residential apartment complexes. The Partnership's general partner is Fox Partners. The general partners of Fox Partners are Fox Capital Management Corporation (the "Managing General Partner" or "FCMC"), Fox Realty Investors ("FRI"), and Fox Partners 82. The Managing General Partner, as well as the managing general partner of FRI, are affiliates of Apartment Investment and Management Company ("AIMCO"). See "Note B - Transfer of Control". As of December 31, 2000, the Partnership operates two residential apartment complexes located in Texas and Utah. The Partnership Agreement provides that the Partnership is to terminate on December 31, 2020 unless terminated prior to such date. The directors and officers of the Managing General Partner also serve as executive officers of AIMCO. Principles of Consolidation: The Partnership's financial statements include the accounts of the Partnership and its wholly-owned partnership, Oak Run LP the entity which holds title to Oak Run Apartments. Allocations to Partners: Net income, losses and cash available for distribution (excluding those arising from the occurrence of sales or dispositions) of the Partnership will be allocated (i) 9% to the General Partner and (ii) the remainder allocated 1% to the General Partner and 99% to the Limited Partners on an annual basis. In accordance with the Partnership Agreement, any gain from the sale or other disposition of Partnership properties shall be allocated; (i) first to the General Partner to the extent it is entitled to receive distributions of cash pursuant to the above and from the sale or disposition of properties (ii) next, until such time as the General Partner does not have a deficit in its capital account, 10% to the General Partner and 90% to the Limited Partnership Unit Holders, and (iii) to the Limited Partnership Unit Holders. Cash from sales or other dispositions, or refinancing and working capital reserves are distributed 99% to the Limited Partnership Unit Holders and 1% to the General Partner, until: (i) each Limited Partnership Unit Holder receives an amount which equals the total of their original invested capital contributed for his Limited Partnership Units and (ii) a sum equal to 8% per year, as determined on a cumulative, non-compounded basis, on the Adjusted Invested Capital, as adjusted from time to time, of such Limited Partnership Unit Holder, calculated from the first day of the month in which he was admitted as a Limited Partner. Thereafter, the General Partner will receive 15% of any additional cash from sales or refinancing and working capital reserve available for distribution and, finally, the remainder of such being allocated 99% to the Limited Partnership Unit Holders and 1% to the General Partner. Upon sale of all properties and termination of the Partnership, the General Partner may be required to contribute certain funds to the Partnership in accordance with the Partnership Agreement. At December 31, 2000 approximately $2,336,000 of cumulative net proceeds from sales and refinancings remained undistributed. Therefore, future distributions will be distributed in accordance with the previous paragraph until the cumulative net proceeds from sales and refinancings are fully distributed. Depreciation: Depreciation is calculated by the straight-line method over the estimated lives of the rental properties and related personal property. For Federal income tax purposes, the accelerated cost recovery method is used (1) for real property over 15 years for additions prior to March 16, 1984, 18 years for additions after March 15, 1984 and before May 9, 1985, and 19 years for additions after May 8, 1985, and before January 1, 1987, and (2) for personal property over 5 years for additions prior to January 1, 1987. As a result of the Tax Reform Act of 1986, for additions after December 31, 1986, the modified accelerated cost recovery method is used for depreciation of (1) real property over 27 1/2 years and (2) personal property additions over 5 years. Cash and Cash Equivalents: Cash and cash equivalents include cash on hand and in banks and money market accounts. At certain times, the amount of cash deposited at a bank may exceed the limit on insured deposits. Cash balances included approximately $752,000 at December 31, 2000 that are maintained by an affiliated management company on behalf of affiliated entities in cash concentration accounts. 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. 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. Loan Costs: Loan costs of approximately $415,000 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, 2000, accumulated amortization is approximately $185,000. Amortization of loan costs is included in interest expense in the accompanying consolidated statements of operations. 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. No adjustments for impairment of value were recorded in the years ended December 31, 2000 or 1999. 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 consolidated financial statements of the Partnership. Fair Value of Financial Instruments: 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 amounts of its financial instruments (except for long term debt) approximate their fair values 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 balance. 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. 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. 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. Advertising Costs: The Partnership expenses the costs of advertising as incurred. Advertising costs of approximately $110,000 and $103,000 for the years ended December 31, 2000 and 1999, respectively, were charged to operating expense. 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. 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 terms of mortgage notes payable are as follows:
