-----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, LHKrPSXBKr1XaealqBEJaqI+rRWRQn2I02rw9fYcpcwxcXXUnIby2rNGJJphEDKx h3nQXboAu8PmcIzvrS8wfg== 0000711642-00-000101.txt : 20000412 0000711642-00-000101.hdr.sgml : 20000412 ACCESSION NUMBER: 0000711642-00-000101 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000411 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTURY PROPERTIES FUND XX CENTRAL INDEX KEY: 0000736909 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 942930770 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: SEC FILE NUMBER: 000-13408 FILM NUMBER: 598638 BUSINESS ADDRESS: STREET 1: 55 BEATTIE PLACE STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8642391000 MAIL ADDRESS: STREET 1: POST & HEYMANN STREET 2: 5665 NORTHSIDE DRIVE NW CITY: ATLANTA STATE: GA ZIP: 30328 10KSB 1 YEAR END 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, 1999 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required] For the transition period from _________to _________ Commission file number 0-13408 CENTURY PROPERTIES FUND XX (Name of small business issuer in its charter) California 94-2930770 (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 Interests (Title of class) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No___ Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of the registrant's knowledge in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [ ] State issuer's revenues for its most recent fiscal year. $8,954,000 State the aggregate market value of the voting partnership interests held by non-affiliates computed by reference to the price at which the partnership interests were sold, or the average bid and asked prices of such partnership interests as of December 31, 1999. No market exists for the limited partnership interests of the Registrant, and, therefore, no aggregate market value can be determined. DOCUMENTS INCORPORATED BY REFERENCE None PART I Item 1. Description of Business General Century Properties Fund XX (the "Partnership" or "Registrant") was organized as a limited partnership under the Uniform Limited Partnership laws of California as of December 1983. The Partnership's general partner is Fox Partners III, a California general partnership. The general partners of Fox Partners III 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 84, a California general partnership. The Managing General Partner and NPI Equity Investments II Corporation, the managing general partner of FRI, are subsidiaries of Apartment Investment and Management Company ("AIMCO") (see "Transfer of Control"). The Partnership Agreement provides that the Partnership is to terminate on December 31, 2008, unless terminated prior to such date. The Partnership's Registration Statement, filed pursuant to the Securities Act of 1933 (No. 2-88615), was declared effective by the Securities and Exchange Commission on February 22, 1984. The Partnership marketed its securities pursuant to its Prospectus dated February 22, 1984, and November 8, 1984, which were thereafter supplemented (hereinafter the "Prospectus"). The Prospectus was filed with the Securities and Exchange Commission pursuant to Rule 424(b) of the Securities Act of 1933. Beginning in February 1984 through April 1985, the Partnership offered $35,000,000 in Individual Investor Units and $65,000,000 in Pension Investors Notes ("Non-Recourse Promissory Notes" or "Promissory Notes"), and sold $30,907,000 and $49,348,500, respectively. Since its initial offering, the Partnership has not received, nor are the limited partners required to make, additional capital contributions. The net proceeds of this offering were used to purchase four income-producing real estate properties including one property which was acquired in two phases, and to fund seven mortgage loans totaling $31,568,000. The Partnership's original property portfolio was geographically diversified with properties acquired and properties on which mortgage loans were funded in seven states. The Partnership's acquisition and mortgage loan funding activities were completed in February 1986 and since then the principal activity of the Partnership has been managing its portfolio. Two mortgage loans were prepaid in 1989, one was prepaid in 1991, and another was satisfied in 1994. In April 1991, the Partnership finalized foreclosure proceedings on Metcalf 103 Office Park which secured a mortgage loan and during 1992 finalized foreclosure proceedings against the borrowers on two additional mortgage loans (Harbor Club Downs and The Corners Apartments). The remaining mortgage loan was prepaid in 1992. Two of the commercial properties were sold in 1999. See "Item 2. Description of Properties" below for a description of the Partnership's properties (see "Item 6. Management's Discussion and Analysis or Plan of Organization" for a description of the sale of Crabtree Office Center and Commonwealth Center). At December 31, 1999, the Partnership adopted the liquidation basis of accounting. The Nonrecourse Promissory Notes (the "Notes") were in default due to nonpayment upon maturity on November 30, 1998. The Managing General Partner contacted the indenture trustee for the Notes and certain holders of the Notes regarding this default. On October 28, 1999 the Partnership entered into a forbearance agreement with the indenture trustee for a period of 390 days. In turn, the Partnership agreed to (a) deliver to the indenture trustee for the benefit of the note holders all of the accumulated cash of the Partnership, less certain reserves and anticipated operating expenses, (b) market all of its properties for sale, (c) deliver all cash proceeds from any sales to the indenture trustee until the notes are fully satisfied and (d) comply with the reporting requirements under the indenture. Based on current market conditions, it is unlikely that the sale of the Partnership's assets will generate sufficient proceeds to pay off the Nonrecourse Promissory Notes in full. If the Partnership cannot sell its properties for sufficient value, in accordance with the terms of the forbearance agreement, it is likely that the Partnership will lose its properties through delivery to an auctioneer who would sell the assets for the benefit of the Note holders. The Registrant has no employees. Management and administrative services are provided by the Managing General Partner and by agents retained by the Managing General Partner for the Partnership's residential properties. With respect to the Partnership's commercial properties, management is performed by an unaffiliated third party management company. The real estate business in which the Partnership is engaged is highly competitive. There are other 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 and commercial space at the Partnership's properties and the rents that may be charged for such apartments and space. While the Managing General Partner and its affiliates are a significant factor in the United States in the apartment industry, they own an insignificant percentage of total apartment units in the United States and competition for the apartments is local. The Managing General Partner is not a significant factor in commercial real estate in the United States. 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. 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 and commercial properties because such properties are susceptible to the impact of economic and other conditions outside of the control of the Partnership. 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. ("Insignia") and Insignia Properties Trust ("IPT") merged into AIMCO, a publicly traded real estate investment trust, with AIMCO being the surviving corporation (the "Insignia Merger"). As a result, AIMCO ultimately 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 (2) Use Linpro Park I 03/85 Fee ownership Office Building Reston, Virginia 75,000 sq. ft. Metcalf 103 Office Park 04/91 Fee ownership Office Building Overland Park, Kansas 62,000 sq. ft. Highland Park Commerce Center (1) Fee ownership Business Park Charlotte, North Carolina 106,000 sq. ft. Harbor Club Downs 05/92 Fee ownership Apartment Palm Harbor, Florida 272 units The Corners Apartment 11/92 Fee ownership Apartment Spartanburg, South Carolina 176 units
(1) Highland Park Commerce Center was acquired in separate transactions on November 5, 1985 and February 12, 1986, respectively. (2) The Non-Recourse Promissory Notes are secured by a deed of trust on all properties owned by the Partnership. Schedule of Properties: Set forth below for each of the Registrant's properties is the gross carrying value, accumulated depreciation, depreciable life, method of depreciation and Federal tax basis.
