-----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, T2wZAVrqdEvwuiDeQ5JRPtQaCzkSl4YA6ILoCD6pgEGKwLZC7wK4MHBvyCHSVj4D EHdaF2Dwmijpo+U8cauxlQ== 0000792181-98-000009.txt : 19980813 0000792181-98-000009.hdr.sgml : 19980813 ACCESSION NUMBER: 0000792181-98-000009 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980812 SROS: NONE 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: 10QSB SEC ACT: SEC FILE NUMBER: 000-13408 FILM NUMBER: 98684126 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: PO BOX 1089 C/O INSIGNIA FINANCIAL GROUP CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: POST & HEYMANN STREET 2: 5665 NORTHSIDE DRIVE NW CITY: ATLANTA STATE: GA ZIP: 30328 10QSB 1 FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 QUARTERLY OR TRANSITIONAL REPORT U.S. Securities And Exchange Commission Washington, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from.........to......... Commission file number 0-13408 CENTURY PROPERTIES FUND XX (Exact name of small business issuer as specified in its charter) California 94-2930770 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Insignia Financial Plaza, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) CENTURY PROPERTIES FUND XX BALANCE SHEET (Unaudited) (in thousands, except unit data) June 30, 1998 Assets Cash and cash equivalents $ 8,416 Receivables and deposits 522 Other assets 954 Investment properties: Land $ 6,495 Buildings and related personal property 43,602 50,097 Less accumulated depreciation (18,815) 31,282 $ 41,174 Liabilities and Partners' Deficit Liabilities Accounts payable $ 15 Tenant security deposit liabilities 190 Accrued property taxes 274 Accrued interest-promissory notes 314 Other liabilities 71 Non-recourse promissory notes: Principal 31,386 Deferred interest payable 16,995 Partners' Deficit General partner's $ (1,486) Limited partners' (61,814 units issued and outstanding) (6,585) (8,071) $ 41,174 See Accompanying Notes to Financial Statements b) CENTURY PROPERTIES FUND XX STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data) Three Months Ended Six Months Ended June 30, June 30, 1998 1997 1998 1997 Revenues: Rental income $ 1,998 $ 1,813 $ 3,893 $ 3,489 Other income 148 119 283 239 Income from deficiency certificate settlement -- -- 256 -- Total revenues 2,146 1,932 4,432 3,728 Expenses: Operating 680 719 1,374 1,376 General and administrative 236 262 424 432 Depreciation 415 413 824 792 Amortization of sales commissions and organizational costs 82 82 163 163 Interest to promissory note holders 627 627 1,255 1,255 Property taxes 149 168 297 318 Total expenses 2,189 2,271 4,337 4,336 Net (loss) income $ (43) $ (339) $ 95 $ (608) Net (loss) income allocated to general partner (2%) $ (1) $ (7) $ 2 $ (12) Net (loss) income allocated to limited partners (98%) (42) (332) 93 (596) $ (43) $ (339) $ 95 $ (608) Net (loss) income per limited partnership unit $ (.68) $ (5.37) $ 1.50 $ (9.64) See Accompanying Notes to Financial Statements c) CENTURY PROPERTIES FUND XX STATEMENT OF CHANGES IN PARTNERS' DEFICIT (Unaudited) (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) Distribution to general partner -- (13) -- (13) Net income for the six months ended June 30, 1998 -- 2 93 95 Partners' deficit at June 30, 1998 61,814 $(1,486) $(6,585) $(8,071) See Accompanying Notes to Financial Statements d) CENTURY PROPERTIES FUND XX STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Six Months Ended June 30, 1998 1997 Cash flows from operating activities: Net income (loss) $ 95 $ (608) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 824 792 Amortization of deferred charges 270 249 Deferred interest on non-recourse promissory notes 628 628 Rent abatement (300) -- Loss on disposal of property 26 -- Change in accounts: Receivables and deposits (262) 6 Other assets 16 11 Accounts payable (33) (101) Tenant security deposit liabilities 8 7 Accrued property taxes 261 95 Other liabilities 7 7 Net cash provided by operating activities 1,540 1,086 Cash flows from investing activities: Property improvements and replacements (221) (494) Lease commissions paid (204) (146) Net cash used in investing activities (425) (640) Cash flows used in financing activities: Distribution paid to general partner (13) (13) Net increase in cash and cash equivalents 1,102 433 Cash and cash equivalents at beginning of period 7,314 6,274 Cash and cash equivalents at end of period $ 8,416 $ 6,707 Supplemental disclosure of cash flow information: Cash paid for interest $ 628 $ 628 Supplemental disclosure of non cash investing information: Tenant improvements funded through rent abatement $ 300 $ -- See Accompanying Notes to Financial Statements e) CENTURY PROPERTIES FUND XX NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE A - GOING CONCERN The accompanying financial statements have been prepared assuming Century Properties Fund XX (the "Partnership") 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"), totaling approximately $48,903,000 in principal and deferred interest at maturity, mature on November 30, 1998. Fox Capital Management Corporation ("FCMC" or the "Managing General Partner") is currently evaluating the feasibility of selling some of the Partnership's properties in order to pay off the outstanding Notes and/or seeking to either extend the maturity date of the Notes or find replacement financing. However, there can be no assurance that these courses of action will be successful and that the Partnership will have sufficient funds to meet its 1998 obligations. The possibility exists that the Partnership will lose all the investment properties through foreclosure during the first quarter of 1999. 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 - BASIS OF PRESENTATION The accompanying unaudited financial statements of the Partnership have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of the Managing General Partner, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 1998, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1998. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-KSB for the year ended December 31, 1997. Certain reclassifications have been made to the 1997 information to conform to the 1998 presentation. NOTE C - TRANSACTIONS WITH AFFILIATED PARTIES The general partner of the Partnership is Fox Partners III, a California general partnership, whose general partners are FCMC, a California corporation, Fox Realty Investors ("FRI"), a California general partnership, and Fox Partners 84, a California general partnership. NPI Equity Investments II, Inc. ("NPI Equity"), a Florida corporation, is the managing general partner of FRI. 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 Managing General Partner and NPI Equity are wholly- owned by Insignia Properties Trust ("IPT"), an affiliate of Insignia Financial Group, Inc. ("Insignia"). The Partnership Agreement provides for certain payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following transactions with affiliates of Insignia were incurred during the six months ended June 30, 1998 and 1997 (in thousands): 1998 1997 Property management fees (included in operating expenses) $ 76 $ 73 Reimbursement for services of affiliates (included in general and administrative expenses) 105 103 Partnership management fee (included in general and administrative expenses) 36 36 In addition, approximately $1,000 and $2,000 of construction oversight reimbursements were included in operating expenses for the six month periods ended June 30, 1998 and 1997, respectively. For the period from January 1, 1997 to August 31, 1997, the Partnership insured its properties under a master policy through an agency affiliated with the Managing General Partner but with an insurer unaffiliated with the Managing General Partner. An affiliate of the Managing General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the master policy. The agent assumed the financial obligations to the affiliate of the Managing General Partner which received payments on these obligations from the agent. The amount of the Partnership's insurance premiums that accrued to the benefit of the affiliate of the Managing General Partner by virtue of the agent's obligations was not significant. On March 17, 1998, Insignia entered into an agreement to merge its national residential property management operations, and its controlling interest in IPT, with Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The closing, which is anticipated to happen in September or October of 1998, is subject to customary conditions, including government approvals and the approval of Insignia's shareholders. If the closing occurs, AIMCO will then control the Managing General Partner of the Partnership. NOTE D - 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 is obligated to accept the settlement which equates 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. With receipt of this settlement during the six months ended June 30, 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 any 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 E - 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 June 30, 1998, $300,000 of improvements have been completed. The allowance is reflected on the financial statements as a rent abatement and is included as rental income. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS The Partnership's investment properties consist of two apartment complexes, three office buildings, and two business parks. The following table sets forth the average occupancy of the properties for the six months ended June 30, 1998 and 1997: Average Occupancy Property 1998 1997 Commonwealth Centre (1) 97% 81% Dallas, TX Crabtree Office Center 100% 98% Raleigh, North Carolina Linpro Park I (2) 92% 99% Reston, Virginia Metcalf 103 Office Park 98% 97% Overland Park, Kansas Highland Park Commerce Center (3) 99% 94% Charlotte, North Carolina Harbor Club Downs 94% 95% Palm Harbor, Florida The Corners Apartments (4) 88% 93% Spartanburg, South Carolina (1)The increase in occupancy at Commonwealth Center is due to four new tenants occupying a total of 23,019 square feet, and one existing tenant expanding into unoccupied space. (2)The decrease in occupancy at Linpro Park I is due to a decrease in demand for Class A space in the Reston, Virginia market. (3)The increase in occupancy at Highland Park results from the addition of two new tenants and the expansion of an existing tenant. (4)The decrease in occupancy at The Corners is due to recent construction of new apartment complexes resulting in higher vacancy rates. The Partnership realized a net loss of approximately $43,000 for the three month period and a net income of approximately $95,000 for the six month period ended June 30, 1998, as compared to a net loss of approximately $339,000 and $608,000 for the three and six month periods ended June 30, 1997. The decrease in net loss for the three month period and the increase in net income for the six month period is primarily due to an increase in total revenues for both comparable periods as well as a decrease in total expenses for the comparable three month periods. Rental income increased for the three and six month periods ended June 30, 1998, as compared to the same periods in 1997, due to increases in occupancy at four of the Partnership's investment properties. The office buildings and business parks also had increases in expense recovery income. In addition, at Linpro Park I, rental income increased as a result of a renovation allowance of approximately $300,000 posted as income during the second quarter of 1998 (see "Item 1. Financial Statements, Note E" for further discussion). This increase was partially offset by a decrease in occupancy at this property. Contributing to the increase in net income for the six month period ended June 30, 1998, was an increase in other income which resulted primarily from an increase in interest income at the Partnership due to larger cash balances held in interest bearing accounts. Increases in lease cancellation fees at Harbor Club Downs and corporate unit rentals at The Corners also contributed to the increase in other income. The Partnership recognized approximately $256,000 from the settlement on the deficiency certificate due from Lincoln Property Company. The settlement relates to legal proceedings at Commonwealth Centre (see "Item 1. Financial Statements, Note D" for further discussion). Operating expenses remained relatively stable for the six month period ended June 30, 1998, however property expenses decreased for the three month period primarily due to a decrease in electric utilities at Crabtree Office Center and Linpro Park I. This decrease was partially offset by an increase in lease commission amortization due to an increase in lease commissions, particularly at Linpro Park I. In addition, a loss associated with the roof replacement at Commonwealth Centre helped offset the decrease in operating expenses. For the three month period ended June 30, 1998, the decrease in operating expenses were also due to a decrease in maintenance expenses. This decrease is primarily due to a decrease in exterior building and tennis court repairs at Harbor Club Downs. Depreciation expenses increased for the six month period ended June 30, 1998, as compared to the same period in 1997, as a result of additional depreciable assets placed in service at Metcalf 103 Office Park. Property taxes decreased for the six month period ended June 30, 1998, versus the same period in 1997, due to a one time assessment paid in 1997 at Harbor Club Downs relating to a repaving project. Included in operating expenses for the period ended June 30, 1998, is approximately $56,000 of major repairs and maintenance, consisting primarily of landscaping versus approximately $52,000 of major repairs and maintenance, consisting primarily of landscaping, tennis court repairs and exterior building improvement for the corresponding period in 1997. As part of the ongoing business plan of the Partnership, the Managing General Partner monitors the rental market environment of each of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expense. As part of this plan, the Managing General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the Managing General Partner will be able to sustain such a plan. At June 30, 1998, the Partnership held cash and cash equivalents of approximately $8,416,000, as compared to approximately $6,707,000 at June 30, 1997. Cash and cash equivalents increased approximately $1,102,000 during the six months ended June 30, 1998, compared to an increase of approximately $433,000 during the