-----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, FvW69dmITAf3XQUtsahlNPwIj6/6ba/hqNmRzvkRz/xo7/xlymA8UHbOCxkb1WZT 83W/oSGpj2J5lnYBBRWaCg== 0000759859-98-000007.txt : 19980515 0000759859-98-000007.hdr.sgml : 19980515 ACCESSION NUMBER: 0000759859-98-000007 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980514 SROS: NONE 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: SEC FILE NUMBER: 000-11935 FILM NUMBER: 98621475 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: PO BOX 1089 C/O INSIGNIA FINANICAL GROUP CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8642391513 MAIL ADDRESS: STREET 1: C/O INSIGNIA FINANCIAL GROUP 14TH FL STREET 2: ONE INSIGNIA FINANCIAL PLZ CITY: GREENVILLE STATE: SC ZIP: 29062 10QSB 1 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 March 31, 1998 [ ] 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.) One Insignia Financial Plaza Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) CENTURY PROPERTIES FUND XIX CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) March 31, 1998 Assets Cash and cash equivalents $ 5,192 Receivables and deposits 849 Restricted escrows 451 Other assets 820 Investment properties: Land $ 11,635 Buildings and related personal property 84,339 95,974 Less accumulated depreciation (40,741) 55,233 $62,545 Liabilities and Partners' (Deficit) Capital Liabilities Accounts payable $ 139 Tenant security deposits payable 288 Accrued property taxes 457 Other liabilities 528 Mortgage notes payable (Note C) 61,156 Partners' (Deficit) Capital General partner's $ (9,092) Limited partners' (89,292 units issued and outstanding) 9,069 (23) $62,545 See Accompanying Notes to Consolidated Financial Statements b) CENTURY PROPERTIES FUND XIX CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data) Three Months Ended March 31, 1998 1997 Revenues: Rental income $ 3,796 $ 3,676 Other income 209 204 Total revenues 4,005 3,880 Expenses: Operating 1,439 1,423 General and administrative 81 84 Depreciation 725 706 Interest 1,247 1,262 Property taxes 322 281 Total expenses 3,814 3,756 Net income $ 191 $ 124 Net income allocated to general partner $ 4 $ 15 Net income allocated to limited partners 187 109 $ 191 $ 124 Net income per limited partnership unit $ 2.10 $ 1.23 See Accompanying Notes to Consolidated Financial Statements c) CENTURY PROPERTIES FUND XIX CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (DEFICIT) (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, 1997 89,292 $(9,096) $ 8,882 $ (214) Net income for the three months ended March 31, 1998 -- 4 187 191 Partners' (deficit) capital at March 31, 1998 89,292 $(9,092) $ 9,069 $ (23) See Accompanying Notes to Consolidated Financial Statements
d) CENTURY PROPERTIES FUND XIX CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Three Months Ended March 31, 1998 1997 Cash flows from operating activities: Net income $ 191 $ 124 Adjustments to reconcile net income to cash provided by operating activities: Depreciation 725 706 Amortization 32 33 Change in accounts: Receivables and deposits (4) 84 Other assets 41 (1) Accounts payable (34) (108) Tenant security deposits payable 10 (3) Accrued property taxes 36 26 Other liabilities (498) 44 Net cash provided by operating activities 499 905 Cash flows from investing activities: Property improvements and replacements (133) (192) Net deposits to restricted escrows (45) (126) Net cash used in investing activities (178) (318) Cash flows from financing activities: Payment on mortgage notes payable (165) (186) Proceeds from mortgage notes payable 270 -- Loan costs paid (21) (15) Net cash provided by (used in) financing activities 84 (201) Net increase in cash and cash equivalents 405 386 Cash and cash equivalents at beginning of period 4,787 3,419 Cash and cash equivalents at end of period $ 5,192 $ 3,805 Supplemental information: Cash paid for interest $ 1,720 $ 1,177 Supplemental information on noncash financing activity: Conversion of accrued interest to principal $ 154 $ -- See Accompanying Notes to Consolidated Financial Statements
e) CENTURY PROPERTIES FUND XIX NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of Century Properties Fund XIX (the "Partnership") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of Fox Capital Management Corporation, a California corporation, ("FCMC" or 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 month period ended March 31, 1998, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1998. 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 year ended December 31, 1997. Certain reclassifications have been made to the 1997 information to conform to the 1998 presentation. NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES The general partners of Fox Partners II are FCMC, Fox Realty Investors ("FRI"), and Fox Partners 83. NPI Equity Investments II, Inc., a Florida Corporation ("NPI Equity"), is the managing general partner of FRI. The Partnership has no employees and is dependent on its general partner, Fox Partners II, a California general partnership, and the Managing General Partner and their affiliates for the management and administration of all partnership activities. The Managing General Partner and NPI Equity are wholly-owned by Insignia Properties Trust ("IPT"), an affiliate of Insignia Financial Group, Inc. ("Insignia"). The Partnership Agreement provides for certain payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following