Gross Carrying Accumulated Federal Property Value Depreciation Rate Method Tax Basis (in thousands) (in thousands) Linpro $ 8,930 (1) 5-39 yrs S/L $ 4,078 Metcalf 3,149 (1) 5-39 yrs S/L 2,770 Highland Park 5,680 (1) 5-39 yrs S/L 4,630 Harbor Club 10,622 (1) 5-39 yrs S/L 7,224 The Corners 3,760 (1) 5-30 yrs S/L 2,956 Total $32,141 $21,658
(1) As a result of adopting the liquidation basis of accounting, the gross carrying values of the properties were adjusted to their net realizable value and will not be depreciated any further. See "Note B" of the financial statements in "Item 7. Financial Statements" for a description of the Partnership's former depreciation policy. The Partnership has Non-Recourse Promissory Notes secured by a deed of trust on all properties owned by the Partnership. The Promissory Notes bear interest at eight percent per annum. On October 28, 1999 the Partnership entered into a forbearance agreement with the indenture trustee for a period of 390 days. In turn, the Partnership agreed to (a) deliver to the indenture trustee for the benefit of the note holders all of the accumulated cash of the Partnership, less certain reserves and anticipated operating expenses, (b) market all of its properties for sale, (c) deliver all cash proceeds from any sales to the indenture trustee until the notes are fully satisfied and (d) comply with the reporting requirements under the indenture. It is uncertain whether the sale of the Partnership's assets will generate sufficient proceeds to pay off the Nonrecourse Promissory Notes in full. If the Partnership cannot sell its properties for sufficient value, in accordance with the terms of the forbearance agreement, it is likely that the Partnership will lose its properties through delivery to an auctioneer who would sell the assets for the benefit of the Note holders. Schedule of Rental Rate and Occupancy: Average annual rental rates and occupancy for 1999 and 1998 for each property were: Average Annual Average Rental Rates Occupancy Property 1999 1998 1999 1998 Linpro $20.36/sq.ft. $19.68/sq.ft. 100% 96% Metcalf 12.02/sq.ft. 11.61/sq.ft. 92% 97% Highland Park 9.61/sq.ft. 9.53/sq.ft. 87% 97% Harbor Club 8,310/unit 7,900/unit 96% 94% The Corners 5,982/unit 5,714/unit 94% 91% The increase in occupancy at Linpro is due to the addition of one tenant occupying the remaining available space. The decrease in occupancy at Metcalf is due to the loss of three tenants during the year of 1999. The decrease in occupancy at Highland Park Commerce Center is due to the loss of five tenants occupying 12,464 square feet, which represents approximately 12% of the total space. The increase at The Corners Apartments is due to increased marketing efforts and a strong economy in the Spartanburg, South Carolina area. As noted under "Item 1. Description of Business", the real estate industry is highly competitive. All of the properties are subject to competition from other similar properties 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. The commercial lease terms vary as set forth below. No residential tenant leases 10% or more of the available rental space. All of the properties are in good physical condition, subject to normal depreciation and deterioration as is typical for assets of this type and age. The following is a schedule of the lease expirations for the years 2000-2009:
Number of Square Annual % of Gross Expirations Feet Rent Annual Rent (in thousands) Linpro 2000 - 2001 -- -- -- -- 2002 6 65,879 $1,392 88.61% 2003 1 3,402 77 4.91% 2004 -- -- -- -- 2005 1 4,523 102 6.48% 2006 - 2009 -- -- -- -- Metcalf 2000 5 22,362 $ 243 35.63% 2001 8 15,262 174 25.59% 2002 1 5,834 79 11.56% 2003 3 6,793 94 13.76% 2004 2 3,320 55 8.06% 2005 - 2009 -- -- -- -- Highland Park 2000 9 46,015 $ 442 50.41% 2001 4 15,099 163 18.65% 2002 3 10,221 74 8.49% 2003 -- -- -- -- 2004 1 15,010 131 14.99% 2005 1 600 8 0.96% 2006 -- -- -- -- 2007 1 4,212 57 6.49% 2008-2009 -- -- -- --
The following schedule reflects information on tenants occupying 10% or more of leasable square footage at December 31, 1999: Nature of Square Footage Annual Rent Per Lease Business Leases Square Foot Expiration Linpro Government Agency 57,122 $21.48 12/31/2002 Real Estate 8,757 18.85 12/15/2002 Metcalf Business Offices 18,677 10.63 10/31/2000 Highland Park Software Designer 20,426 9.50 10/31/2000 Bank 15,010 8.75 03/31/2004 Schedule of Real Estate Taxes and Rates: Real estate taxes and rates in 1999 for each property were: 1999 1999 Billing Rate (in thousands) Linpro $104 1.29% Metcalf 109 2.98% Highland Park 81 1.20% Harbor Club 185 2.17% The Corners 96 2.53% Capital Improvements: Linpro Park I The Partnership completed approximately $24,000 in capital expenditures at Linpro Park I as of December 31, 1999, consisting primarily of tenant improvements and major landscaping. These improvements were funded from operating cash flow. This property was sold subsequent to year end. Metcalf 103 Office Park The Partnership completed approximately $51,000 in capital expenditures at Metcalf 103 Office Park as of December 31, 1999, consisting primarily of building improvements and tenant improvements. These improvements were funded from operating cash flow. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year. As the property is currently being held for sale, improvements are anticipated to be made only on an as needed basis to maintain the property is good condition for sale. Highland Park Commerce Center The Partnership completed approximately $45,000 in capital expenditures at Highland Park Commerce Center as of December 31, 1999, consisting primarily of tenant improvements. These improvements were funded from operating cash flow. The Partnership is currently evaluating the capital improvement needs of the property for the upcoming year. As the property is currently being held for sale, improvements are anticipated to be made only on an as needed basis to maintain the property is good condition for sale. Harbor Club Downs The Partnership completed approximately $410,000 in capital expenditures at Harbor Club Downs as of December 31, 1999, consisting primarily of roof replacements, floor covering replacements, parking lot improvements, and electrical upgrades. 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 $300 per unit or $81,600. Additional improvements may be considered and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. The Corners Apartments The Partnership completed approximately $92,000 in capital expenditures at The Corners Apartments as of December 31, 1999, consisting primarily of structural improvements, floor covering replacements, and HVAC upgrades. 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 $300 per unit or $52,800. 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. Commonwealth Center The Partnership completed approximately $70,000 in capital improvements at Commonwealth Center in 1999 consisting primarily of building improvements. The property was sold December 30, 1999. Crabtree Office Center The Partnership completed approximately $119,000 in capital improvements at Crabtree Office Center in 1999 consisting primarily of tenant improvements. The property was sold November 10, 1999. Item 3. Legal Proceedings In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, the Managing General Partner and several of their affiliated partnerships and corporate entities. The action purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging the acquisition by Insignia Financial Group, Inc. ("Insignia") and entities which were, at one time, affiliates of Insignia ("Insignia Affiliates") of interests in certain general partner entities, past tender offers by Insignia Affiliates to acquire limited partnership units, the management of partnerships by Insignia Affiliates and the Insignia Merger (see "Item 7. Financial Statements, Note D - Transfer of Control"). The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the Managing General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs have filed an amended complaint. The Managing General Partner filed demurrers to the amended complaint which were heard February 1999. Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to final court approval, on behalf of the Partnership and all limited partners who own units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Superior Court of the State of California, County of San Mateo, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of class plaintiffs' counsel to enter the settlement. On December 14, 1999, the Managing General Partner and its affiliates terminated the proposed settlement. Certain plaintiffs have filed a motion to disqualify some of the plaintiffs' counsel in the action. The Managing General Partner does not anticipate that costs associated with this case will be material to the Partnership's overall operations. The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature arising in the ordinary course of business. Item 4. Submission of Matters to a Vote of Security Holders During the quarter ended December 31, 1999, no matter was submitted to a vote of unit holders through the solicitation of proxies or otherwise. PART II Item 5. Market for the Partnership Equity and Related Partner Matters The Partnership, a publicly-held limited partnership, offered and sold 61,814 Individual Investor Units during its offering period through April 1985. The Partnership currently has 1,772 holders of record owning an aggregate of 61,814 Units. An affiliate of the Managing General Partner owns 3,601 Units or 5.826%. No public trading market has developed for the Units, and it is not anticipated that such a market will develop in the future. In light of the maturity of the Notes, no distributions were made to the limited partners for the years ended December 31, 1999 or 1998. On October 28, 1999 the Partnership entered into a forbearance agreement with the indenture trustee for a period of 390 days. In turn, the Partnership agreed to (a) deliver to the indenture trustee for the benefit of the note holders all of the accumulated cash of the Partnership, less certain reserves and anticipated operating expenses, (b) market all of its properties for sale, (c) deliver all cash proceeds from any sales to the indenture trustee until the notes are fully satisfied and (d) comply with the reporting requirements under the indenture. It is uncertain whether the sale of the Partnership's assets will generate sufficient proceeds to pay off the Nonrecourse Promissory Notes in full. If the Partnership cannot sell its properties for sufficient value, in accordance with the terms of the forbearance agreement, it is likely that the Partnership will lose its properties through delivery to an auctioneer who would sell the assets for the benefit of the Note holders. Item 6. Management's Discussion and Analysis or Plan of Organization 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 disclosure 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 financial statements and other items contained elsewhere in this report. Results of Operations At December 31, 1999, the Partnership adopted the liquidation basis of accounting due to the imminent loss of its investment properties. In order to finance the purchase of its properties, the Partnership sold Nonrecourse Pension Investor Notes with an aggregate original principal amount of $49,348,500 (the "Notes"). Pursuant to the terms of the Notes, the Partnership was required to pay interest at a rate of 4% per annum on the Notes, and accrue the additional 4% per annum due on the Notes. The Notes are secured by all of the Partnership's properties. The Notes, which had a balance of principal and accrued interest of approximately $36,555,000 at December 31, 1999, matured on November 30, 1998. See discussion in "Liquidity and Capital Resources" regarding the adoption of liquidation basis. Prior to adopting the liquidation basis of accounting, the Partnership realized a net loss for the year ended December 31, 1999 of approximately $931,000 as compared to a net loss of $184,000 for the year ended December 31, 1998. The increase in net loss for the year ended December 31, 1999, is attributable to an increase in total expenses which more than offset an increase in total revenues. Total revenues for the comparable periods increased due to a net gain on the sale of Commonwealth Center and Crabtree Office Center. Excluding the net gain and results of operations for Commonwealth Center and Crabtree Office Center for 1999 and 1998, the Partnership realized an increase in net loss for the year ended December 31, 1999. The increase in net loss is due to an increase in total revenues which was offset by an increase in total expenses. The increase in total revenues is due to an increase in income from a deficiency certificate settlement (see "Item 7. Financial Statements, Note J - Contingency" for further discussion). Total expenses increased primarily due to an increase in general and administrative expenses, which was partially offset by a decrease in interest on the promissory notes and amortization of sales commissions and organizational costs. General and administrative expenses increased due to professional fees and expenses associated with the Partnership's attempt to secure alternative financing for the non recourse promissory notes which matured November 30, 1998. The decrease in interest on the promissory notes is due to the reduction of the principal amount of the notes. Included in general and administrative expenses for the year ended December 31, 1999 and 1998, are reimbursements to the Managing General Partner allowed under the Partnership Agreement associated with its management of the Partnership. 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. On November 10, 1999, the Partnership sold Crabtree Office Center to an unaffiliated third party for approximately $6,700,000. The Partnership recognized a gain of approximately $1,505,000 on the sale during the year ended December 31, 1999. The net sales proceeds of approximately $6,494,000 were paid directly to the indenture trustee, as required by the forbearance agreement. On December 30, 1999, the Partnership sold Commonwealth Center to an unaffiliated party for approximately $1,950,000. The Partnership recognized a loss of approximately $650,000 during the year ended December 31, 1999. The net sales proceeds of approximately $1,862,000 were paid directly to the indenture trustee as required by the forbearance agreement. The following unaudited pro-forma information reflects the operations of the Partnership for the years ended December 31, 1999 and 1998, as if Crabtree Office Center and Commonwealth Center had been sold January 1, 1998. 1999 1998 (in thousands, except per unit data) Revenues $ 6,897 $ 6,944 Net loss (1,883) (511) Net loss per limited partnership unit (29.85) (8.10) In March 2000 the Partnership sold Linpro Park I to an unaffiliated third party for approximately $8,900,000, net of closing costs. Liquidity and Capital Resources The financial statements have been prepared assuming the Partnership will liquidate during 2000 (see "Item 7. Financial Statements, Note A"). The nonrecourse promissory notes matured on November 30, 1998 and all of the remaining properties are being marketed for sale. In addition, the Partnership suffers from inadequate liquidity. In addition, there are no other capital resources available to the Partnership. At December 31, 1999, the Partnership had cash and cash equivalents of approximately $1,718,000, as compared to approximately $9,197,000 at December 31, 1998. Cash and cash equivalents decreased by approximately $7,479,000 from the Partnership's previous year ended December 31, 1998. The decrease is due to approximately $8,971,000 of cash used in financing activities and approximately $5,957,000 of cash used in operating activities offset by approximately $7,449,000 of cash provided by investing activities. Cash used in financing activities consists of principal payments on the promissory notes. Cash provided by investing activities consists of proceeds from the sale of Commonwealth Center and Crabtree Office Center partially offset by property improvements and replacements and lease commissions paid. The Partnership invests its working capital reserves in money market accounts. Pursuant to the terms of the Notes, the Partnership was required to pay interest at a rate of 4% per annum on the Notes, and accrue the additional 4% per annum due on the Notes. The Notes are secured by all of the Partnership's properties. The Notes, which had a balance of principal and accrued interest of approximately $36,555,000 at December 31, 1999, matured on November 30, 1998. As a result, the Partnership is currently in default under the Nonrecourse Promissory Notes. The Managing General Partner has contacted the indenture trustee and entered a forbearance agreement on October 29, 1999. In turn, the Partnership agreed to (a) deliver to the indenture trustee for the benefit of the note holders all of the accumulated cash of the Partnership, less certain reserves and anticipated operating expenses, (b) market all of its properties for sale, (c) deliver all cash proceeds from any sales to the indenture trustee until the notes are fully satisfied and (d) comply with the reporting requirements under the indenture. It is uncertain whether the sale of the Partnership's assets will generate sufficient proceeds to pay off the Nonrecourse Promissory Notes in full. If the Partnership cannot sell its properties for sufficient value, in accordance with the terms of the forbearance agreement, it is likely that the Partnership will lose its properties through delivery to an auctioneer who would sell the assets for the benefit of the Note holders. As a result of the