corresponding period in 1997. Net cash provided by operating activities increased primarily as a result of an increase in net income, as discussed above, and an increase in accrued property taxes due to a change in the timing of payments. These changes were partially offset by an increase in receivables and deposits, due primarily to an increase in tax and insurance escrows. Net cash used in investing activities decreased as a result of a decrease in expenditures for property improvements and replacements. The mortgage indebtedness of the Partnership consists of Notes totaling approximately $48,381,000 in principal and deferred interest which matures on November 30, 1998. The Managing General Partner is currently evaluating the feasibility of selling some or all of the Partnership's properties in order to pay off the outstanding Notes and/or seeking to either extend the maturity date of the Notes or find replacement financing. However, there can be no assurance that these courses of action will be successful and that the Partnership will have sufficient funds to meet its 1998 obligations. The possibility exists that the Partnership will lose all the investment properties through foreclosure during the first quarter of 1999. Future cash distributions will depend on the levels of net cash generated from operations, property sales, refinancings and the availability of cash reserves. No cash distributions to the limited partners were made in the six month periods ended June 30, 1998 or 1997. Year 2000 The Partnership is dependent upon the Managing General Partner and Insignia for management and administrative services. Insignia has completed an assessment and will have to modify or replace portions of its software so that its computer systems will function properly with respect to dates in the year 2000 and thereafter (the "Year 2000 Issue"). The project is estimated to be completed not later than December 31, 1998, which is prior to any anticipated impact on its operating systems. The Managing General Partner believes that with modifications to existing software and conversions to new software, the Year 2000 Issue will not pose significant operational problems for its computer systems. However, if such modifications and conversions are not made, or are not completed timely, the Year 2000 Issue could have a material impact on the operations of the Partnership. Other Certain items discussed in this quarterly report may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act") and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Partnership to be materially different from any future results, performance or achievements expressed or implied by such forward- looking statements. Such forward-looking statements speak only as of the date of this quarterly report. The Partnership expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Partnership's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled ROSALIE NUANES, ET AL. V. INSIGNIA FINANCIAL GROUP, INC., ET AL. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, the Managing General Partner and several of their affiliated partnerships and corporate entities. The complaint purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging the acquisition by Insignia and its affiliates of interests in certain general partner entities, past tender offers by Insignia affiliates to acquire limited partnership units, the management of partnerships by Insignia affiliates as well as a recently announced agreement between Insignia and 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 believes the action to be without merit, and intends to vigorously defend it. The Managing General Partner is unaware of any other pending or outstanding litigation that is not of a routine nature. The Managing General Partner believes that all such other matters will be resolved without a material adverse effect upon the Partnership's financial condition, results of operations, or liquidity. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: None filed during the quarter ended June 30, 1998. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CENTURY PROPERTIES FUND XX By: Fox Partners III, Its General Partner By: Fox Capital Management Corporation Its Managing General Partner By: /s/William H. Jarrard, Jr. William H. Jarrard, Jr. President and Director By: /s/Ronald Uretta Ronald Uretta Vice President and Treasurer Date: August 12, 1998 EX-27 2
5 This schedule contains summary financial information extracted from Century Properties Fund XX 1998 Second Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000736909 CENTURY PROPERTIES FUND XX 1,000 6-MOS DEC-31-1998 JUN-30-1998 8,416 0 0 0 0 0 50,097 18,815 41,174 0 48,381 0 0 0 (8,071) 41,174 0 4,432 0 0 3,082 0 1,255 0 0 0 0 0 0 95 1.50 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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