-----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, SPXU4s/HO7c/yLIplAmzvSL6HxzZK0TRBfn1dPx53j926DYLzlX+t+Gn5hEr5dzI B8dUYSG7dHXt54ZRqTcuzw== 0000711642-99-000040.txt : 19990402 0000711642-99-000040.hdr.sgml : 19990402 ACCESSION NUMBER: 0000711642-99-000040 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990331 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: 99580009 BUSINESS ADDRESS: STREET 1: 1873 SOUTH BELLAIRE ST 17TH FLOOR CITY: DENVER STATE: CO ZIP: 80222 BUSINESS PHONE: 3037578101 MAIL ADDRESS: STREET 1: POST & HEYMANN STREET 2: 5665 NORTHSIDE DRIVE NW CITY: ATLANTA STATE: GA ZIP: 30328 10KSB 1 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, 1998 [ ] 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, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (Zip Code) Issuer's telephone number (864) 239-1000 Securities registered under Section 12(b) of the Exchange Act: None Securities registered under Section 12(g) of the Exchange Act: Units of Limited Partnership Interest (Title of class) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No __ Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X] State issuer's revenues for its most recent fiscal year. $8,482,000. 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, 1998. No market exists for the limited partnership interests of the Registrant, and, therefore, no aggregate market value can be determined. DOCUMENTS INCORPORATED BY REFERENCE None PART I ITEM 1. DESCRIPTION OF BUSINESS Century Properties Fund 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 84, a California general partnership. The Managing General Partner is a subsidiary of Apartment Investment and Management Company ("AIMCO"). 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 (the "Commission") on February 22, 1984. The Partnership marketed its securities pursuant to its Prospectuses dated February 22, 1984, and November 8, 1984, which were thereafter supplemented (hereinafter the "Prospectus"). The Prospectus was filed with the 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 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. See "Item 2. Description of Properties" below for a description of the Partnership's properties. 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. 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, competition for apartments is local. In addition, various limited partnerships have been formed by the Managing General Partner and/or affiliates to engage in business which may be competitive with the Partnership. 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 remaining properties owned by the Partnership are subject to factors outside of the Partnership's control, such as an oversupply of similar properties resulting from overbuilding, increases in unemployment or population shifts, reduced 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 properties because such properties are susceptible to the impact of economic and other conditions outside of the control of the Partnership. Change in Control Pursuant to a series of transactions which closed during 1996, affiliates of Insignia Financial Group, Inc. ("Insignia") acquired all of the issued and outstanding shares of stock of FCMC, NPI Equity Investments II, Inc. ("NPI Equity"), the managing general partner of FRI, and National Property Investors, Inc. ("NPI"). NPI was the sole stockholder of NPI Equity until December 31, 1996, at which time the stock of NPI Equity was acquired by Insignia Properties Trust, an affiliate of Insignia. 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 Apartment Investment and Management Company, a publicly traded real estate investment trust, with AIMCO being the surviving corporation (the "Insignia Merger"). As a result, AIMCO ultimately acquired a 100% ownership interest in Insignia Properties Trust ("IPT"), the entity which controls the Managing General Partner. The Managing General Partner does not believe that this transaction 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 investments in properties: Date of Property Purchase Type of Ownership (2) Use Crabtree Office Center 12/84 Fee Ownership Office Building- Raleigh, North Carolina 59,000 sq. ft. 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. Commonwealth Centre 10/84 Fee Ownership Business Park- Dallas, Texas 109,000 sq. ft. Highland Park Commerce (1) Fee Ownership Business Park- Center Charlotte, North Carolina 106,000 sq. ft. Harbor Club Downs 05/92 Fee Ownership Apartment- Palm Harbor, Florida 272 units The Corners Apartments 11/92 Fee Ownership Apartment- Spartanburg, South 176 units Carolina (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) Crabtree $ 8,723 $ 3,674 5-39 yrs S/L $ 3,513 Linpro 8,459 4,598 5-39 yrs S/L 4,446 Metcalf 3,204 756 5-39 yrs S/L 2,795 Commonwealth 6,456 3,896 5-39 yrs S/L 5,139 Highland Park 10,545 3,941 5-39 yrs S/L 5,046 Harbor Club 9,067 1,911 5-30 yrs S/L 7,156 The Corners 3,954 876 5-30 yrs S/L 3,027 Total $50,408 $19,652 $31,122 See "Note B" to the financial statements in "Item 7. Financial Statements" for a description of the Partnership's 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 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. The Promissory Notes were due November 30, 1998. In accordance with the Partnership Agreement and the Trust Indenture, upon the sale, repayment or other disposition of any Partnership properties or Partnership mortgage loans, 98 percent of the resulting cash proceeds are first allocated to the payment of Promissory Notes until such Promissory Notes are repaid. Promissory Note holders are also entitled to the payment of residual interest after specified payments to the general partner and Individual Unit holders as set forth in the Trust Indenture. The Promissory Notes are currently in default. See "Item 6. Management's Discussion and Analysis or Plan of Operation" for further information. RENTAL RATES AND OCCUPANCY: Average annual rental rate and occupancy for 1998 and 1997 for each property: Average Annual Rental Rates Average Occupancy Property 1998 1997 1998 1997 Crabtree $17.25/sq. ft. $16.44/sq. ft. 96% 99% Linpro 14.29/sq. ft. 17.06/sq. ft. 96% 100% Metcalf 11.61/sq. ft. 11.25/sq. ft. 97% 97% Commonwealth 5.09/sq. ft. 4.90/sq. ft. 96% 87% Highland Park 9.53/sq. ft. 9.44/sq. ft. 97% 94% Harbor Club 7,900/unit 7,546/unit 94% 95% The Corners 5,714/unit 5,680/unit 91% 93% The decrease in occupancy at Crabtree is due to the loss of two tenants which occupied approximately 6,000 square feet during 1998. The decrease in occupancy at Linpro is due to a decrease in demand for Class B space in the Reston, Virginia market. The increase in occupancy at Commonwealth is due to four new tenants occupying a total of 23,019 square feet and one existing tenant expanding into unoccupied space. The increase in occupancy at Highland Park is due to the addition of two new tenants and the expansion of an existing tenant. 