0000711642-01-500186.txt : 20011107 0000711642-01-500186.hdr.sgml : 20011107 ACCESSION NUMBER: 0000711642-01-500186 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011102 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTURY PROPERTIES FUND XIX CENTRAL INDEX KEY: 0000705752 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 942887133 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-11935 FILM NUMBER: 1773624 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 10QSB 1 cpf19.txt CPF19 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 0-11935 CENTURY PROPERTIES FUND XIX (Exact name of small business issuer as specified in its charter) California 94-2887133 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 55 Beattie Place, PO Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 (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 preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No___ PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) CENTURY PROPERTIES FUND XIX CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) September 30, 2001
Assets Cash and cash equivalents $ 1,326 Receivables and deposits 1,091 Restricted escrows 152 Other assets 695 Investment properties: Land $ 11,635 Buildings and related personal property 90,135 101,770 Less accumulated depreciation (51,855) 49,915 $ 53,179 Liabilities and Partners' (Deficit) Capital Liabilities Accounts payable $ 293 Tenant security deposits payable 306 Accrued property taxes 1,026 Due to former affiliate 270 Other liabilities 1,145 Mortgage notes payable 59,646 Partners' (Deficit) Capital: General partner $ (9,759) Limited partners (89,292 units issued and outstanding) 252 (9,507) $ 53,179 See Accompanying Notes to Consolidated Financial Statements
b) CENTURY PROPERTIES FUND XIX CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per unit data)
Three Months Nine Months Ended September 30, Ended September 30, 2001 2000 2001 2000 Revenues: Rental income $ 3,999 $ 4,150 $12,320 $12,490 Other income 290 245 947 666 Gain on casualty -- -- 156 -- Total revenues 4,289 4,395 13,423 13,156 Expenses: Operating 1,626 1,457 4,491 4,180 General and administrative 140 97 386 261 Depreciation 861 837 2,596 2,463 Interest 1,197 1,198 3,839 3,629 Property tax 336 323 1,040 1,037 Total expenses 4,160 3,912 12,352 11,570 Income before extraordinary loss on early extinguishment of debt 129 483 1,071 1,586 Loss on early extinguishment of debt (39) -- (39) -- Net income $ 90 $ 483 $ 1,032 $ 1,586 Net income allocated to general partner $ 11 $ 58 $ 122 $ 188 Net income allocated to limited partners 79 425 910 1,398 $ 90 $ 483 $ 1,032 $ 1,586 Net income per limited partnership unit: Income before extraordinary item $ 1.27 $ 4.76 $ 10.58 $ 15.66 Extraordinary loss on early extinguishment of debt (.39) -- (.39) -- Net income $ .88 $ 4.76 $10.19 $15.66 Distributions per limited partnership unit $17.59 $ 0.65 $39.37 $35.47 See Accompanying Notes to Consolidated Financial Statements
c) CENTURY PROPERTIES FUND XIX CONSOLIDATED STATEMENT OF PARTNERS' (DEFICIT) CAPITAL (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Units Partner Partners Total Original capital contributions 89,292 $ -- $89,292 $89,292 Partners' (deficit) capital at December 31, 2000 89,292 $(9,532) $ 2,857 $(6,675) Distributions paid to partners -- (349) (3,515) (3,864) Net income for the nine months ended September 30, 2001 -- 122 910 1,032 Partners' (deficit) capital at September 30, 2001 89,292 $(9,759) $ 252 $(9,507) See Accompanying Notes to Consolidated Financial Statements
d) CENTURY PROPERTIES FUND XIX CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Nine Months Ended September 30, 2001 2000 Cash flows from operating activities: Net income $ 1,032 $ 1,586 Adjustments to reconcile net income to net cash provided by operating activities: Casualty gain (156) -- Extraordinary loss on early extinguishment of debt 39 -- Depreciation 2,596 2,463 Amortization of loan costs and discount 73 74 Change in accounts: Receivables and deposits (195) (517) Other assets (82) (83) Accounts payable 55 38 Tenant security deposit liabilities (12) (1) Accrued property taxes 511 427 Other liabilities 43 (66) Net cash provided by operating activities 3,904 3,921 Cash flows from investing activities: Net insurance proceeds received 223 -- Property improvements and replacements (1,523) (1,477) Net (deposits to) withdrawals from restricted escrows (26) 183 Net cash used in investing activities (1,326) (1,294) Cash flows from financing activities: Proceeds from long term borrowing 4,650 -- Repayment of mortgage note payable (3,250) -- Loan costs paid (185) -- Payments on mortgage notes payable (775) (524) Distributions to partners (3,864) (3,591) Net cash used in financing activities (3,424) (4,115) Net decrease in cash and cash equivalents (846) (1,488) Cash and cash equivalents at beginning of period 2,172 2,900 Cash and cash equivalents at end of period $ 1,326 $ 1,412 Supplemental disclosure of cash flow information: Cash paid for interest $ 3,517 $ 3,558 At December 31, 2000 and September 30, 2001, accounts payable and property improvements and replacements were adjusted by approximately $132,000. At September 30, 2000, property improvements and replacements were adjusted by approximately $165,000 for property improvements and replacements in accounts payable at December 31, 1999. See Accompanying Notes to Consolidated Financial Statements