Principal Monthly Principal Balance At Payment Stated Balance December 31, Including Interest Maturity Due At Property 2000 Interest Rate Date Maturity (in thousands) (in thousands) Overlook Point Apartments $ 8,757 $ 56 6.33% 09/2005 $ 8,127 Oak Run Apartments 10,255 73 7.36% 10/2004 9,728 $19,012 $ 129 $17,855
All mortgage agreements include non-recourse provisions which limit the lenders' remedies in the event of default to the specific property collateralizing each loan. The notes require prepayment penalties if prepaid prior to maturity. Further, the properties may not be sold subject to existing indebtedness. 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. At the present time, the Partnership has no outstanding amounts due under this line of credit. Scheduled principal payments on the mortgage notes payable subsequent to December 31, 2000 are as follows (in thousands): 2001 $ 246 2002 264 2003 283 2004 9,990 2005 8,229 $19,012 Note D - Income Taxes 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: 2000 1999 Net income as reported $ 496 $ 540 Add (deduct): Depreciation differences 374 212 Other (51) 49 Federal taxable income $ 819 $ 801 Federal taxable income per limited partnership unit $ 9.84 $ 9.62 The following is a reconciliation between the Partnership's reported amounts and Federal tax basis of net assets and liabilities (in thousands): 2000 Net liabilities as reported $(2,084) Land and buildings 1,195 Accumulated depreciation (9,088) Syndication and distribution costs 9,592 Other 136 Net liabilities - Federal tax basis $ (249) Note E - 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 (i) payments to affiliates for services and (ii) 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 years ended December 31, 2000 and 1999: 2000 1999 (in thousands) Property management fees (included in operating expense) $262 $254 Reimbursement for services of affiliates (included in general and administrative expenses and investment properties) 184 126 During the years ended December 31, 2000 and 1999, affiliates of the Managing General Partner were entitled to receive 5% of gross receipts from both of the Registrant's properties for providing property management services. The Registrant paid to such affiliates approximately $262,000 and $254,000 for the years ended December 31, 2000 and 1999, respectively. An affiliate of the Managing General Partner received reimbursement of accountable administrative expenses amounting to approximately $184,000 and $126,000 for the years ended December 31, 2000 and 1999, respectively. As compensation for the services rendered in managing the Partnership, the Managing General Partner is entitled to receive a Partnership Management Fee equal to 9% of distributions from operations as defined in the Partnership Agreement. During the years ended December 31, 2000 and 1999, no amounts were paid to the Managing General Partner. In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 39,555.5 limited partnership units in the Partnership representing 52.74% of the outstanding units as of December 31, 2000. A number of these units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional 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. In this regard, on February 8, 2001, AIMCO Properties, L.P., commenced a tender offer to acquire all of the Units not owned by affiliates of AIMCO for a purchase price of $95.00 per Unit. Pursuant to this offer, AIMCO acquired an additional 342 units resulting in its total ownership being increased to 39,897.5 units or 53.20% of the total outstanding units. 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 without limitation, voting on certain amendments to the Partnership Agreement and voting to remove the Managing General Partner. As a result of its ownership of 53.20% 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. Insignia Properties L.P. ("IPLP"), an affiliate of AIMCO and the Managing General Partner indirectly, had agreed for the benefit of non-tendering unitholders, that it would vote its Units acquired in January 1996: (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 unitholders. Except for the foregoing, no other limitations are imposed on IPLP's, AIMCO's or any of their affiliates right to vote each unit acquired. Note F - Investment Properties and Accumulated Depreciation
Initial Cost To Partnership (in thousands) Buildings Costs and Related Capitalized Personal Subsequent to Description Encumbrances Land Property Acquisition (in thousands) (in thousands) Overlook Point Apartments $ 8,757 $ 1,082 $ 8,225 $ 1,663 Oak Run Apartments 10,255 6,218 8,713 2,511 Total $19,012 $ 7,300 $16,938 $ 4,174