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 multifamily 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 1999-2008: Number of Square Annual % Of Gross Expirations Feet Rent Annual Rent (in thousands) Crabtree 1999 4 10,819 $ 172 19.56% 2000 5 25,015 426 48.45% 2001 1 5,298 92 10.45% 2002 4 9,588 166 18.88% 2003 1 1,238 23 2.67% 2004-2008 0 -- -- -- Linpro 1999-2001 0 -- $ -- -- 2002 2 65,879 1,385 87.89% 2003 1 3,402 79 5.04% 2004 - -- -- -- 2005 1 4,523 111 7.07% 2006-2008 - -- -- -- Metcalf 1999 3 8,468 $ 92 12.75% 2000 4 18,381 189 26.08% 2001 7 13,100 143 19.77% 2002 2 8,124 108 14.92% 2003 3 9,198 130 17.99% 2004 1 1,265 25 3.41% 2005-2008 - -- -- -- Commonwealth 1999 4 30,535 $ 136 26.06% 2000 4 20,109 96 18.47% 2001 4 8,830 48 9.26% 2002 3 15,567 90 17.18% 2003-2008 0 -- -- -- Highland Park 1999 5 25,377 $ 253 25.89% 2000 12 51,998 502 51.41% 2001 2 6,626 58 5.96% 2002 2 9,396 86 8.81% 2003-2006 0 -- -- -- 2007 1 4,212 59 6.04% 2008 - -- -- -- The following schedule reflects information on tenants occupying 10% or more of leasable square footage at December 31, 1998: Nature of Square Footage Annual Rent Per Lease Business Leased Square Foot Expiration CRABTREE Investment Company 7,770 $17.77 10/31/2000 Medical Services 9,981 17.39 04/30/2000 LINPRO Government Agency 57,122 21.50 12/31/2002 Real Estate 8,757 17.94 12/15/2002 METCALF Business Offices 14,426 10.09 10/31/2000 COMMONWEALTH Florist 14,580 3.98 04/15/1999 Wine Shop 14,873 4.50 05/31/2000 HIGHLAND PARK Software Designer 20,426 9.19 10/31/2000 Bank 15,010 8.72 03/31/1999 REAL ESTATE TAXES AND RATES: Real estate taxes and rates in 1998 for each property: 1998 1998 Billing Rate (in thousands) Crabtree $ 45 1.15% Linpro 82 1.29% Metcalf 51 2.19% Commonwealth 75 2.54% Highland Park 78 1.16% Harbor Club 173 2.09% The Corners 96 2.54% CAPITAL IMPROVEMENTS: Commonwealth Center During the year ended December 31, 1998 the Partnership completed approximately $104,000 of capital improvement projects at Commonwealth Center, consisting primarily of building improvements. Based on a report received from an independent third party consultant analyzing necessary exterior improvements and estimates made by the Managing General Partner on interior improvements, it is estimated that the property requires approximately $168,000 of capital improvements over the near term. Capital improvement projects planned for 1999 include, but are not limited to, tenant improvements. These improvements are expected to cost approximately $38,000. Crabtree During the year ended December 31, 1998, the partnership completed approximately $10,000 of capital improvement projects at Crabtree Office Center, consisting primarily of tenant improvements. Based on a report received from an independent third party consultant analyzing necessary exterior improvements and estimates made by the Managing General Partner on interior improvements, it is estimated that the property requires approximately $112,000 of capital improvements over the near term. Capital improvements planned for 1999 include, but are not limited to, tenant improvements. These improvements are expected to cost approximately $95,000. Highland Park During the year ended December 31, 1998, the partnership completed approximately $13,000 of capital improvement projects at Highland Park, consisting primarily of tenant improvements. Based on a report received from an independent third party consultant analyzing necessary exterior improvements and estimates made by the Managing General Partner on interior improvements, it is estimated that the property requires approximately $141,000 of capital improvements over the near term. Capital improvement projects planned for 1999 include, but are not limited to, tenant improvements. These improvements are expected to cost approximately $100,000. Linpro During the year ended December 31, 1998, the Partnership completed approximately $521,000 of capital improvement projects at Linpro Office building, consisting primarily of tenant improvements. Based on a report received from an independent third party consultant analyzing necessary exterior improvements and estimates made by the Managing General Partner on interior improvements, it is estimated that the property requires approximately $439,000 of capital improvements over the near term. Capital improvement projects planned for 1999 include, but are not limited to, parking lot repairs. These improvements are expected to cost approximately $33,000. Metcalf During the year ended December 31, 1998, the Partnership completed approximately $50,000 of capital improvement projects at Metcalf 103 Office Park, consisting primarily of tenant improvements. Based on a report received from an independent third party consultant analyzing necessary exterior improvements and estimates made by the Managing General Partner on interior improvements, it is estimated that the property requires approximately $79,000 of capital improvements over the near term. Capital improvement projects planned for 1999 include, but are not limited to, tenant improvements. These improvements are expected to cost approximately $21,000. Harbor Club During the year ended December 31, 1998, the Partnership completed approximately $86,000 of capital improvement projects at Harbor Club Downs, consisting primarily of floor covering replacements and HVAC upgrades. Based on a report received from an independent third party consultant analyzing necessary exterior improvements and estimates made by the Managing General Partner on interior improvements, it is estimated that the property requires approximately $503,000 of capital improvements over the near term. Capital improvement projects planned for 1999 include, but are not limited to, floor covering replacements, roof repairs, parking lot repairs and landscaping. These improvements are expected to cost approximately $439,000. The Corners During the year ended December 31, 1998, the Partnership completed approximately $47,000 of capital improvement projects at The Corners consisting primarily of floor covering replacements and upgrades to the appliances. Based on a report received from an independent third party consultant analyzing necessary exterior improvements and estimates made by the Managing General Partner on interior improvements, it is estimated that the property requires approximately $388,000 of capital improvements over the near term. Capital improvement projects planned for 1999 include, but are not limited to, floor covering replacements and landscaping. These improvements are expected to cost approximately $73,000. The capital improvements planned for 1999 at the Partnership's properties will be made only to the extent of cash available from operations. 