e) CENTURY PROPERTIES FUND XIX NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited consolidated financial statements of Century Properties Fund XIX (the "Partnership" or "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. The general partner of the Partnership is Fox Partners II, a California general partnership. The general partners of Fox Partners II are Fox Capital Management Corporation ("FCMC" or the "Managing General Partner"), a California corporation, Fox Realty Investors ("FRI"), a California general partnership, and Fox Partners 83, a California general partnership. The Managing General Partner is a subsidiary of Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. In the opinion of the Managing 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. Principles of Consolidation The Registrant's financial statements include the accounts of Misty Woods CPF 19, LLC, a limited liability company in which the Registrant ultimately owns a 100% economic interest. All significant inter-entity transactions have been eliminated. Segment Reporting Statement of Financial Accounting Standards ("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. Moreover, due to the very nature of the Partnership's operations, the Managing General Partner believes that segment-based disclosures will not result in a more meaningful presentation than the consolidated financial statements as presently presented. Note B - Casualty Gain In February 2001, one of the Partnership's investment properties, McMillan Place Apartments, incurred damages to its buildings as a result of a hail storm. As a result of the damage, approximately $142,000 of fixed assets and approximately $75,000 of accumulated depreciation were written off resulting in a net write off of approximately $67,000. The property received approximately $223,000 in proceeds from the insurance company to repair the damaged units. For financial statement purposes, a casualty gain of approximately $156,000 was recognized as a result of the difference between the proceeds received and the net book value of the buildings which were damaged. Note C - Refinancing of Mortgage Note Payable On August 31, 2001 the Partnership refinanced the mortgage note payable for Sunrunner Apartments. The refinancing of Sunrunner Apartments replaced mortgage indebtedness of approximately $3,250,000 with a new mortgage of $4,650,000. The mortgage was refinanced at a rate of 7.06% compared to the prior rate of 7.33%. Payments of approximately $36,000 are due on the first day of each month until the note matures in September 2021. At the closing, a repair escrow of $125,000 was established and is held by the lender. AIMCO LP, an affiliate of the Managing General Partner, has signed as guarantor of this mortgage note payable. Capitalized loan costs incurred on the refinancing were approximately $185,000. The Partnership wrote off unamortized loan costs resulting in an extraordinary loss on early extinguishment of debt of approximately $39,000. Note D - Transactions with Affiliated Parties The Registrant 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) certain payments to affiliates for services and (ii) reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following amounts to the Managing General Partner and its affiliates were incurred during the nine months ended September 30, 2001 and 2000: 2001 2000 (in thousands) Property management fees (included in operating expenses) $684 $666 Reimbursement for services of affiliates (included in general and administrative and operating expenses and investment properties) 125 134 Partnership management fee (included in general partner distributions) 277 359 Loan costs (included in other assets) 47 -- 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 as compensation for providing property management services. The Registrant paid to such affiliates approximately $684,000 and $666,000 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 $125,000 and $134,000 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 $277,000 and $359,000 in Partnership management fees were paid along with the distributions from operations which were made during the nine months ended September 30, 2001 and 2000, respectively. The Partnership paid an affiliate of the Managing General Partner approximately $47,000 for loan costs associated with the refinancing of Sunrunner Apartments (see "Note C") which are capitalized and included in other assets on the consolidated balance sheet. 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 owned 49,988.66 limited partnership units in the Partnership representing 55.98% of the outstanding units at September 30, 2001. 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. 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 55.98% 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, IPLP, an affiliate of the Managing General Partner, is required to vote 25,228.66 of its Units: (i) against any proposal to increase the fees and other compensation payable by the Partnership to the Managing General Partner and any of its 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 IPLP's or AIMCO's right to vote its Units. Note E - Distribution During the nine months ended September 30, 2001, the Partnership distributed approximately $2,769,000 (approximately $2,442,000 to the limited partners, $27.35 per limited partnership unit) from operations. Also during the nine months ended September 30, 2001, the Partnership distributed approximately $1,095,000 (approximately $1,073,000 to the limited partners, $12.02 per limited partnership unit) from the refinancing proceeds of Sunrunner Apartments. During the nine months ended September 30, 2000, the Partnership distributed approximately $3,591,000 (approximately $3,167,000 to the limited partners or $35.47 per limited partnership unit) from operations. 