Gross Amount At Which Carried At December 31, 2000 (in thousands) Buildings And Related Personal Accumulated Date Depreciable Description Land Property Total Depreciation Acquired Life (in thousands) Overlook Point Apartments $ 1,078 $ 9,892 $10,970 $ 5,404 07/83 5-30 yrs Oak Run Apartments 6,218 11,224 17,442 6,612 11/83 5-30 yrs Total $ 7,296 $21,116 $28,412 $12,016
Reconciliation of "Investment Properties and Accumulated Depreciation": Years Ended December 31, 2000 1999 Investment Properties (in thousands) Balance at beginning of year $27,864 $27,143 Property improvements 548 721 Balance at end of year $28,412 $27,864 Accumulated Depreciation Balance at beginning of year $11,194 $10,473 Additions charged to expense 822 721 Balance at end of year $12,016 $11,194 The aggregate cost of the investment properties for Federal income tax purposes at December 31, 2000 and 1999, is approximately $29,607,000 and $29,045,000, respectively. The accumulated depreciation taken for Federal income tax purposes at December 31, 2000 and 1999, is approximately $21,104,000 and $20,658,000, respectively. Note G - 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, 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 Insignia Merger. 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. 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 H - Distributions Cash distributions of prior cumulative undistributed sale and refinancing proceeds of approximately $703,000 (approximately $696,000 to the limited partners or $9.28 per limited partnership unit) and $1,620,000 (approximately $1,604,000 to the limited partners or $21.39 per limited partnership unit) were made during the years ended December 31, 2000 and 1999, respectively. Subsequent to December 31, 2000, cash distributions of prior cumulative undistributed sale and refinancing proceeds of approximately $390,000 were declared and paid (approximately $386,000 to the limited partners or $5.15 per limited partnership unit). 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 Neither the Registrant, nor Fox Partners ("Fox"), the general partner of the Registrant, has any officers or directors. Fox Capital Management Corporation (the "Managing General Partner" or "FCMC"), the managing general partner of Fox, manages and controls substantially all of the Registrant's affairs and has general responsibility and ultimate authority in all matters affecting its business. The names and ages of, as well as the positions and offices held by, the executive officers and directors 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 43 Executive Vice President and Director Martha L. Long 41 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 since October 1998 as a result of the acquisition of Insignia Financial Group, Inc. As of February 2001, Ms. Long was also appointed head of the service business for AIMCO. 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. One or more of the above persons are also directors and/or officers of a general partner (or general partner of a general partner) of limited partnerships which either have a class of securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, or are subject to the reporting requirements of Section 15(d) of such Act. Further, one or more of the above persons are also directors and/or officers of Apartment Investment and Management Company and the general partner of AIMCO Properties, L.P., entities that have a class of securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, or are subject to the reporting requirements of Section 15 (d) of such Act. The executive officers and director of the Managing General Partner fulfill the obligations of the Audit Committee and oversee the Partnership's financial reporting process on behalf of the Managing General Partner. Management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the executive officers and director of the Managing General Partner reviewed the audited financial statements with management including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements. The executive officers and director of the Managing General Partner reviewed with the independent auditors, who are responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, their judgments as to the quality, not just the acceptability, of the Partnership's accounting principles and such other matters as are required to be discussed with the Audit Committee or its equivalent under generally accepted auditing standards. In addition, the Partnership has discussed with the independent auditors the auditors' independence from management and the Partnership including the matters in the written disclosures required by the Independence Standards Board and considered the compatibility of non-audit services with the auditors' independence. The executive officers and director of the Managing General Partner discussed with the Partnership's independent auditors the overall scope and plans for their audit. In reliance on the reviews and discussions referred to above, the executive officers and director of the Managing General Partner has approved the inclusion of the audited financial statements in the Form 10-KSB for the year ended December 31, 2000 for filing with the Securities and Exchange Commission. The Managing General Partner has reappointed Ernst & Young LLP as independent auditors to audit the financial statements of the Partnership for the current fiscal year. Fees for the last fiscal year were annual audit services of approximately $36,000 and non-audit services (principally tax-related) of approximately $15,000. Item 10. Executive Compensation No direct form of compensation or remuneration was paid by the Partnership to any officer or director of Fox Partners. 