decision to liquidate the Partnership, the Partnership changed its basis of accounting for its financial statements at December 31, 1999 to the liquidation basis of accounting. Consequently, assets have been valued at estimated net realizable value and liabilities are presented at their estimated settlement amounts. The valuation of assets and liabilities necessarily requires many estimates and assumptions and there are substantial uncertainties in carrying out the liquidation. The actual realization of assets and settlement of liabilities could be higher or lower than amounts indicated and is based upon the Managing General Partner's estimates as of the date of the financial statements. The Managing General Partner estimates the liquidation process will be completed by June 30, 2000. Because the success in realization of assets and the settlement of liabilities is based on the Managing General Partner's best estimates, the liquidation period may be shorter than projected or it may be extended beyond the projected period. The net adjustment required to convert to the liquidation basis of accounting was a decrease in net liabilities of approximately $8,921,000 which is included in the Statement of Changes in Partners' Deficit/Net Liabilities in Liquidation. The adjustments are summarized as follows: (Increase) Decrease in Net Liabilities (in thousands) Adjustment from book value of properties and improvements to estimated net realizable value $ 9,530 Adjustment of other assets (609) Net decrease in net liabilities $ 8,921 In light of the maturity of the Notes, no distributions were made to the limited partners for the years ended December 31, 1999 or 1998. Subsequent Event In March 2000, the Partnership sold Linpro Park I to an unaffiliated third party for approximately $8,900,000, net of closing costs. Year 2000 Compliance General Description The Year 2000 issue is the result of computer programs being written using two digits rather than four digits to define the applicable year. The Partnership is dependent upon the Managing General Partner and its affiliates for management and administrative services ("Managing Agent"). Any of the Managing Agent's computer programs or hardware that had date-sensitive software or embedded chips might have recognized a date using "00" as the year 1900 rather than the year 2000. This could have resulted in a system failure or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process transactions, send invoices, or engage in similar normal business activities. Computer Hardware, Software and Operating Equipment In 1999, the Managing Agent completed all phases of its Year 2000 program by completing the replacement and repair of any hardware or software system or operating equipment that was not yet Year 2000 compliant. The Managing Agent's hardware and software systems and its operating equipment are now Year 2000 compliant. No material failure or erroneous results have occurred in the Managing Agent's computer applications related to the failure to reference the Year 2000 to date. Third Parties To date, the Managing Agent is not aware of any significant supplier or subcontractor (external agent) or financial institution of the Partnership that has a Year 2000 issue that would have a material impact on the Partnership's results of operations, liquidity or capital resources. However, the Managing Agent has no means of ensuring or determining the Year 2000 compliance of external agents. At this time, the Managing Agent does not believe that a Year 2000 issue of any non-compliant external agent will have a material impact on the Partnership's financial position or results of operations. Costs The total cost of the Managing Agent's Year 2000 project was approximately $3.2 million and was funded from operating cash flows. Risks Associated with the Year 2000 The Managing Agent completed all necessary phases of its Year 2000 program in 1999, and did not experience system or equipment malfunctions related to a failure to reference the Year 2000. The Managing Agent or Partnership have not been materially adversely effected by disruptions in the economy generally resulting from the Year 2000 issue. At this time, the Managing Agent does not believe that the Partnership's businesses, results of operations or financial condition will be materially adversely effected by the Year 2000 issue. Contingency Plans Associated with the Year 2000 The Managing Agent has not had to implement contingency plans such as manual workarounds or selecting new relationships for its banking or elevator operation activities in order to avoid the Year 2000 issue. Item 7. Financial Statements CENTURY PROPERTIES FUND XX LIST OF FINANCIAL STATEMENTS Report of Ernst & Young, LLP, Independent Auditors Report of Imowitz, Koenig & Co., LLP, Independent Auditors Statement of Net Liabilities in Liquidation - December 31, 1999 Statements of Operations - Years ended December 31, 1999 and 1998 Statements of Changes in Partners' Deficit/Net Liabilities in Liquidation for the years ended December 31, 1999 and 1998 Statements of Cash Flows - Years ended December 31, 1999 and 1998 Notes to Financial Statements Report of Ernst & Young LLP, Independent Auditors The Partners Century Properties Fund XX We have audited the accompanying statement of net liabilities in liquidation of Century Properties Fund XX as of December 31, 1999 and the related statements of operations, changes in partners' deficit/net liabilities in liquidation and cash flows for the year then ended. 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 audit. We conducted our audit 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 audit provides a reasonable basis for our opinion. As more fully described in Note A, due to the imminent disposal of its investment properties, the Managing General Partner has decided, effective December 31, 1999, to liquidate the Partnership. As a result, the Partnership changed its basis of accounting as of December 31, 1999 from a going concern basis to a liquidation basis. In our opinion, the financial statements referred to above present fairly, in all material respects, the net liabilities in liquidation of Century Properties Fund XX at December 31, 1999 and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States applied on the bases described in the preceding paragraph. /s/Ernst & Young LLP Greenville, South Carolina March 24, 2000 Independent Auditors' Report To the Partners Century Properties Fund XX Greenville, South Carolina We have audited the accompanying statements of operations, partners' deficit and cash flows of Century Properties Fund XX (a limited partnership) (the "Partnership") for the year ended December 31, 1998. 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 audit. We conducted our audit in accordance with generally accepted auditing standards. 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 audit provides a reasonable basis for our opinion. The accompanying financial statements have been prepared assuming that the Partnership will continue as a going concern. As discussed in Note A to the financial statements, the Partnership's Non-Recourse Promissory Notes, totaling approximately $49,323,000 in principal and interest, matured on November 30, 1998 and are in default. This matter raises substantial doubt about the Partnership's ability to continue as a going concern. Management's plans in regard to this matter are also described in Note A. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. In our opinion, the financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of Century Properties Fund XX for the year ended December 31, 1998, in conformity with generally accepted accounting principles. /s/IMOWITZ KOENIG & CO., LLP Certified Public Accountants New York, NY March 10, 1999 CENTURY PROPERTIES FUND XX STATEMENT OF NET LIABILITIES IN LIQUIDATION (in thousands, except unit data) December 31, 1999
Assets Cash and cash equivalents $ 1,718 Receivables and deposits 678 Debt trustee escrow 2,270 Investment properties 32,141 36,807 Liabilities Accounts payable 82 Tenant security deposit payable 125 Accrued property taxes 242 Other liabilities 176 Non-recourse promissory notes (Note A) 36,555 37,180 Net liabilities in liquidation $ (373)
See Accompanying Notes to Financial Statements CENTURY PROPERTIES FUND XX STATEMENTS OF OPERATIONS (in thousands, except unit data)
Years Ended December 31, 1999 1998 Revenues: Rental income $ 7,378 $ 7,634 Other income 630 547 Income from deficiency certificate settlement (Note J) 91 301 Gain on sale of investment properties 855 -- Total revenues 8,954 8,482 Expenses: Interest to promissory note holders 2,394 2,511 Operating 2,676 2,777 Depreciation 1,658 1,661 Amortization of sales commissions and organizational costs -- 298 General and administrative 2,404 833 Property taxes 753 586 Total expenses 9,885 8,666 Net loss $ (931) $ (184) Net income (loss) allocated to general partner $ 252 $ (4) Net loss allocated to limited partners (1,183) (180) $ (931) $ (184) Net loss per limited partnership unit $(19.14) $ (2.91)
See Accompanying Notes to Financial Statements CENTURY PROPERTIES FUND XX STATEMENT OF CHANGES IN PARTNERS' DEFICIT/NET LIABILITIES IN LIQUIDATION (in thousands, except unit data)
Limited Partnership General Limited Units Partner Partners Total Original capital contributions 61,814 $ -- $30,907 $30,907 Partners' deficit at December 31, 1997 61,814 $(1,475) $(6,678) $(8,153) Net loss for the year ended December 31, 1998 -- (4) (180) (184) Distributions paid to partners -- (26) -- (26) Partners' deficit at December 31, 1998 61,814 (1,505) (6,858) (8,363) Net income (loss) for year ended December 31, 1999 -- 252 (1,183) (931) Partners' deficit at December 31, 1999 61,814 $(1,253) $(8,041) (9,294) Adjustment to liquidation basis (Notes A & C) 8,921 Net liabilities in liquidation at December 31, 1999 $ (373)
See Accompanying Notes to Financial Statements CENTURY PROPERTIES FUND XX STATEMENTS OF CASH FLOWS (in thousands)
Year Ended December 31, 1999 1998 Cash flows from operating activities: Net loss $ (931) $ (184) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 1,658 1,661 Amortization of deferred charges 216 504 Interest on non-recourse promissory notes -- 1,256 Rent abatement -- (392) Loss on disposal of property -- 26 Gain on sale of investment properties (855) -- Change in accounts: Receivables and deposits 133 (551) Debt trustee escrow (2,270) -- Other assets (127) 2 Accounts payable 42 (8) Tenant security deposit liabilities (67) 10 Accrued property taxes (39) 268 Other liabilities 80 12 Deferred interest (3,483) -- Accrued interest (314) -- Net cash (used in) provided by operating activities (5,957) 2,604 Cash flows from investing activities: Property improvements and replacements (811) (440) Lease commissions paid (96) (255) Proceeds from sale of investment properties 8,356 -- Net cash provided by (used in) investing activities 7,449 (695) Cash flows from financing activities: Cash distributions to general partner -- (26) Non-recourse promissory notes principal payments (8,971) -- Net cash used in financing activities (8,971) (26) Net (decrease) increase in cash and cash equivalents (7,479) 1,883 Cash and cash equivalents at beginning of period 9,197 7,314 Cash and cash equivalents at end of period $ 1,718 $ 9,197 Supplemental disclosure of cash flow information: Cash paid for interest $ 5,667 $ 1,255 Supplemental disclosure of non-cash investing information: Tenant improvements funded through rent abatement $ -- $ 392
See Accompanying Notes to Financial Statements CENTURY PROPERTIES FUND XX NOTES TO FINANCIAL STATEMENTS December 31, 1999 Note A - Basis of Presentation As of December 31, 1999, Century Properties Fund XX (the "Partnership" or "Registrant") adopted the liquidation basis of accounting due to the imminent loss of its remaining investment properties. The Partnership's Nonrecourse Promissory Notes (the "Notes") of approximately $49,323,000 in principal and accrued interest were in default due to nonpayment upon maturity on November 30, 1998. The Notes are secured by a deed of trust on all properties owned by the Partnership. The Promissory Notes bear interest at eight percent per annum except that interest of up to four percent may be deferred, provided the Partnership makes interest payments on the unpaid principal balance of at least four percent per annum. The deferred interest does not bear interest. Fox Capital Management Corporation ("FCMC" or the "Managing General Partner") previously contacted the indenture trustee for the Notes and certain holders of the Notes regarding this default. On October 28, 1999 the Partnership entered into a forbearance agreement with the indenture trustee for a period of 390 days. In turn, the Partnership agreed to (a) deliver to the indenture trustee for the benefit of the note holders all of the accumulated cash of the Partnership, less certain reserves and anticipated operating expenses, (b) market all of its properties for sale, (c) deliver all cash proceeds from any sales to the indenture trustee until the notes are fully satisfied and (d) comply with the reporting requirements under the indenture. It is uncertain whether the sale of the Partnership's assets will generate sufficient proceeds to pay off the Nonrecourse Promissory Notes in full. If the Partnership cannot sell its properties for sufficient value, in accordance with the terms of the forbearance agreement, it is likely that the Partnership will lose its properties through delivery to an auctioneer who would sell the assets for the benefit of the Note holders. As a result of the decision to liquidate the Partnership, the Partnership changed its basis of accounting for its financial statements at December 31, 1999, to the liquidation basis of accounting. Consequently, assets have been valued at estimated net realizable value and liabilities are presented at their estimated settlement amounts. The valuation of assets and liabilities necessarily requires many estimates and assumptions and there are substantial uncertainties in carrying out the liquidation. The actual realization of assets and settlement of liabilities could be higher or lower than amounts indicated and is based upon the Managing General Partner's estimates as of the date of the financial statements. The Managing General Partner estimates that the liquidation process will be completed by June 30, 2000. Because the success in realization of assets and the settlement of liabilities is based on the Managing General Partner's best estimates, the liquidation period may be shorter than projected or it may be extended beyond the projected period. Note B - Organization and Significant Accounting Policies Organization: The Partnership was organized under the Uniform Limited Partnership Laws of California as of December 1983. The general partner responsible for management of the Partnership's business is Fox Partner III (the "General Partner"). The general partners of Fox Partners III are Fox Capital Management Corporation ("FCMC"), a California corporation, Fox Realty Investors ("FRI"), a California general partnership, and Fox 84, a California general partnership. The Managing General Partner and NPI Equity Investments II, Inc., the managing general partner of FRI, are subsidiaries of Apartment Investment And Management Company ("AIMCO") (see "Note D - Transfer of Control"). The directors and officers of the Managing General Partner also serve as executive officers of AIMCO. The Partnership Agreement provides that the Partnership is to terminate on December 31, 2008 unless terminated prior to such date. The Partnership operates three commercial properties and two apartment properties. Uses of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Allocation of Income, Loss and Distributions: Net income, net loss and distributions of cash of the Partnership are allocated between the general and limited partners in accordance with the provisions of the Partnership Agreement. Fair Value of Financial Instruments: SFAS No. 107, "Disclosures about Fair Value of Financial Instruments", as amended by SFAS No. 119, "Disclosures about Derivative Financial Instruments and Fair Value of Financial Instruments", requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate fair value. Fair value is defined in the SFAS as the amount at which the instruments could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The Partnership believes that the carrying amount of its financial instruments (except for long term debt) approximates their fair value due to the short term maturity of these instruments. The fair value of the Partnership's Non-Recourse Promissory Notes is not practicable to estimate due to their maturity in November 1998. Cash and Cash Equivalents: Includes cash on hand, in banks and money market accounts. At certain times, the amount of cash deposited at a bank may exceed the limit on insured deposits. Depreciation: Depreciation was provided by the straight-line method over the estimated lives of the investment 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. As a result of adopting the liquidation basis of accounting, the gross carrying values of the properties were adjusted to their net realizable value and will not be depreciated any further. Deferred Charges: Sales commissions and organization expenses related to the Notes were deferred and amortized by the straight-line method over the life of the Promissory Notes. These costs became fully amortized at the maturity date of November 30, 1998. Leasing commissions were deferred and amortized over the lives of the related leases. Such amortization was charged to operating expense. At December 31, 1999, these leasing commissions were written off in the adjustment to liquidation basis because the Partnership determined that these intangible assets no longer have value. Tenant Security Deposits: The Partnership requires security deposits from lessees for the duration of the lease and such deposits are included in receivables and deposits. Deposits are refunded when the tenant vacates, provided the tenant has not damaged its space and is current on 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. The Partnership leases commercial space to tenants under various lease terms. For leases containing fixed rental increases during their term, rents are recognized on a straight-line basis over the terms of the leases. For all other commercial leases, rents are recognized over the terms of the leases as earned. Investment Properties: Investment properties consist of three commercial properties and 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 those assets. No adjustment for impairment of value was recorded in the year ended December 31, 1998. As a result of the Partnership adopting the liquidation basis of accounting, the investment properties were adjusted to their estimated net realizable values at December 31, 1999. The effect of adoption was to increase the carrying value of the investment properties by approximately $9,530,000. Segment Reporting: Statement of Financial 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 establishes standards for related disclosures about products and services, geographic areas, and major customers. See "Note L" for required disclosure. Advertising Costs: The Partnership expenses the costs of advertising as incurred. Advertising costs of approximately $61,000 and $59,000 for the years ended December 31, 1999 and 1998, respectively, were charged to operating expense as incurred. Reclassifications: Certain reclassifications have been made to 1998 balances to conform to the 1999 presentation. Note C - Adjustment to Liquidation Basis of Accounting At December 31, 1999, in accordance with the liquidation basis of accounting, assets were adjusted to their estimated net realizable value and liabilities were adjusted to their settlement amount. The net adjustment required to convert to the liquidation basis of accounting was a decrease in net liabilities of approximately $8,921,000 which is included in the Statement of Changes in Partners' Deficit/Net Liabilities In Liquidation. The adjustments are summarized as follows: (Increase) Decrease in Net Liabilities (in thousands) Adjustment from book value of property and improvements to estimated net realizable value $ 9,530 Adjustment of other assets (609) Net decrease in net liabilities $ 8,921 Note D - Transfer of Control Pursuant to a series of transactions which closed on October 1, 1998 and February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust merged into AIMCO, a publicly traded real estate investment trust, with AIMCO being the surviving corporation (the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in the Managing General Partner. The Managing General Partner does not believe that this transaction has had or will have a material effect on the affairs and operations of the Partnership. Note E - Income Taxes Taxable income or loss of the Partnership is reported in the income tax returns of its partners. The following is a reconciliation of reported net loss and Federal taxable loss (in thousands, except per unit data): 1999 1998 Net loss as reported $ (931) $ (184) Add (deduct): Depreciation differences (606) (501) Original issue discount -- (763) Change in prepaid rental 67 (28) Capitalized expenses -- 40 Other 272 (91) Sale of investment properties (829) -- Federal taxable loss $(2,027) $(1,527) Federal taxable loss per limited partnership unit $(32.65) $(24.00) The following is a reconciliation between the Partnership's reported amounts and Federal tax basis of net assets and liabilities (in thousands): 1999 Net liabilities in liquidation $ (373) Land and buildings 7,176 Accumulated depreciation (17,659) Syndication costs 4,551 Other 661 Net liabilities - Federal tax basis $ (5,644) Note F - 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 certain payments to affiliates for services and as reimbursement of certain expense 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, 1999 and 1998: 1999 1998 (in thousands) Property management fees (included in operating expense) $ 159 $ 154 Reimbursement for services of affiliates (included in investment properties and operating and general and administrative expenses) 187 212 Partnership management fees (included in general and administrative expenses) 390 72 During the years ended December 31, 1999 and 1998, affiliates of the Managing General Partner were entitled to receive 5% of gross receipts from both of the Registrant's residential properties as compensation for providing property management services. These services were performed by affiliates of the Managing General Partner. The Registrant paid to such affiliates approximately $159,000 and $154,000 for the years ended December 31, 1999 and 1998, respectively. For the Registrant's commercial properties, these services were provided by an unrelated party for the years ended December 31, 1999 and 1998. Affiliates of the Managing General Partner received reimbursement of accountable administrative expenses amounting to approximately $187,000 and $212,000 for the years ended December 31, 1999 and 1998, respectively. In accordance with the Partnership Agreement, the general partner was allocated its two percent continuing interest in the Partnership's net loss. The general partner received two percent of total distributions including cash paid to the Promissory Note holders. In addition, the general partner is entitled to a partnership management incentive distribution, which together with the partnership management fee cannot exceed ten percent of cash available for distribution, as defined. No incentive distributions were made in 1999 or 1998; however, the general partner received a partnership management fee of approximately $390,000 and $72,000 in 1999 and 1998, respectively. Note G - Significant Tenant and Minimum Future Rental Revenues Rental revenue from one tenant at Linpro Park I represented approximately 16% of total Partnership rental income in 1999 and 1998. The tenant's lease is scheduled to expire in December 2002. Minimum future rental revenues from operating leases having initial or remaining non-cancelable lease terms in excess of one year at December 31, 1999, are as follows (in thousands): 2000 $ 3,104 2001 2,320 2002 2,191 2003 521 2004 317 Thereafter 105 $ 8,558 Amortization of deferred leasing commissions totaled approximately $216,000 and $206,000 for the years ended December 31, 1999 and 1998, respectively. Note H - Sale of Investment Properties On November 10, 1999, the Partnership sold Crabtree Office Center to an unaffiliated third party for approximately $6,700,000. The Partnership recognized a gain of approximately $1,505,000 on the sale during the year ended December 31, 1999. The net sales proceeds of approximately $6,494,000 were paid directly to the indenture trustee, as required by the forbearance agreement. The sale transaction is summarized as follows (amounts in thousands): Sales price, net of selling costs $ 6,494 Net real estate (1) (4,877) Net other assets (112) Gain on sale of real estate $ 1,505 (1) Real estate at cost, net of accumulated depreciation of approximately $3,965,000. On December 30, 1999, the Partnership sold Commonwealth Center to an unaffiliated third party for approximately $1,950,000. The Partnership recognized a loss of approximately $650,000 during the year ended December 31, 1999. The net sales proceeds of approximately $1,862,000 were paid directly to the indenture trustee as required by the forbearance agreement. The sale transaction is summarized as follows (amounts in thousands): Sales price, net of selling costs $ 1,862 Net real estate (2) (2,421) Net other assets (91) Loss on sale of real estate $ (650) (2) Real estate at cost, net of accumulated depreciation of approximately $4,104,000. In March 2000 the Partnership sold Linpro Park I to an unaffiliated third party for approximately $8,900,000, net of closing costs. Note I - Real Estate and Accumulated Depreciation
Initial Cost To Partnership (in thousands) Net Cost Buildings (Removed) Adjustment and Related Capitalized To Personal Subsequent to Liquidation Description Encumbrances (1) Land Property Acquisition Basis (in thousands) Linpro Park I $ -- $ 1,089 $ 7,882 $ (488) $ 447 Metcalf 103 Office Park -- 810 1,565 880 (106) Highland Park -- 1,256 7,884 1,450 (4,910) Harbor Club Downs -- 1,416 6,864 1,198 1,144 The Corners -- 419 3,102 525 (286) Totals $ -- $ 4,990 $27,297 $ 3,565 $(3,711)
(1) The Non-Recourse Promissory Notes are secured by deed of trust on all properties owned by the Partnership. See "Note A" for further discussion.
Gross Amount At Which Carried At December 31, 1999 (in thousands) Buildings And Related Year of Personal Accumulated Construc- Date Depreciable Description Land Property Total Depreciation tion Acquired Life-Years Linpro Park I $ 693 $ 8,237 $ 8,930 (1) 1982 03/85 5-39 Metcalf 103 Office Park 810 2,339 3,149 (1) 1973 04/91 5-39 Highland Park 1,231 4,449 5,680 (1) 1986 11/85-02/86 5-39 Harbor Club Downs 1,416 9,206 10,622 (1) 1986 05/92 5-39 The Corners 419 3,341 3,760 (1) 1974 11/92 5-30 Total $ 4,569 $27,572 $32,141
(1) As a result of adopting the liquidation basis of accounting, the gross carrying values of the properties were adjusted to their net realizable value and will not be depreciated any further. Reconciliation of Real Estate and Accumulated Depreciation: Years Ended December 31, 1999 1998 (in thousands) Investment Properties Balance at beginning of year $ 50,408 $ 49,623 Property improvements 811 440 Rent abatement -- 392 Disposal of property -- (47) Sale of investment properties (15,367) -- Adjustment to liquidation basis (3,711) -- Balance at end of year $ 32,141 $ 50,408 Accumulated Depreciation Balance at beginning of year $ 19,652 $ 18,012 Additions charged to expense 1,658 1,661 Disposals of property -- (21) Sale of investment properties (8,069) -- Adjustment to liquidation basis (13,241) -- Balance at end of year $ -- $ 19,652 The aggregate cost of the real estate for Federal income tax purposes at December 31, 1999 and 1998, is approximately $39,317,000 and $58,008,000, respectively. The accumulated depreciation for Federal income tax purposes at December 31, 1999 and 1998 respectively, is approximately $17,659,000 and $26,886,000. Note J - Contingency On January 24, 1990, a settlement agreement was executed by and between the Partnership and certain defendants in connection with legal proceedings at Commonwealth Centre. Lincoln Property Company ("Lincoln"), one of the defendants, provided the Partnership with a deficiency certificate totaling $1,250,000 pursuant to Lincoln's company-wide debt restructuring plan. Effective December 31, 1994, the obligators under this collateral pool agreement exercised their right to extend the maturity date of the deficiency certificates to December 31, 1997. The senior obligators have accepted an offer to settle the outstanding amounts due from Lincoln at a discounted rate. The Managing General Partner was obligated to accept the initial settlement which equated to approximately $256,000. Prior to this settlement, the Partnership had not recorded a receivable on the financial statements due to the uncertainty of receiving any funds. The initial settlement related to the cash collateral pool, and the Partnership received further funds of approximately $45,000 during the remaining months of 1998 as well as approximately $91,000 during the year ended December 31, 1999. It is anticipated this will be the final payment received by the Partnership. With receipt of this settlement, the Partnership has recorded income from the settlement in the financial statements. The current settlement relates to the cash available to distribute in the collateral pool. Note K - Rent Abatement On January 1, 1998, a tenant of Linpro Park I entered into a five year lease agreement. The lease provided for a renovation allowance equal to $7.00 per square foot to reimburse the tenant for improvements made to accommodate the tenant. This allowance is for the twelve month period beginning January 1, 1998 and ending December 31, 1998. As of December 31, 1998, $392,000 of improvements have been completed. The allowance is reflected on the financial statements as rent abatement and is included as rental income. Note L - Disclosures about Segments of an Enterprise and Related Information Description of the types of products and services from which the reportable segment derives its revenues: The Partnership has two reportable segments: commercial properties and residential properties. The Partnership's commercial property segment consists of three office complexes in Virginia, Kansas, and North Carolina. The Partnership leases office space for terms that typically exceed one year. The residential property segment consists of two apartment complexes in Florida and South Carolina. The Partnership rents apartment units to tenants for terms that are typically twelve months or less. Measurement of segment profit or loss: The Partnership evaluates performance based on segment profit (loss) before depreciation. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. Factors management used to identify the enterprise's reportable segment: The Partnership's reportable segment consists of investment properties that offer different products and services. The reportable segments are each managed separately because they provide distinct services with different types of products and services. Segment information for the years 1999 and 1998 is shown in the tables below (in thousands). The "Other" Column includes partnership administration related items and income and expense not allocated to the reportable segment.
1999 Residential Commercial Other Totals Rental income $ 2,981 $ 4,397 $ -- $ 7,378 Other income 137 32 461 630 Income from settlement -- -- 91 91 Gain on sale of investment properties -- 855 -- 855 Interest expense -- -- 2,394 2,394 Depreciation 458 1,200 -- 1,658 General and administrative expense -- -- 2,404 2,404 Segment profit (loss) 1,204 2,111 (4,246) (931) Net liabilities in liquidation -- -- (373) (373) Capital expenditures for investment properties 502 309 -- 811
1998 Residential Commercial Other Totals Rental income $ 2,864 $ 4,770 $ -- $ 7,634 Other income 166 26 355 547 Income from settlement -- -- 301 301 Interest expense -- -- 2,511 2,511 Depreciation 471 1,190 -- 1,661 Amortization of deferred charges -- -- 298 298 General and administrative expense -- -- 833 833 Segment profit (loss) 1,087 1,715 (2,986) (184) Total assets 10,745 21,890 8,914 41,549 Capital expenditures for investment properties 133 699 -- 832
Note M - Legal Proceedings In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, the Managing General Partner and several of their affiliated partnerships and corporate entities. The action purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging the acquisition by Insignia Financial Group, Inc. ("Insignia") and entities which were, at one time, affiliates of Insignia ("Insignia Affiliates") of interests in certain general partner entities, past tender offers by Insignia Affiliates to acquire limited partnership units, the management of partnerships by Insignia Affiliates and the Insignia Merger (see "Note D - Transfer of Control"). The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the Managing General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs have filed an amended complaint. The Managing General Partner filed demurrers to the amended complaint which were heard February 1999. Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to final court approval, on behalf of the Partnership and all limited partners who own units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Superior Court of the State of California, County of San Mateo, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of class plaintiffs' counsel to enter the settlement. On December 14, 1999, the Managing General Partner and its affiliates terminated the proposed settlement. Certain plaintiffs have filed a motion to disqualify some of the plaintiffs' counsel in the action. The Managing General Partner does not anticipate that costs associated with this case will be material to the Partnership's overall operations. The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature arising in the ordinary course of business. Item 8. Changes in and Disagreements with Accountants and Financial Disclosure As of December 10, 1999 Imowitz Koenig & Co., LLP, the independent accountant previously engaged as the principal accountant to audit the financial statements of the Partnership, was terminated. As of the same date, the firm of Ernst & Young LLP was engaged as the independent accountant for the Registrant. The audit reports of Imowitz Koenig & Co., LLP on the financial statements of the Partnership as of and for the years ended December 31, 1998 and 1997, did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to audit scope or accounting principles. The audit reports were modified as to the uncertainty of the Registrant's ability to continue as a going concern. The decision to change accountants was approved by the board of directors of the managing general partner of the Partnership on December 10, 1999. During the Partnership's calendar year ended December 31, 1998 and the subsequent interim periods preceding the change, there were no disagreements with the former accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of the former accountant, would have caused it to make reference to the subject matter of the disagreements in connection with its report. During the calendar year ended December 31, 1998 and through December 10, 1999, the Partnership did not consult Ernst & Young LLP regarding any matters or events set forth in Item 304 (a)(2)(i) and (ii) of Regulation S-B. PART III Item 9. Directors, Executive Officers, Promoters and Control Persons, Compliance with Section 16(a) of the Exchange Act Century Properties Fund XX (the "Partnership" or the "Registrant") has no officers or directors. The names and ages of, as well as the positions and offices held by, the present executive officers and director of Fox Capital Management Corporation ("FCMC" or the "Managing General Partner") are set forth below. The Managing General Partner manages and controls substantially all of the partnership's affairs and has general responsibility and ultimate authority in all matters affecting its business. There are no family relationships between or among any officers or directors. Name Age Position Patrick J. Foye 42 Executive Vice President and Director Martha L. Long 40 Senior Vice President and Controller Patrick J. Foye has been Executive Vice President and Director of the Managing General Partner since October 1, 1998. Mr. Foye has served as Executive Vice President of AIMCO since May 1998. Prior to joining AIMCO, Mr. Foye was a partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to 1998 and was Managing Partner of the firm's Brussels, Budapest and Moscow offices from 1992 through 1994. Mr. Foye is also Deputy Chairman of the Long Island Power Authority and serves as a member of the New York State Privatization Council. He received a B.A. from Fordham College and a J.D. from Fordham University Law School. Martha L. Long has been Senior Vice President and Controller of the Managing General Partner and AIMCO since October 1998, as a result of the acquisition of Insignia Financial Group, Inc. From June 1994 until January 1997, she was the Controller for Insignia, and was promoted to Senior Vice President - Finance and Controller in January 1997, retaining that title until October 1998. From 1988 to June 1994, Ms. Long was Senior Vice President and Controller for The First Savings Bank, FSB in Greenville, South Carolina. Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to the Registrant under Rule 16a-3(e) during the Registrant's most recent fiscal year and Form 5 and amendments thereto furnished to the Registrant with respect to its most recent fiscal year, the Registrant is not aware of any director, officer, beneficial owner of more than ten percent of the units of limited partnership interest in the Registrant that failed to file on a timely basis, as disclosed in the above Forms, reports required by Section 16(a) of the Exchange Act during the most recent fiscal year or prior fiscal years. Item 10. Executive Compensation Neither the directors nor any of the officers of the Managing General Partner received any remuneration from the Registrant. Item 11. Security Ownership of Certain Beneficial Owners and Management Except as noted below, no person or entity was known by the Registrant to be the beneficial owner of more than 5% of the Limited Partnership Units of the Registrant as of December 31, 1999. Entity Number of Units Percentage Insignia Properties LP 10 .016% (an affiliate of AIMCO) AIMCO Properties LP 3,591 5.810% (an affiliate of AIMCO) Independent Life & Accident 3,180 5.145% (unrelated party) Insignia Properties LP is indirectly ultimately owned by AIMCO. Its business address is 55 Beattie Place, Greenville, South Carolina 29602. AIMCO Properties LP is indirectly ultimately controlled by AIMCO. Its business address is 2000 South Colorado Boulevard, 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 certain payments to affiliates for services and as reimbursements 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, 1999 and 1998: 1999 1998 (in thousands) Property management fees $ 159 $ 154 Reimbursement for services of affiliates 187 212 Partnership management fees 390 72 During the years ended December 31, 1999 and 1998, affiliates of the Managing General Partner were entitled to receive 5% of gross receipts from both of the Registrant's residential properties as compensation for providing property management services. These services were performed by affiliates of the Managing General Partner. The Registrant paid to such affiliates approximately $159,000 and $154,000 for the years ended December 31, 1999 and 1998, respectively. For the Registrant's commercial properties these services were provided by an unrelated party for the years ended December 31, 1999 and 1998. Affiliates of the Managing General Partner received reimbursement of accountable administrative expenses amounting to approximately $187,000 and $212,000 for the years ended December 31, 1999 and 1998, respectively. In accordance with the Partnership Agreement, the general partner is allocated its two percent continuing interest in the Partnership's net loss. The general partner received two percent of total distributions including cash paid to the Promissory Note holders. In addition, the general partner is entitled to a partnership management incentive distribution, which together with the partnership management fee cannot exceed ten percent of cash available for distribution, as defined. No incentive distributions were made in 1999 or 1998; however, the general partner received a partnership management fee of approximately $390,000 and $72,000 in 1999 and 1998, respectively. Item 13. 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 filed in the fourth quarter of calendar year 1999: None. SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CENTURY PROPERTIES FUND XX By: FOX PARTNERS III, 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: In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities on the date indicated. /s/Patrick J. Foye Executive Vice President Date: Patrick J. Foye and Director /s/Martha L. Long Senior Vice President Date: Martha L. Long and Controller EXHIBIT INDEX Exhibit 2 NPI, Inc. Stock Purchase Agreement, dated as of August 17, 1995, incorporated by reference to the Partnership's Current Report on Form 8-K dated August 17, 1995. 2.1 Agreement and Plan of Merger, dated as of October 1, 1998, by and between AIMCO and IPT; incorporated by reference to Current Report on Form 8-K dated October 1, 1998. 3.4 Agreement of Limited Partnership, incorporated by reference to Exhibit A to the Prospectus of the Partnership dated February 22, 1984, and November 8, 1984, and thereafter supplemented contained in the Partnership Registration Statement on Form S-11 (Reg. No. 2-88615). 27 Financial Data Schedule. EX-27 2 YEAR END 10-KSB
5 This schedule contains summary financial information extracted from Century Properties Fund XX 1999 Fourth Quarter 10-KSB and is qualified in its entirety by reference to such 10-KSB filing. 0000736909 Century Properties Fund XX 1,000 12-MOS DEC-31-1999 JAN-01-1999 DEC-31-1999 1,718 0 678 0 0 0 32,141 0 36,807 0 36,555 0 0 0 0 37,180 0 8,954 0 0 9,885 0 2,394 0 0 0 0 0 0 (931) (19.14) 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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