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 eight 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 Sunrunner Apartments 96% 97% St. Petersburg, Florida Misty Woods Apartments 91% 93% Charlotte, North Carolina McMillan Place Apartments 97% 96% Dallas, Texas Vinings Peak Apartments 92% 96% Atlanta, Georgia Wood Lake Apartments 91% 95% Atlanta, Georgia Plantation Crossing 88% 95% Atlanta, Georgia Greenspoint Apartments 93% 94% Phoenix, Arizona Sandspoint Apartments 95% 94% Phoenix, Arizona The decrease in occupancy at Vinings Peak Apartments, Wood Lake Apartments and Plantation Crossing Apartments is due to the competitive market of the apartment industry in the Atlanta area and the purchase of new homes by the apartments' tenants. Additionally, the Managing General Partner attributes the decrease in occupancy at Wood Lake Apartments and Plantation Crossing Apartments to numerous evictions during the current year. Management is evicting tenants who are not complying with the collection policy in an effort to improve the tenant base. Results of Operations The Partnership realized net income of approximately $90,000 and $1,032,000 for the three and nine month periods ended September 30, 2001 as compared to net income of approximately $483,000 and $1,586,000 for the three and nine month periods ended September 30, 2000, respectively. The decrease in net income for the three and nine month periods ended September 30, 2001 is attributable to an increase in total expenses and an extraordinary loss on early extinguishment of debt. Excluding the extraordinary loss on early extinguishment of debt, income for the three and nine month periods ended September 30, 2001 was approximately $129,000 and $1,071,000 as compared to approximately $483,000 and $1,586,000 for the three and nine months ended September 30, 2000. The increase in total expenses for the three and nine month periods ended September 30, 2001 is primarily attributable to an increase in operating, depreciation, and general and administrative expenses. The increase in operating expenses for the three and nine month periods ended September 30, 2001 is the result of an increase in insurance premiums and an increase in property and advertising expenses at several of the investment properties. Property expense increased for both periods at several properties due to increased utility costs as a result of the decrease in occupancy. Property expense also increased due to an increase in employee salaries and related benefits at several of the Partnership's investment properties. Advertising expense increased as a result of the effort to increase occupancy at those investment properties that have experienced a decline in occupancy. Depreciation expense increased for both periods due to the addition of property improvements and replacements that were placed in service during the past twelve months and are now being depreciated. Interest expense increased for the nine months ended September 30, 2001 as a result of the contingency for additional interest on McMillan Place Apartments as discussed below. The increase in general and administrative expense during the three and nine months ended September 30, 2001, is primarily due to an increase in professional fees and audit expenses partially offset by a decrease in legal expenses. Also included in general and administrative expense at both September 30, 2001 and 2000 are costs associated with the quarterly and annual communications with investors and regulatory agencies. Total revenues increased slightly for the nine months ended September 30, 2001 primarily due to a casualty gain as discussed below and an increase in other income which were partially offset by a decrease in rental income. Other income increased due to the collection of utility reimbursements, lease cancellation fees and late charges being enforced at several of the properties. Rental income decreased due to a decrease in occupancy and increased concessions at several properties which were partially offset by an increase in average rental rates at all investment properties. Total revenues decreased slightly for the three months ended September 30, 2001 primarily due to a decrease in occupancy and an increase in concessions at several properties. In February 2001, one of the Partnership's investment properties, McMillan Place Apartments, incurred damages to its buildings as a result of a hail storm. As a result of the damage, approximately $142,000 of fixed assets and approximately $75,000 of accumulated depreciation were written off resulting in a net write off of approximately $67,000. The property received approximately $223,000 in proceeds from the insurance company to repair the damaged units. For financial statement purposes, a casualty gain of approximately $156,000 was recognized as a result of the difference between the proceeds received and the net book value of the buildings which were damaged. As part of the ongoing business plan of the Partnership, the Managing General Partner monitors the rental market environment of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the Managing General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the Managing General Partner will be able to sustain such a plan. Liquidity and Capital Resources At September 30, 2001, the Registrant had cash and cash equivalents of approximately $1,326,000 as compared to approximately $1,412,000 at September 30, 2000. For the nine months ended September 30, 2001, cash and cash equivalents decreased approximately $846,000 from the Registrant's