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 Registrant's limited partnership units as of December 31, 2000. Name of Percentage Beneficial Owner Number of Units of Class Insignia Properties, LP (an affiliate of AIMCO) 21,717.0 28.96% Madison River Properties, LLC (an affiliate of AIMCO) 5,259.5 7.01% AIMCO Properties, LP (an affiliate of AIMCO) 12,479.0 16.64% Fox Capital Management Company (an affiliate of AIMCO) 100.0 0.13% Madison River Properties, LLC and Insignia Properties LP and Fox Capital Management Company are indirectly ultimately owned by AIMCO. Their 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 on 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 payments were made to the Managing General Partner and affiliates during the years ended December 31, 2000 and 1999: 2000 1999 (in thousands) Property management fees $262 $254 Reimbursement for services of affiliates 184 126 During the years ended December 31, 2000 and 1999, affiliates of the Managing General Partner were entitled to receive 5% of gross receipts from both of the Registrant's properties for providing property management services. The Registrant paid to such affiliates approximately $262,000 and $254,000 for the years ended December 31, 2000 and 1999, respectively. An affiliate of the Managing General Partner received reimbursement of accountable administrative expenses amounting to approximately $184,000 and $126,000 for the years ended December 31, 2000 and 1999, respectively. As compensation for the services rendered in managing the Partnership, the Managing General Partner is entitled to receive a Partnership Management Fee equal to 9% of distributions from operations as defined in the Partnership Agreement. During the years ended December 31, 2000 and 1999, no amounts were paid to the Managing General Partner. In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 39,555.5 limited partnership units in the Partnership representing 52.74% of the outstanding units as of December 31, 2000. A number of these units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional 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. In this regard, on February 8, 2001, AIMCO Properties, L.P., commenced a tender offer to acquire all of the Units not owned by affiliates of AIMCO for a purchase price of $95.00 per Unit. Pursuant to this offer, AIMCO acquired an additional 342 units resulting in its total ownership being increased to 39,897.5 units or 53.20% of the total outstanding units. 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 without limitation, voting on certain amendments to the Partnership Agreement and voting to remove the Managing General Partner. As a result of its ownership of 53.20% 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. Insignia Properties L.P. ("IPLP"), an affiliate of AIMCO and the Managing General Partner indirectly, had agreed for the benefit of non-tendering unitholders, that it would vote its Units acquired in January 1996: (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 unitholders. Except for the foregoing, no other limitations are imposed on IPLP's, AIMCO's or any of their affiliates right to vote each unit acquired. Item 13. Exhibits and Reports on Form 8-K (a) Exhibits: None. (b) Reports on Form 8-K filed during the quarter ended December 31, 2000: 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 XVIII 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: 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 XVIII EXHIBIT INDEX Exhibit Number Description of Exhibit 2.5 Master Indemnity Agreement Incorporated by reference 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 November 5, 1982, as revised December 30, 1982, and after supplemented contained in the Registrant's Agreement on For S-11 (Reg. No. 2-78495). (Page 1) 10.1 Promissory Note between Oak Run, L.L.C., a South Carolina limited liability company, and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, a division of Lehman Brothers Holdings Inc., a Delaware corporation, dated September 1997. Filed with December 31, 1997 10-KSB. 10.2 Deed of Trust and Security Agreement between Oak Run, L.L.C., a South Carolina limited liability company, David M. Parnell, and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, a division of Lehman Brothers Holdings Inc., a Delaware corporation, dated September 1997. Filed with December 31, 1997 10-KSB. 10.3 Multi-Family Note between Century Properties Fund XVIII, L.P., a California limited partnership, and Newport Mortgage Company, L.P., a Texas limited partnership, dated August 24, 1998. Filed with December 31, 1998 10-KSB. 16 Letter dated November 11, 1998 from the Registrant's former Independent Auditor regarding its concurrence with the statements made by the Registrant in Current Report on Form 8-K dated November 10, 1998. Filed with December 31, 1998 10-KSB. -----END PRIVACY-ENHANCED MESSAGE-----