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 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 entities which were, at the time, affiliates of Insignia ("Insignia Affiliates") of interests in certain general partner entities, past tender offers by Insignia Affiliates as well as a recently announced agreement between Insignia and AIMCO. The complaint seeks 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 has filed demurrers to the amended complaint which were heard during February 1999. No ruling on such demurrers has been received. The Managing General Partner does not anticipate that costs associated with this case, if any, 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, 1998 no matter was submitted to a vote of unit holders through the solicitation of proxies or otherwise. PART II ITEM 5. MARKET FOR 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 1,918 holders of record owning an aggregate of 61,814 Units. An affiliate of the Managing General Partner owns 10 Units, or 0.0161. No public trading market has developed for the Units, and it is not anticipated that such a market will develop in the future. In accordance with the Partnership Agreement, distributions are to be made to the general partner in an amount equal to 2% of cash payments to holders of the Promissory Notes. As such, cash distributions of approximately $26,000 were paid to the General Partner during each of the years ended December 31, 1998 and 1997. No other distributions were made during the years ended December 31, 1998 or 1997. 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 The Partnership's net loss for the year ended December 31, 1998 was approximately $184,000 as compared to a net loss of approximately $1,092,000 for the year ended December 31, 1997. (See "Note E" of the financial statements for a reconciliation of these amounts to the Partnership's federal taxable income (loss)). The decrease in net loss is primarily attributable to an increase in total revenues and a decrease in total expenses. The increase in the Partnership's revenues as a result of a renovation allowance at Linpro Park 1 of approximately $392,000 in 1998 (see "Item 7. Financial Statements - Note J" for further discussion). In addition, the Partnership recognized approximately $301,000 from the settlement on the deficiency certificate due from Lincoln Property Company. The settlement relates to legal proceedings at Commonwealth center. (See "Item 7. Financial Statements - Note I" for further discussion). Operating expenses decreased for the year ended December 31, 1998 as compared to the corresponding period in 1997 as a result of fewer repairs in 1998 compared to 1997 at Commonwealth Center, Crabtree Office Center and Harbor Club Downs. General and administrative expenses decreased for the year ended December 31, 1998, as compared to 1997 resulting from deferred expenses becoming fully amortized during 1998. Included in general and administrative expenses at both December 31, 1998 and 1997 are management reimbursements to the general partner allowed under the Partnership Agreement. In addition, costs associated with the quarterly and annual communications with investors and regulatory agencies and the annual audit required by the Partnership Agreement are also included. Liquidity and Capital Resources At December 31, 1998, the Partnership had cash and cash equivalents of approximately $9,197,000, as compared to approximately $7,314,000 at December 31, 1997. The increase in cash and cash equivalents is due to approximately $2,604,000 of cash provided by operating activities partially offset by approximately $695,000 of cash used in investing activities and approximately $26,000 of cash used in financing activities. Cash used in investing activities consisted of capital improvements and payment of lease commissions. Cash used in financing activities consisted of distributions paid to the General Partner. The Partnership invests its working capital reserves in money market accounts. 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 current and deferred interest of approximately $49,323,000 at December 31, 1998, 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 for the Notes and certain holders of Notes regarding this default. In an effort to cure this default, the Partnership is currently seeking to satisfy the Notes by purchasing the Notes pursuant to a tender offer which commenced on March 9, 1999 at $1,423.34 per $1,000 principal amount (the "Purchase Price"), net to the seller in cash. The Purchase Price represents 90% of the principal, current accrued interest and deferred interest at February 15, 1999, which equates to a total Purchase Price of approximately $44,672,000. In order to fund the tender offer, the Partnership will use its cash reserves and is seeking financing of at least $39,000,000. An affiliate of the Managing General Partner purchased 7,678 Notes on January 4, 1999, and has agreed to tender their units pursuant to this offer. The offer is conditional upon approximately $33,333,000 of Notes being tendered. The offer is to expire on April 6, 1999, unless extended by the Partnership. There can be no assurance that the Partnership will be able to obtain the necessary financing with which to consummate the tender offer or that a sufficient number of noteholders will tender their Notes to enable the Partnership to satisfy the Notes. If the tender offer is not consummated, either because an insufficient number of noteholders tender or if replacement financing cannot be obtained, it is possible that the noteholders will exercise their rights and foreclose on the Partnership's properties. Assuming that the Partnership is successful in tendering for the Notes and consummating the loan as described above, the sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the properties to adequately maintain the physical assets and other operating needs of the Registrant and to comply with Federal, state, and local legal and regulatory requirements. The Registrant has budgeted approximately $798,000 in capital improvements for all of the Registrant's properties in 1999. These improvements include parking lot improvements, tenant improvements, roof replacements, floor coverings, landscaping, and exterior building improvements. The capital expenditures will be incurred only if cash is available from operations. To the extent that such budgeted capital improvements are completed, the Registrant's distributable cash flow, if any, may be adversely affected at least in the short term. In light of the maturity of the Notes, no distributions were made to the limited partners for the years ended December 31, 1998 or 1997. Cash distributions of approximately $26,000 were paid to the general partner during each of the years ended December 31, 1998 and 1997. Year 2000 Compliance General Description of the Year 2000 Issue and the Nature and Effects of the Year 2000 on Information Technology (IT) and Non-IT Systems 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 computer programs or hardware that have date-sensitive software or embedded chips may recognize a date using "00" as the year 1900 rather than the year 2000. This could result 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. Over the past two years, the Managing Agent has determined that it will be required to modify or replace significant portions of its software and certain hardware so that those systems will properly utilize dates beyond December 31, 1999. The Managing Agent