year ended December 31, 2000. The decrease in cash and cash equivalents is due to approximately $3,424,000 of cash used in financing activities and approximately $1,326,000 of cash used in investing activities partially offset by approximately $3,904,000 of cash provided by operating activities. Net cash used in financing activities consisted of distributions to partners, repayment of mortgage note payable, and to a lesser extent, payments of principal made on the mortgages encumbering the Registrant's investment properties and payment of loan costs which were partially offset by proceeds received from the refinancing of Sunrunner Apartments. Net cash used in investing activities consisted of property improvements and replacements and net deposits to restricted escrows maintained by the mortgage lenders partially offset by insurance proceeds received for a casualty as discussed above. The Partnership 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. 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. Capital improvements planned for each of the Registrant's properties are detailed below. Sunrunner Apartments During the nine months ended September 30, 2001, the Partnership completed approximately $97,000 of budgeted and non-budgeted capital improvements consisting primarily of roof replacements, exterior painting, and floor covering and appliance replacements. These improvements were funded from Partnership reserves and operating cash flow. The Partnership has budgeted for, but is not limited to, capital improvements of $130,000 at the property consisting primarily of floor covering and appliance replacements, roof replacements, contract painting, and air conditioning and water heater 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. Misty Woods Apartments During the nine months ended September 30, 2001, the Partnership completed approximately $113,000 of budgeted and non-budgeted capital improvements consisting primarily of building improvements, floor covering and appliance replacement, lighting and parking lot improvements, wall coverings, and interior decoration. These improvements were funded from Partnership reserves and operating cash flow. The Partnership has budgeted for, but is not limited to, capital improvements of $70,000 at the property consisting primarily of floor covering and appliance replacements, wall coverings, air conditioning unit upgrades, interior decoration and parking lot 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. McMillian Place Apartments During the nine months ended September 30, 2001, the Partnership completed approximately $201,000 of budgeted and non-budgeted capital improvements consisting primarily of swimming pool improvements, floor covering and appliance replacements, interior decoration, other building improvements, and water heater replacements. These improvements were funded from Partnership reserves, operating cash flow and insurance proceeds. The Partnership has budgeted for, but is not limited to, capital improvements of $124,000 at the property consisting primarily of appliance and floor covering replacements, interior decoration, and countertop and air conditioning 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. Vinings Peak Apartments During the nine months ended September 30, 2001, the Partnership completed approximately $279,000 of budgeted and non-budgeted capital improvements consisting primarily of land improvements, structural improvements, other building improvements, floor covering and appliance replacements, signage, air conditioning upgrades, water heaters, and recreational facilities improvements. These improvements were funded from operating cash flow. The Partnership has budgeted for, but is not limited to, capital improvements of $152,000 at the property consisting primarily of floor covering and appliance replacements, and interior decoration. 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. Wood Lake Apartments During the nine months ended September 30, 2001, the Partnership completed approximately $164,000 of budgeted and non-budgeted capital improvements consisting primarily of land improvements, signage, other building improvements, floor covering and appliance replacements, water heaters, roof replacement, and plumbing improvements. These improvements were funded from operating cash flow. The Partnership has budgeted for, but is not limited to, capital improvements of $137,000 at the property consisting primarily of floor covering and appliance replacements and other building 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. Plantation Crossing Apartments During the nine months ended September 30, 2001, the Partnership completed approximately $175,000 of budgeted and non-budgeted capital improvements consisting primarily of other building improvements, structural improvements, and floor covering and appliance replacements. These improvements were funded from operating cash flow. The Partnership has budgeted for, but is not limited to, capital improvements of $151,000 at the property consisting primarily of floor covering and appliance replacements, wall coverings, and other building 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. Greenspoint Apartments During the nine months ended September 30, 2001, the Partnership completed approximately $185,000 of capital improvements consisting primarily of structural and plumbing improvements, floor covering and appliance replacements, and parking lot enhancements. These improvements were funded from operating cash flow. The Partnership has budgeted for, but is not limited to, capital improvements