transactions with affiliates of Insignia were incurred in the three month periods ended March 31, 1998 and 1997 (in thousands): 1998 1997 Property management fees (included in operating expenses) $198 $184 Reimbursement for services of affiliates, including approximately $1,000 and $5,000 of construction oversight reimbursements in 1998 and 1997, respectively (included in general and administrative and operating expenses and investment properties) 46 44 During the three months ended March 31, 1998, the Partnership borrowed $270,000 from an affiliate of the Managing General Partner in conjunction with the modification of the mortgages encumbering McMillan Place as discussed in Note C. For the period from January 1, 1997 to August 31, 1997, the Partnership insured its properties under a master policy through an agency affiliated with the Managing General Partner with an insurer unaffiliated with the Managing General Partner. An affiliate of the Managing General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the master policy. The agent assumed the financial obligations to the affiliate of the Managing General Partner which received payments on these obligations from the agent. The amount of the Partnership's insurance premiums that accrued to the benefit of the affiliate of the Managing General Partner by virtue of the agent's obligations was not significant. On August 28, 1997, an Insignia affiliate (the "Purchaser") commenced tender offers for limited partnership interests in six real estate limited partnerships (including the Partnership) in which various Insignia affiliates act as general partner. The Purchaser offered to purchase up to 27,000 of the outstanding units of limited partnership interest in the Partnership, at $175.00 per Unit, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated August 28, 1997 (the "Offer to Purchase") and the related Assignment of Partnership Interest attached as Exhibits (a)(1) and (a)(2), respectively, to the Tender Offer Statement on Schedule 14D-1 originally filed with the Securities and Exchange Commission on August 28, 1997. Because of the existing and potential future conflicts of interest (described in the Partnership's Statements on Schedule 14D-9 filed with the Securities and Exchange Commission), neither the Partnership nor the Managing General Partner expressed any opinion as to the Offer to Purchase and made no recommendation as to whether unit holders should tender their units in response to the Offer to Purchase. In addition, because of these conflicts of interest, including as a result of the Purchaser's affiliation with various Insignia affiliates, the manner in which the Purchaser votes its limited partnership interests in the Partnership may not always be consistent with the best interests of the other limited partners. As a result of the tender offer, an Insignia affiliate purchased 4,892 of the outstanding limited partner units of the Partnership. On March 17, 1998, Insignia entered into an agreement to merge its national residential property management operations, and its controlling interest in IPT, with Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The closing, which is anticipated to happen in the third quarter of 1998, is subject to customary conditions, including government approvals and the approval of Insignia's shareholders. If the closing occurs, AIMCO will then control the Managing General Partner of the Partnership. NOTE C - MORTGAGE NOTES PAYABLE On January 29, 1998, the Managing General Partner successfully negotiated a modification of the terms of the mortgages encumbering McMillan Place, which had been in default since January 20, 1997. The total future cash payments of the modified loans exceed the carrying value of the loans as of the date of modification. Consequently, interest on the restructured debt is being recorded at an effective rate of 9.15% for the first mortgage and 4.47% for the second mortgage which are the rates required to equate the present value of the total future cash payments under the new terms with the carrying amount of the loans at the date of modification. Accrued interest and late charges to the effective date were paid on the first mortgage and approximately $86,000 was transferred from the second mortgage balance to the first mortgage balance increasing the first mortgage to approximately $10,219,000. The first mortgage requires interest only payments through October 31, 2001, at a rate of 9.15% and for the final year, at a fixed rate of 325 basis points plus the annualized yield on United States Treasury non-callable bonds having a one year maturity, as determined at November 1, 2001. In addition, any excess cash as defined in the modified loan agreement is required to be remitted to the mortgage holder by January 20 of each year to be applied to outstanding principal and interest. Additional interest is required to be paid upon maturity of the note equal to 50% of the appreciated fair market value of McMillan Place as defined in the note agreement. The Partnership was required to pay $270,000 of accrued interest on the second mortgage. In addition, an affiliate of the Managing General Partner was required to pay an additional $270,000 on behalf of the Partnership which was applied to accrued interest on the second mortgage. The remaining accrued interest on the second mortgage was rolled to principal in the amount of approximately $154,000. The second mortgage balance of approximately $2,207,000 consists of a non-interest bearing portion of $800,000 which is due at the maturity date of October 31, 2002, and an interest bearing portion. The interest bearing portion has a stated interest rate of 9.15% and an effective rate of 4.47%. Under the terms of the modified mortgages, the Partnership is no longer restricted from making distributions to its partners from cash from operations generated by the Partnership's properties other than McMillan Place. The Partnership is still prohibited, however, from making distributions from cash from operations derived from McMillan Place. ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Partnership's investment properties consist of eight apartment complexes. The following table sets forth the average occupancy of the properties for each of the three months ended March 31, 1998 and 1997: Average Occupancy Property 1998 1997 Sunrunner Apartments St. Petersburg, Florida 98% 95% Misty Woods Apartments Charlotte, North Carolina 86% 91% McMillan Place Apartments Dallas, Texas 94% 97% Vinings Peak Apartments (formerly Wood Ridge Apartments) Atlanta, Georgia 92% 92% Wood Lake Apartments Atlanta, Georgia 93% 92% Plantation Crossing Atlanta, Georgia 92% 89% Greenspoint Apartments Phoenix, Arizona 94% 92% Sandspoint Apartments Phoenix, Arizona 96% 93% The Managing General Partner attributes the decrease in occupancy at Misty Woods to increased competition as a result of newly constructed units, which occupy the same market niche as the property. The Partnership realized net income of approximately $191,000 and $124,000 for the three month periods ended March 31, 1998 and 1997, respectively. The increase in net income is primarily attributable to an increase in rental income attributable to an increase in the occupancy at a majority of the Partnership's properties. Partially offsetting the increase in net income was an increase in property tax expense. The increase is largely the result of a large increase in tax billings due to an increase in the assessed value of Greenspoint. Included in operating expense for the three month period ended March 31, 1998, are approximately $59,000 in major repairs and maintenance expense versus approximately $45,000 for the corresponding period in 1997. The 1998 costs were primarily comprised of landscaping at Plantation Crossing and Greenspoint. The 1997 costs were primarily comprised of landscaping, interior and exterior improvements and golf carts. 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. At March 31, 1998, the Partnership had cash and cash equivalents of approximately $5,192,000 as compared to approximately $3,805,000 at March 31, 1997. The net increase in cash and cash equivalents for the three month periods ended March 31, 1998 and 1997, was approximately $405,000 and $386,000, respectively. Net cash provided by operating activities decreased despite an increase in net income due primarily to the repayment of accrued interest included in other liabilities. This repayment was in connection with the modification of the debt encumbering McMillan Place as discussed below. Partially offsetting this decrease is a decrease in cash used in accounts payable due the change in the timing of payments. Net cash used in investing activities decreased due to decreased net cash deposits to restricted escrows and decreased spending on property improvements and replacements. Net cash provided by financing activities increased due to additional borrowing in connection with the modification of the mortgages encumbering McMillan Place in January of 1998. 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, management 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. On January 29, 1998, the Managing General Partner successfully negotiated a modification of the terms of the mortgages encumbering McMillan Place, which had been in default since January 20, 1997. The total future cash payments of the modified loans exceed the carrying value of the loans as of the date of modification. Consequently, interest on the restructured debt is being recorded at an effective rate of 9.15% for the first mortgage and 4.47% for the second mortgage which are the rates required to equate the present value of the total future cash payments under the new terms with the carrying amount of the loans at the date of modification. Accrued interest and late charges to the effective date were paid on the first mortgage and approximately $86,000 was transferred from the second mortgage balance to the first mortgage balance increasing the first mortgage to approximately $10,219,000. The first mortgage requires interest only payments through October 31, 2001, at a rate of 9.15% and for the final year, at a fixed rate of 325 basis points plus the annualized yield on United States Treasury non-callable bonds having a one year maturity, as determined at November 1, 2001. In addition, any excess cash as defined in the modified loan agreement is required to be remitted to the mortgage holder by January 20 of each year to be applied to outstanding principal and interest. Additional interest is required to be paid upon maturity of the note equal to 50% of the appreciated fair market value of McMillan Place as defined in the note agreement. The Partnership was required to pay $270,000 of accrued interest on the second mortgage. In addition, an affiliate of the Managing General Partner was required to pay an additional $270,000 on behalf of the Partnership which was applied to accrued interest on the second mortgage. The remaining accrued interest on the second mortgage was rolled to principal in the amount of approximately $154,000. The second mortgage balance of approximately $2,207,000 consists of a non-interest bearing portion of $800,000 which is due at the maturity date of October 31, 2002, and an interest bearing portion. The interest bearing portion has a stated interest rate of 9.15% and an effective rate of 4.47%. Under the terms of the modified mortgages, the Partnership is no longer restricted from making distributions to its partners from cash from operations generated by the Partnership's properties other than McMillan Place. The Partnership is still prohibited, however, from making distributions from cash from operations derived from McMillan Place. The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the properties to adequately maintain the physical assets and other operating needs of the Partnership. Such assets are currently thought to be sufficient for any near-term needs of the Partnership. Mortgage indebtedness of approximately $61,156,000 is amortized over varying periods with required balloon payments ranging from October 2002 to January 2006, at which time the properties will either be refinanced or sold. No cash distributions were paid in 1997 or during the first three months of 1998. The Managing General Partner anticipates making distributions in the second and fourth quarters of 1998. Year 2000 The Partnership is dependent upon the Managing General Partner and Insignia for management and administrative services. Insignia has completed an assessment and will have to modify or replace portions of its software so that its computer systems will function properly with respect to dates in the year 2000 and thereafter (the "Year 2000 Issue"). The project is estimated to be completed not later than December 31, 1998, which is prior to any anticipated impact on its operating systems. The Managing General Partner believes that with modifications to existing software and conversions to new software, the Year 2000 Issue will not pose significant operational problems for its computer systems. However, if such modifications and conversions are not made, or are not completed timely, the Year 2000 Issue could have a material impact on the operations of the Partnership. Other Certain items discussed in this quarterly report may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act") and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Partnership to be materially different from any future results, performance or achievements expressed or implied by such forward- looking statements. Such forward-looking statements speak only as of the date of this quarterly report. The Partnership expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Partnership's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The three lawsuits previously described in the Partnership's 1997 Annual Report on Form 10-KSB relating to the August, 1997, tender offers made by an Insignia affiliate (the Kline, City Partnerships, and Heller complaints) each have been voluntarily discontinued by their respective plaintiffs, with no material affect on the financial condition or operations of the Partnership. In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled ROSALIE NUANES, ET AL. V. INSIGNIA FINANCIAL GROUP, INC., ET AL. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, the Managing General Partner and several of their affiliated partnerships and corporate entities. The complaint purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging the acquisition by Insignia and its affiliates of interests in certain general partner entities, past tender offers by Insignia affiliates to acquire limited partnership units, the management of partnerships by Insignia affiliates as well as a recently announced agreement between Insignia and Apartment Investment and Management Company. The complaint seeks monetary damages and equitable relief, including judicial dissolution of the Partnership. The Managing General Partner was only recently served with the complaint which it believes to be without merit, and intends to vigorously defend the action. The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature. The Managing General Partner believes that all such pending or outstanding litigation will be resolved without a material adverse effect upon the business, financial condition, or operations of the Partnership. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: None filed during the quarter ended March 31, 1998 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/William H. Jarrard, Jr. William H. Jarrard, Jr. President and Director By: /s/Ronald Uretta Ronald Uretta Vice President and Treasurer Date: May 14, 1998 EX-27 2
5 This schedule contains summary financial information extracted from Century Properties Fund XIX 1998 First Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000705752 CENTURY PROPERTIES FUND XIX 1,000 3-MOS DEC-31-1998 MAR-31-1998 5,192 0 0 0 0 0 95,974 40,741 62,545 0 61,156 0 0 0 (23) 62,545 0 4,005 0 0 2,567 0 1,247 0 0 0 0 0 0 191 2.10 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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