presently believes that with modifications or replacements of existing software and certain hardware, the Year 2000 issue can be mitigated. However, if such modifications and replacements are not made or not completed in time, the Year 2000 issue could have a material impact on the operations of the Partnership. The Managing Agent's plan to resolve Year 2000 issues involves four Phases: assessment, remediation, testing, and implementation. To date, the Managing Agent has fully completed its assessment of all the information systems that could be significantly affected by the Year 2000, and has begun the remediation, testing and implementation phases on both hardware and software systems. Assessments are continuing in regards to embedded systems. The status of each is detailed below. Status of Progress in Becoming Year 2000 Compliant, Including Timetable for Completion of Each Remaining Phase Computer Hardware: During 1997 and 1998, the Managing Agent identified all of the computer systems at risk and formulated a plan to repair or replace each of the affected systems. In August 1998, the mainframe system used by the Managing Agent became fully functional. In addition to the mainframe, PC-based network servers and routers and desktop PCs were analyzed for compliance. The Managing Agent has begun to replace each of the non-compliant network connections and desktop PCs and, as of December 31, 1998, had completed approximately 75% of this effort. The total cost to the Managing Agent to replace the PC-based network servers, routers and desktop PCs is expected to be approximately $1.5 million of which $1.3 million has been incurred to date. The remaining network connections and desktop PCs are expected to be upgraded to Year 2000 compliant systems by March 31, 1999. Computer software: The Managing Agent utilizes a combination of off-the-shelf, commercially available software programs as well as custom-written programs that are designed to fit specific needs. Both of these types of programs were studied, and implementation plans written and executed with the intent of repairing or replacing any non-compliant software programs. During 1998, the Managing Agent began converting the existing property management and rent collection systems to its management properties Year 2000 compliant systems. The estimated additional costs to convert such systems at all properties, is $200,000, and the implementation and the testing process is expected to be completed by March 31, 1999. The final software area is the office software and server operating systems. The Managing Agent has upgraded all non-compliant office software systems on each PC and has upgraded 80% of the server operating systems. The remaining server operating systems are planned to be upgraded to be Year 2000 compliant by March 31, 1999. Operating Equipment: The Managing Agent has operating equipment, primarily at the property sites, which needed to be evaluated for Year 2000 compliance. In September 1997, the Managing Agent began taking a census and inventory of embedded systems (including those devices that use time to control systems and machines at specific properties, for example elevators, heating, ventilating, and air conditioning systems, security and alarm systems, etc.). The Managing Agent has chosen to focus its attention mainly upon security systems, elevators, heating, ventilating and air conditioning systems, telephone systems and switches, and sprinkler systems. While this area is the most difficult to fully research adequately, management has not yet found any major non-compliance issues that put the Managing Agent at risk financially or operationally. The Managing Agent intends to have a third-party conduct an audit of these systems and report their findings by March 31, 1999. Any of the above operating equipment that has been found to be non-compliant to date has been replaced or repaired. To date, these have consisted only of security systems and phone systems. As of December 31, 1998 the Managing Agent has evaluated approximately 86% of the operating equipment for the Year 2000 compliance. The total cost incurred for all properties managed by the Managing Agent as of December 31, 1998 to replace or repair the operating equipment was approximately $400,000. The Managing Agent estimates the cost to replace or repair any remaining operating equipment is approximately $325,000, which is expected to be completed by April 30, 1999. The Managing Agent continues to have "awareness campaigns" throughout the organization designed to raise awareness and report any possible compliance issues regarding operating equipment within our enterprise. Nature and Level of Importance of Third Parties and Their Exposure to the Year 2000 The Managing Agent continues to conduct surveys of its banking and other vendor relationships to assess risks regarding their Year 2000 readiness. The Managing Agent has banking relationships with three major financial institutions, all of which have indicated their compliance efforts will be complete before May 1999. The Managing Agent has updated data transmission standards with two of the three financial institutions. The Managing Agent's contingency plan in this regard is to move accounts from any institution that cannot be certified Year 2000 compliant by June 1, 1999. The Partnership does not rely heavily on any single vendor for goods and services, and does not have significant suppliers and subcontractors who share information systems (external agent). To date the Partnership is not aware of any external agent with a Year 2000 compliance issue that would materially impact the Partnership's results of operations, liquidity, or capital resources. However, the Partnership has no means of ensuring that external agents will be Year 2000 compliant. The Managing Agent does not believe that the inability of external agents to complete their Year 2000 remediation process in a timely manner will have a material impact on the financial position or results of operations of the Partnership. However, the effect of non-compliance by external agents is not readily determinable. Costs to Address Year 2000 The total cost of the Year 2000 project to the Managing Agent is estimated at $3.5 million and is being funded from operating cash flows. To date, the Managing Agent has incurred approximately $2.8 million ($0.6 million expensed and $2.2 million capitalized for new systems and equipment) related to all phases of the Year 2000 project. Of the total remaining project costs, approximately $0.5 million is attributable to the purchase of new software and operating equipment, which will be capitalized. The remaining $0.2 million relates to repair of hardware and software and will be expensed as incurred. The Partnership's portion of these costs are not material. Risks Associated with the Year 2000 The Managing Agent believes it has an effective program in place to resolve the Year 2000 issue in a timely manner. As noted above, the Managing Agent has not yet completed all necessary phases of the Year 2000 program. In the event that the Managing Agent does not complete any additional phases, certain worst case scenarios could occur. The worst case scenarios could include elevators, security and heating, ventilating and air conditioning systems that read incorrect dates and operate with incorrect schedules (e.g., elevators will operate on Monday as if it were Sunday). Although such a change would be annoying to residents, it is not business critical. In addition, disruptions in the economy generally resulting from Year 2000 issues could also adversely affect the Partnership. The Partnership could be subject to litigation for, among other things, computer system failures, equipment shutdowns or failure to properly date business records. The amount of potential liability and lost revenue cannot be reasonably estimated at this time. Contingency Plans Associated with the Year 2000 The Managing Agent has contingency plans for certain critical applications and is working on such plans for others. These contingency plans involve, among other actions, manual workarounds and selecting new relationships for such activities as banking relationships and elevator operating systems. ITEM 7. FINANCIAL STATEMENTS CENTURY PROPERTIES FUND XX LIST OF FINANCIAL STATEMENTS Report of Independent Auditors' Balance Sheet - December 31, 1998 Statements of Operations - Years ended December 31, 1998 and 1997 Statements of Changes in Partners' Deficit - Years ended December 31, 1998 and 1997 Statements of Cash Flows - Years ended December 31, 1998 and 1997 Notes to Financial Statements Independent Auditors' Report To the Partners Century Properties Fund XX Greenville, South Carolina We have audited the accompanying balance sheet of Century Properties Fund XX (a limited partnership) (the "Partnership") as of December 31, 1998, and the related statements of operations, changes in partners' deficit and cash flows for each of the two years in the period 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 audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits 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 management, as well as evaluating the overall financial statement presentation. We believe that our audits provide 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 financial position of Century Properties Fund XX as of December 31, 1998, and the results of its operations and its cash flows for each of the two years in the period 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 BALANCE SHEET (in thousands, except unit data) December 31, 1998 Assets Cash and cash equivalents $ 9,197 Receivables and deposits 811 Other assets 785 Investment properties (Notes B & H): Land $ 6,495 Buildings and related personal property 43,913 50,408 Less accumulated depreciation (19,652) 30,756 $41,549 Liabilities and Partners' Deficit Liabilities Accounts payable $ 40 Tenant security deposit liabilities 192 Accrued property taxes 281 Accrued interest-promissory notes (Note D) 314 Other liabilities 76 Non-recourse promissory notes in default (Notes A & D): Principal 31,386 Deferred interest payable 17,623 Contingency (Note A) -- Partners' Deficit General partner's $ (1,505) Limited partners' (61,814 units outstanding) (6,858) (8,363) $41,549 See Accompanying Notes to Financial Statements CENTURY PROPERTIES FUND XX STATEMENTS OF OPERATIONS (in thousands, except unit data) Years Ended December 31, 1998 1997 Revenues: Rental income $ 7,634 $ 7,150 Other income 547 525 Income from deficiency certificate settlement (Note I) 301 -- Total revenues 8,482 7,675 Expenses: Interest to promissory note holders 2,511 2,511 Operating 2,777 2,885 Depreciation 1,661 1,609 Amortization of sales commissions and organizational costs 298 325 General and administrative 833 833 Property taxes 586 604 Total expenses 8,666 8,767 Net loss $ (184) $(1,092) Net loss allocated to general partner (2%) $ (4) $ (22) Net loss allocated to limited partners (98%) (180) (1,070) $ (184) $(1,092) Net loss per limited partnership unit $ (2.91) $(17.31) See Accompanying Notes to Financial Statements CENTURY PROPERTIES FUND XX STATEMENTS OF CHANGES IN PARTNERS' DEFICIT (in thousands, except unit data) Limited Partnership General Limited Units Partner's Partners' Total Original capital contributions 61,814 $ -- $30,907 $30,907 Partners' deficit at December 31, 1996 61,814 $(1,427) $(5,608) $(7,035) Net loss for the year ended December 31, 1997 -- (22) (1,070) (1,092) Distributions to general partner -- (26) -- (26) 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 to general partner -- (26) -- (26) Partners' deficit at December 31, 1998 61,814 $(1,505) $(6,858) $(8,363) See Accompanying Notes to Financial Statements CENTURY PROPERTIES FUND XX STATEMENTS OF CASH FLOWS (in thousands) Years Ended December 31, 1998 1997 Cash flows from operating activities: Net loss $ (184) $(1,092) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 1,661 1,609 Amortization of deferred charges 504 507 Deferred interest on non-recourse promissory notes 1,256 1,255 Rent abatement (392) -- Loss on disposal of property 26 -- Change in accounts: Receivables and deposits (551) 192 Other assets 2 15 Accounts payable (8) (86) Tenant security deposit liabilities 10 9 Accrued property taxes 268 (166) Other liabilities 12 11 Net cash provided by operating activities 2,604 2,254 Cash flows used in investing activities: Property improvements and replacements (440) (820) Less commissions paid (255) (368) Net cash used in investing activities (695) (1,188) Cash flows used in financing activities: Cash distributions to general partner (26) (26) Net increase in cash and cash equivalents 1,883 1,040 Cash and cash equivalents at beginning of period 7,314 6,274 Cash and cash equivalents at end of period $ 9,197 $ 7,314 Supplemental disclosure of cash flow information: Cash paid for interest $ 1,255 $ 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, 1998 NOTE A - GOING CONCERN The accompanying financial statements have been prepared assuming Century Properties Fund XX (the "Partnership" or "Registrant") will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Non-Recourse Promissory Notes (the "Notes") of approximately $49,323,000 in principal and current and deferred interest at December 31, 1998, which matured on November 30, 1998 are in default. In an effort to cure this default, the Partnership is currently seeking to satisfy the Notes by purchasing the Notes pursuant to a tender offer which commenced on March 9, 1999 at $1,423.34 per $1,000 principal amount (the "Purchase Price"), net to the seller in cash. The Purchase Price represents 90% of the principal, current accrued interest and deferred interest at February 15, 1999, which equates to a total Purchase Price of approximately $44,672,000. In order to fund the tender offer, the Partnership will use its cash reserves and is seeking financing from a third party financial institution of at least $39,000,000. An affiliate of Fox Capital Management Corporation (the "Managing General Partner") purchased 7,678 Notes on January 4, 1999, and has agreed to tender their units pursuant to this offer. The offer is conditional upon approximately $33,333,000 of Notes being tendered. The offer is to expire on April 6, 1999, unless extended by the Partnership. There can be no assurance that the Partnership will be able to obtain the necessary financing with which to consummate the tender offer or that a sufficient number of Noteholders will tender their Notes to enable the Partnership to satisfy the Notes. If the tender offer is not consummated, either because an insufficient number of Noteholders tender or if replacement financing cannot be obtained, it is possible that the Noteholders will exercise their rights and foreclose on the Partnership's properties. These conditions raise substantial doubt about the Partnership's ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Partnership be unable to continue as a going concern. 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 Partners III (the "General Partner"). The general partners of Fox Partners III are FCMC, a California corporation, Fox Realty Investors ("FRI"), a California general partnership, and Fox 84, a California general partnership. The Managing General Partner is an affiliate of Apartment Investment and Management Company ("AIMCO"), (see "Note C _ Transfer of Control"). The directors and officers of the General Partners 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 five 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 the Partnership are allocated between the general and limited partners in accordance with the provisions of the Partnership Agreement. Fair Value of Financial Instruments: Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosures about Fair Value of Financial Instruments", as amended by SFAS No. 119, "Disclosures about Derivative Financial Instruments and Fair Value of Financial Instruments", requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate fair value. Fair value is defined in the SFAS as the amount at which the instruments could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The Partnership believes that the carrying 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. Cash and Cash Equivalents: Includes cash on hand and in banks, money market accounts and certificates of deposit with original maturities less than 90 days. At certain times, the amount of cash deposited at a bank may exceed the limit on insured deposits. Depreciation: Depreciation is computed by the straight-line method over estimated useful lives ranging from 15 to 39 years for buildings and improvements and five to seven years for furnishings. Deferred Charges: Included in other assets are sales commissions, organization expenses and lease commissions. Sales commissions and organization expenses related to the Notes are deferred and amortized by the straight-line method over the life of the Promissory Notes. Leasing commissions are deferred and amortized over the lives of the related leases. Such amortization is charged to operating expense. At December 31, 1998, the cost of deferred charges totaled approximately $7,714,000. At December 31, 1998, accumulated amortization of deferred charges totaled approximately $7,152,000. 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 its rental payments. Leases: The Partnership generally leases apartment units for twelve-month terms or less. The Partnership recognizes income as earned on its leases. In addition, the Managing General Partner's policy is to offer rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area. Concessions are charged against rental income as incurred. 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 five commercial properties and two apartment properties 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. Costs of investment properties that have been permanently impaired have been written down to fair value. No adjustments for impairment of value were recorded in the years ended December 31, 1998 or 1997. Segment Reporting: In June 1997, the Financial Accounting Standards Board issued Statement of Financial Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" ("Statement 131"), which is effective for years beginning after December 15, 1997. Statement 131 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 K" for required disclosure). Advertising: The Partnership expenses the costs of advertising as incurred. Advertising costs of approximately $59,000 and $48,000 for the years ended December 31, 1998 and 1997, respectively were charged to expense as incurred. Reclassification: Certain reclassifications have been made to the 1997 information to conform to the 1998 presentation. NOTE C - 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 Apartment Investment and Management Company, a publicly traded real estate investment trust, with AIMCO being the surviving corporation (the "Insignia Merger"). As a result, AIMCO ultimately acquired a 100% ownership interest in Insignia Properties Trust ("IPT"), the entity which controls the Managing General Partner. The Managing General Partner does not believe that this transaction will have a material effect on the affairs and operations of the Partnership. NOTE D - NON-RECOURSE PROMISSORY NOTES The Partnership has 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 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. The Promissory Notes were due November 30, 1998. In accordance with the Partnership Agreement and the Trust Indenture, upon the sale, repayment or other disposition of any Partnership properties or Partnership mortgage loans, 98 percent of the resulting cash proceeds are first allocated to the payment of Promissory Notes until such Promissory Notes are repaid. Promissory Note holders are also entitled to the payment of residual interest after specified payments to the general partner and Individual Unit holders as set forth in the Trust Indenture. See "Note A - Going Concern" for discussion regarding the Managing General Partner's intentions to meet its obligation. 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): 1998 1997 Net loss as reported $ (184) $(1,092) Add (deduct): Depreciation differences (501) (543) Original Issue Discount (763) (695) Change in prepaid rental (28) 36 Capitalized expenses 40 34 Other (91) (11) Federal taxable loss $(1,527) $(2,271) Federal taxable loss per limited Partnership unit $(24.00) $(36.00) The following is a reconciliation between the Partnership's reported amounts and Federal tax basis of net assets and liabilities (in thousands): 1998 Net liabilities as reported $ (8,363) Differences resulted from: Sales commissions 2,482 Organization expenses 2,069 Foreclosures of mortgage loan receivable 238 Payments credited to rental property 280 Acquisition costs expensed (34) Depreciation (7,147) Provision for impairment of value 6,296 Capitalized expenses 1,019 Provision for bad debts 11 Deferred and prepaid rent (512) Other 44 Net liabilities - tax basis $ (3,617) 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 expenses incurred by affiliates on behalf of the Partnership. The following payments were made to the Managing General Partner and affiliates during the year ended December 31, 1998 and 1997: 1998 1997 (in thousands) Property management fees (included in operating expenses) $154 $150 Reimbursement for services of affiliates (included in operating, and general and administrative expenses) (1) 212 218 Partnership management fees (included in general and administrative expenses) 72 72 (1) Included in "reimbursements for services of affiliates" for the years ended December 31, 1998 and 1997, is approximately $3,000 and $5,000, respectively, in reimbursements for construction oversight costs. During the years ended December 31, 1998 and 1997, affiliates of the Managing General Partner were entitled to receive 5% of gross receipts from all 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 $154,000 and $150,000 for the years ended December 31, 1998 and 1997 respectively. For the Registrant's commercial properties these services were provided by an unrelated party for the years ended December 31, 1998 and 1997. Affiliates of the Managing General Partner received reimbursement of accountable administrative expenses amounting to approximately $212,000 and $218,000 for the years ended December 31, 1998 and 1997, respectively. For the period 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 receives payments on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the Managing General Partner by virtue of the agent's obligations was not significant. 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 1998 or 1997; however, the General Partner received a partnership management fee of approximately $72,000 in 1998 and 1997. On January 4, 1999, an affiliate of the Managing General Partner purchased 7,678 Notes from a noteholder for $450 per Note, or $3,455,100. On February 10, 1999, the Partnership purchased 2,844 Notes from a noteholder for $450 per Note, or $1,279,800. The Notes purchased by the Partnership will be cancelled. In addition, on March 9, 1999, the Partnership commenced a tender offer to acquire all of the outstanding Notes. The Partnership offered to purchase all of the 98,697 outstanding Notes at $1,423.34 per $1,000 principal amount (the "Purchase Price"), net to the seller in cash. The Purchase Price represents 90% of the principal, current accrued interest and deferred interest at February 15, 1999, which equates to a total Purchase Price of approximately $44,672,000. The offer, which is scheduled to expire on April 6, 1999, unless extended, is subject to, among other things, the Partnership obtaining at least $39,000,000 in financing with which to purchase the Notes. See "Note A _ Going Concern". NOTE G - SIGNIFICANT TENANT AND MINIMUM FUTURE RENTAL REVENUES Rental revenue from one tenant at Linpro Park I represented approximately 16 percent of total Partnership rental income in 1998 and 1997. 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, 1998, are as follows (in thousands): 1999 $ 4,066 2000 3,472 2001 2,476 2002 4,161 2003 377 Thereafter 443 $14,995 Amortization of deferred leasing commissions totaled approximately $206,000 and $182,000 for the years ended December 31, 1998 and 1997, respectively. NOTE H - REAL ESTATE AND ACCUMULATED DEPRECIATION
Initial Cost To Partnership (in thousands) Net Costs Buildings Capitalized and Related (Written Down) Encrum- Personal Subsequent to Description brances(1) Land Property Acquisition (in thousands) Crabtree Office Center $ -- $ 966 $ 6,409 $ 1,348 Linpro Park I -- 1,089 7,882 (512) Metcalf 103 Office Park -- 810 1,565 829 Commonwealth Center -- 1,929 6,300 (1,773) Highland Park -- 1,256 7,884 1,405 Harbor Club Downs -- 1,416 6,864 787 The Corners Apartments -- 419 3,102 433 Totals $ -- $ 7,885 $40,006 $ 2,517
(1) The Non-Recourse Promissory Notes are secured by a deed of trust on all properties owned by the Partnership. See "Note D" for a further discussion.
Gross Amount At Which Carried December 31, 1998 (in thousands) Buildings Accum- Year Date Deprec- and Related ulated Of Of Iable Personal Depre- Constru- Acqui- Life- Description Land Property Total ciation ction sition Years (in thousands) Crabtree Office Center $ 962 $ 7,761 $ 8,723 $ 3,674 1983 12/84 5-39 Linpro Park I 693 7,766 8,459 4,598 1982 03/85 5-39 Metcalf 103 Office Park 810 2,394 3,204 756 1973 04/91 5-39 Commonwealth Center 964 5,492 6,456 3,896 1980 10/84 5-39 Highland Park 1,231 9,314 10,545 3,941 1986 11/85-02/86 5-39 Harbor Club Downs 1,416 7,651 9,067 1,911 1986 05/92 5-30 The Corners Apartments 419 3,535 3,954 876 1974 11/92 5-30 Totals $6,495 $43,913 $50,408 $19,652
Reconciliation of Real Estate and Accumulated Depreciation: Years Ended December 31, 1998 1997 Investment Properties Balance at beginning of year $49,623 $48,803 Property improvements 440 820 Rent abatement 392 -- Disposals of property (47) -- Balance at end of year $50,408 $49,623 Accumulated Depreciation Balance at beginning of year $18,012 $16,403 Additions charged to expense 1,661 1,609 Disposals of property (21) -- Balance at end of year $19,652 $18,012 The aggregate cost of the real estate for Federal income tax purposes at December 31, 1998 and 1997, respectively, is approximately $58,008,000 and $57,227,000. The accumulated depreciation taken for Federal income tax purposes at December 31, 1998 and 1997 respectively, is approximately $26,886,000 and $24,696,000. NOTE I - 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 the certificate in the financial statements due to the uncertainty of receiving any funds. The initial settlement related to the cash available to distribute in the collateral pool. Additional assets were sold from this collateral pool, and the Partnership received further funds of approximately $45,000. With receipt of this settlement during the year ended December 31, 1998, 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. If additional assets are sold from this collateral pool, there is a possibility that the Partnership could receive further funds, however there is no guarantee that this will occur. NOTE J - 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 K - 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: As defined by SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information". The Partnership has two reportable segments: commercial properties and residential properties. The Partnership's commercial property segment consists of five office complexes in four states in the United States. The Partnership leases office space for terms that typically exceed one year. The residential property segment consists of two apartment complexes in two states in the United States. The Partnership rents apartment units to people for terms that are typically twelve months or less. Measurement of segment profit or loss: The Partnership evaluates performance based on net income. 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 segments are 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 customers. Segment information for the years 1998 and 1997, 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. 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 1997 Residential Commercial Other Totals Rental income $ 2,833 $ 4,317 $ -- $ 7,150 Other income 121 42 362 525 Interest expense -- -- 2,511 2,511 Depreciation 461 1,148 -- 1,609 Amortization of deferred charges -- -- 325 325 General and administrative expense -- -- 833 833 Segment profit (loss) 941 1,274 (3,307) (1,092) Total assets 10,815 21,917 7,495 40,227 Capital expenditures for investment properties 225 595 -- 820 NOTE L - 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 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 entities which were, at the time, affiliates of Insignia ("Insignia Affiliates") of interests in certain general partner entities, past tender offers by Insignia Affiliates as well as a recently announced agreement between Insignia and AIMCO. The complaint seeks 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 has filed demurrers to the amended complaint which were heard during February 1999. No ruling on such demurrers has been received. The Managing General Partner does not anticipate that costs associated with this case, if any, to 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 ON ACCOUNTING AND FINANCIAL DISCLOSURE There were no disagreements with Imowitz Koenig & Co., LLP regarding the 1998 or 1997 audits of the Partnership's financial statements. 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 "Registrant") has no officers or directors. The managing general partner is as follows: Managing General Partner - 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, the managing general partner of the general partner ("FCMC" or "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. The Managing General Partner is a subsidiary of Apartment Investment and Management Company ("AIMCO"). There are no family relationships between or among any officers or directors. Name Age Position Patrick J. Foye 41 Executive Vice President and Director Timothy R. Garrick 42 Vice President - Accounting and Director 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. Timothy R. Garrick has served as Vice President-Accounting of AIMCO and Vice President-Accounting and Director of the Managing General Partner and AIMCO since October 1, 1998. Prior to that date, Mr. Garrick served as Vice President-Accounting Services of Insignia Financial Group since June of 1997. From 1992 until June of 1997, Mr. Garrick served as Vice President of Partnership Accounting and from 1990 to 1992 as an Asset Manager for Insignia Financial Group. From 1984 to 1990, Mr. Garrick served in various capacities with U.S. Shelter Corporation. From 1979 to 1984, Mr. Garrick worked on the audit staff of Ernst & Whinney. Mr. Garrick received his B.S. Degree from the University of South Carolina and is a Certified Public Accountant. ITEM 10. EXECUTIVE COMPENSATION Neither directors nor 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, 1998. Entity Number of Units Percentage Independent Life & Accident 3,180.00 5.144% Lafayette Bay LLC 7,515.00 7.614% Insignia Properties LP 10.00 .016% Independent Life & Accident and Lafayette Bay LLC are both unrelated parties. Insignia Properties LP is indirectly ultimately owned by AIMCO. Their business address is 55 Beattie Place, Greenville, SC 29602. 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 reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following payments were made to the Managing General Partner and affiliates during the year ended December 31, 1998 and 1997: 1998 1997 (in thousands) Property management fees $154 $150 Reimbursement for services of affiliates (1) 212 218 Partnership management fees 72 72 (1) Included in "reimbursements for services of affiliates" for the years ended December 31, 1998 and 1997, is approximately $3,000 and $5,000, respectively, in reimbursements for construction oversight costs. During the years ended December 31, 1998 and 1997, affiliates of the Managing General Partner were entitled to receive 5% of gross receipts from all 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 $154,000 and $150,000 for the years ended December 31, 1998 and 1997 respectively. For the Registrant's commercial properties these services were provided by an unrelated party for the years ended December 31, 1998 and 1997. Affiliates of the Managing General Partner received reimbursement of accountable administrative expenses amounting to approximately $212,000 and $218,000 for the years ended December 31, 1998 and 1997, respectively. For the period 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 receives payments on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the Managing General Partner by virtue of the agent's obligations was not significant. 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 1998 or 1997; however, the General Partner received a partnership management fee of approximately $72,000 in 1998 and 1997. On January 4, 1999, an affiliate of the Managing General Partner purchased 7,678 Notes from a noteholder for $450 per Note, or $3,455,100. On February 10, 1999, the Partnership purchased 2,844 Notes from a noteholder for $450 per Note, or $1,279,800. The Notes purchased by the Partnership will be cancelled. In addition, on March 9, 1999, the Partnership commenced a tender offer to acquire all of the outstanding Notes. The Partnership offered to purchase all of the 98,697 outstanding Notes at $1,423.34 per $1,000 principal amount (the "Purchase Price"), net to the seller in cash. The Purchase Price represents 90% of the principal, current accrued interest and deferred interest at February 15, 1999, which equates to a total Purchase Price of approximately $44,672,000. The offer, which is scheduled to expire on April 6, 1999, unless extended, is subject to, among other things, the Partnership obtaining at least $39,000,000 in financing with which to purchase the Notes. ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: See Exhibit Index contained herein. (b) Reports on Form 8-K filed during the fourth quarter of 1998: Current Report on Form 8-K dated October 1, 1998, disclosing change in control of the Partnership from Insignia Financial Group, Inc. to AIMCO. 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/ Timothy R. Garrick Timothy R. Garrick Vice President - Accounting Date: March 31, 1999 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 and on the date indicated. /s/ Patrick J. Foye Executive Vice President Date: March 31, 1999 Patrick J. Foye and Director /s/ Timothy R. Garrick Vice President - Accounting Date: March 31, 1999 Timothy R. Garrick and Director 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
5 This schedule contains summary financial information extracted from Century Properties Fund XX 1998 Year-end 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-31-1998 DEC-31-1998 9,197 0 0 0 0 0 50,408 19,652 41,549 0 0 0 0 0 (8,363) 41,549 0 8,482 0 0 0 0 2,511 0 0 0 0 0 0 (184) (2.91) 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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