of $238,000 at the property consisting primarily of floor covering and appliance replacements, roof replacements, air conditioning unit replacements, and plumbing 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. Sands Point Apartments During the nine months ended September 30, 2001, the Partnership completed approximately $177,000 of budgeted and non-budgeted capital improvements consisting primarily of structural improvements, air conditioning improvements, plumbing enhancements, ground lighting enhancements, roof replacements, and floor covering and appliance replacements. These improvements were funded from operating cash flow. The Partnership has budgeted for, but is not limited to, capital improvements of $172,000 at the property consisting primarily of floor covering and appliance replacements, air conditioning unit replacements, roof replacements, swimming pool improvements, plumbing improvements, and parking lot resurfacing. 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 Registrant's distributable cash flow, if any, may be adversely affected at least in the short term. In connection with the January 29, 1998 modification of the terms of the mortgages encumbering McMillan Place Apartments, the first mortgage requires additional interest to be paid upon maturity at October 31, 2002 equal to 50% of the increase in the appreciated fair market value of the property, which was stipulated as $12,860,000 at the time of the restructuring. At December 31, 2000 and June 30, 2001, the Managing General Partner estimated that there had been an increase in the fair market value of McMillan Place Apartments. A liability for $250,000 was recorded at December 31, 2000 and is included in other liabilities. An additional liability for $250,000 was recorded at June 30, 2001 and is included in other liabilities and interest expense. On August 31, 2001 the Partnership refinanced the mortgage note payable for Sunrunner Apartments. The refinancing of Sunrunner Apartments replaced mortgage indebtedness of approximately $3,250,000 with a new mortgage of $4,650,000. The mortgage was refinanced at a rate of 7.06% compared to the prior rate of 7.33%. Payments of approximately $36,000 are due on the first day of each month until the note matures in September 2021. At the closing, a repair escrow of $125,000 was established and is held by the lender. AIMCO LP, an affiliate of the Managing General Partner, has signed as guarantor of this mortgage note payable. Capitalized loan costs incurred on the refinancing were approximately $185,000. The Partnership wrote off unamortized loan costs resulting in an extraordinary loss on early extinguishment of debt of approximately $39,000. 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, excluding Sunrunner Apartments, of approximately $54,996,000, net of discount, is amortized over varying periods with required balloon payments ranging from October 2002 to January 2006. The mortgage note payable for Sunrunner Apartments of approximately $4,650,000 is due to mature in September 2021 at which time it is expected to be completely amortized. 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 Registrant will risk losing such properties through foreclosure. During the nine months ended September 30, 2001, the Partnership distributed approximately $2,769,000 (approximately $2,442,000 to the limited partners, $27.35 per limited partnership unit) from operations. Also during the nine months ended September 30, 2001, the Partnership distributed approximately $1,095,000 (approximately $1,073,000 to the limited partners, $12.02 per limited partnership unit) from the refinancing proceeds of Sunrunner Apartments. During the nine months ended September 30, 2000, the Partnership distributed approximately $3,591,000 (approximately $3,167,000 to the limited partners or $35.47 per limited partnership unit) from operations. The Registrant is prohibited from distributing cash from McMillan Place operations due to debt restrictions. However, the Registrant can distribute cash from the remaining properties' operations. The Partnership's distribution policy is reviewed on a monthly basis. Future cash distributions will depend on the levels of net cash generated from operations, the availability of cash reserves and the timing of debt maturities, refinancings, and/or property sales. There can be no assurance, however, that the Partnership will generate sufficient funds from operations after required capital expenditures to permit any 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 owned 49,988.66 limited partnership units in the Partnership representing 55.98% of the outstanding units at September 30, 2001. 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. 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 55.98% 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, IPLP, an affiliate of the Managing General Partner, is required to vote 25,228.66 of its Units: (i) against any proposal to increase the fees and other compensation payable by the Partnership to the Managing General Partner and any of its 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 IPLP's or AIMCO's right to vote its Units. 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: Current Report on Form 8-K dated August 30, 2001 and filed on September 25, 2001 in connection with the refinancing of Sunrunner Apartments. SIGNATURES In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CENTURY PROPERTIES FUND XIX By: FOX PARTNERS II Its General Partner By: FOX CAPITAL MANAGEMENT CORPORATION Its 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: