10QSB 1 0001.txt FORM 10-QSB FORM 10-QSB--QUARTERLY OR TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Quarterly or Transitional Report U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2000 [ ] 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 0-14528 CENTURY PENSION INCOME FUND XXIII (Exact name of registrant as specified in its charter) California 94-2963120 (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) (864) 239-1000 (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No___ PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) CENTURY PENSION INCOME FUND XXIII CONSOLIDATED STATEMENT OF NET LIABILITIES IN LIQUIDATION (Unaudited) (in thousands) September 30, 2000 Assets Cash and cash equivalents $ 1,793 Receivables and deposits, net of allowance for uncollectible amounts of $289 1,280 Debt trustee escrow 2,052 Investment properties 12,933 18,058 Liabilities Accounts payable 33 Tenant security deposit liabilities 49 Accrued property taxes 182 Other liabilities 1,111 Non-recourse promissory notes: Principal 18,516 Interest payable 20,328 Minority interest in consolidated joint venture 214 Estimated costs during the period of liquidation 853 41,286 Net liabilities in liquidation $(23,228) See Accompanying Notes to Consolidated Financial Statements b) CENTURY PENSION INCOME FUND XXIII STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION (Unaudited) (in thousands) Nine Months Ended September 30, 2000 Net liabilities in liquidation at beginning of period $(20,509) Changes in net liabilities in liquidation attributed to: Decrease in cash and cash equivalents (286) Increase in receivables and deposits 720 Decrease in debt trustee escrow (2,693) Decrease in mortgage loan receivable (1,000) Decrease in investment in properties (34,004) Decrease in accounts payable 17 Decrease in tenant security deposits 145 Increase in accrued property taxes (81) Increase in other liabilities (814) Decrease in accrued interest - notes payable 295 Decrease in mortgage note payable 6,856 Decrease in non-recourse promissory notes - principal 14,260 Decrease in non-recourse promissory notes - interest payable 12,911 Decrease in minority interest in consolidated joint venture 1,400 Increase in estimated costs during the period of liquidation (445) Net liabilities in liquidation at end of period $(23,228) See Accompanying Notes to Consolidated Financial Statements c) CENTURY PENSION INCOME FUND XXIII CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Ended Nine Months Ended September 30, 1999 September 30, 1999 Revenues: Rental income $ 2,051 $ 7,575 Interest income on mortgage loans 20 61 Other income 259 936 Total revenues 2,330 8,572 Expenses: Operating 530 2,061 General and administrative 649 1,184 Depreciation 460 1,656 Interest on notes payable 206 620 Interest to promissory note holders 1,216 3,647 Amortization of deferred charges -- 52 Property taxes 174 938 Gain (loss) on disposal of investment properties (3) 433 Total expenses 3,232 10,591 Loss before minority interest in joint ventures' operations (902) (2,019) Minority interest in joint ventures' operations (124) (149) Net loss $(1,026) $(2,168) Net loss allocated to general partner (2%) $ (21) $ (43) Net loss allocated to limited partners (98%) (1,005) (2,125) $(1,026) $(2,168) Net loss per limited partnership unit (95,789 units issued and outstanding) $(10.49) $(22.18)
See Accompanying Notes to Consolidated Financial Statements d) CENTURY PENSION INCOME FUND XXIII CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Nine Months Ended September 30, 1999 Cash flows from operating activities: Net loss $ (2,168) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 1,656 Amortization of deferred charges and lease commissions 217 Minority interest in joint ventures' operations 149 Deferred interest on non-recourse promissory notes 2,075 Loss on disposal of investment properties 433 Change in accounts: Receivables and deposits 80 Other assets (230) Accounts payable (7) Tenant security deposit liabilities (106) Accrued property taxes (122) Due to general partner 397 Indenture trustee escrow (1,000) Other liabilities (173) Accrued interest on promissory notes 525 Accrued interest on mortgage note payable 90 Net cash provided by operating activities 1,816 Cash flows from investing activities: Property replacements and improvements (320) Lease commissions paid (252) Distribution to minority interest holder (5,901) Proceeds from sale of investment properties 14,202 Net cash provided by investing activities 7,729 Cash flows from financing activities: Payment of deferred interest on promissory notes (8,657) Cash distributions to the general partner (21) Payment on non-recourse promissory notes (9,163) Net cash used in financing activities (17,841) Net decrease in cash and cash equivalents (8,296) Cash and cash equivalents at beginning of period 11,698 Cash and cash equivalents at end of period $ 3,402 Supplemental disclosure of cash flow information: Cash paid for interest - notes payable $ 596 Cash paid for interest - non-recourse promissory notes $ 9,705 See Accompanying Notes to Consolidated Financial Statements e) CENTURY PENSION INCOME FUND XXIII NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation As of December 31, 1999, Century Pension Income Fund XXIII (the "Partnership" or "Registrant") adopted the liquidation basis of accounting due to the imminent sale of its investment properties. The Partnership's Non-Recourse Promissory Notes are secured by a deed of trust on all properties owned in fee by the Partnership, by a security interest in the joint venture interests held by the Partnership, and by a pledge of the note and of the deed of trust on the real properties underlying the mortgage loans made by the Partnership. The Notes were issued in two series. The "1985 Series Notes," in the amount of $33,454,000 bear interest at 12% per annum, and the "1986 Series Notes," in the amount of $8,485,000, bear interest at 10% per annum. Portions of the interest on both the "1985 Series Notes" and the "1986 Series Notes" were permitted to be deferred, provided the Partnership made minimum interest payments of 5% on the unpaid principal balance. The Nonrecourse Promissory Notes had a balance of principal and deferred interest of approximately $80,000,000 at their maturity date of February 15, 1999. The Partnership was unable to satisfy the Nonrecourse Promissory Notes at maturity, and as a result, the Partnership was in default on the Nonrecourse Promissory Notes. Fox Capital Management Corporation ("FCMC" or the "Managing General Partner"), the Managing General Partner of the Partnership's general partner, contacted the indenture trustee for the Nonrecourse Promissory Notes regarding this default. In connection with these conversations, on July 30, 1999, the Partnership entered into a forbearance agreement with the indenture trustee pursuant to which the indenture trustee agreed not to exercise its rights and remedies under the indenture for up to 390 days. The trustee has indicated, however, that it will extend the forebearance period to accommodate the completion of the sale of the Partnership's remaining properties, one of which is currently under contract for sale and two of which are being marketed for sale. In turn, the Partnership agreed to (a) deliver to the indenture trustee for the benefit of the noteholders all of the accumulated cash of the Partnership, less certain reserves and anticipated operating expenses, (b) market all of its properties for sale, (c) deliver all net cash proceeds from any sales to the indenture trustee until the notes are fully satisfied and (d) comply with the reporting requirements under the indenture. Based on the proceeds received to date from sales of Partnership assets and the anticipated net proceeds from sales of the Partnership's remaining properties, it is unlikely that the sale of the Partnership's assets will generate sufficient proceeds to pay off the Nonrecourse Promissory Notes in full and accordingly, generate any cash for distribution. Upon the sale or disposal of the last property, the Partnership is expected to terminate. As a result of the decision to liquidate the Partnership, the Partnership changed its basis of accounting for its consolidated financial statements at December 31, 1999, to the liquidation basis of accounting. Consequently, assets have been valued at their estimated net realizable value and liabilities are presented at their estimated settlement amounts, including estimated costs associated with carrying out the liquidation. The valuation of assets and liabilities necessarily requires many estimates and assumptions and there are substantial uncertainties in carrying out the liquidation. The actual realization of assets and settlement of liabilities could be higher or lower than amounts indicated and is based upon the Managing General Partner's estimates as of the date of the consolidated financial statements. Included in liabilities in the consolidated statement of net liabilities in liquidation as of September 30, 2000 is approximately $853,000 of costs, net of income, that the Managing General Partner estimates will be incurred during the period of liquidation based on the assumption that the liquidation process will be completed by April 30, 2001. Because the success in realization of assets and the settlement of liabilities is based on the Managing General Partner's best estimates, the liquidation period may be shorter than projected or it may be extended beyond the projected period. Principles of Consolidation The consolidated financial statements include all of the accounts of the Partnership and the joint ventures in which the Partnership has a controlling interest. An affiliated partnership owned the minority interest in these joint ventures. All significant inter-entity transactions and balances have been eliminated. Note B - 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 ("AIMCO"), a publicly traded real estate investment trust, with AIMCO being the surviving corporation (the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in the Managing General Partner. The Managing General Partner does not believe that this transaction has had or will have a material effect on the affairs and operations of the Partnership. Note C - 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 transactions with affiliates of the Managing General Partner were incurred during the nine month periods ended September 30, 2000 and 1999: 2000 1999 (in thousands) Property management fees (included in operating expenses in 1999) $ 65 $ 94 Reimbursement for services of affiliates (included in general and administrative expenses in 1999) 35 153 Partnership management fee (included in general and administrative expenses in 1999) -- 452 During the nine months ended September 30, 2000 and 1999, affiliates of the Managing General Partner were entitled to receive 5% of gross receipts from the Partnership's residential property as compensation for providing property management services. The Partnership paid to such affiliates approximately $65,000 and $94,000 for the nine months ended September 30, 2000 and 1999, respectively. On May 26, 2000, the residential property was sold (see "Note D"). For the Partnership's commercial properties, these services were provided by an unrelated party for the nine months ended September 30, 2000 and 1999. An affiliate of the Managing General Partner received reimbursement of accountable administrative expenses amounting to approximately $35,000 and $153,000 for the nine months ended September 30, 2000 and 1999, respectively. On January 4, 1999, an affiliate of the Managing General Partner purchased 3,554 of the Partnership's 1985 Nonrecourse Promissory Notes and 1,270 of the Partnership's 1986 Nonrecourse Promissory Notes from a noteholder for $600 per note. During the nine months ended September 30, 1999, the general partner received a cash distribution of approximately $21,000, which was equal to two percent of cash distributions to the Promissory Note holders prior to July 1, 1999. The partnership management fee and partnership management incentive are limited by the Partnership Agreement to ten percent of cash available for distribution before interest payments to the Promissory Note holders and the partnership management fee. During the nine months ended September 30, 1999, the general partner received a Partnership management fee of approximately $452,000. There were no distributions during the nine months ended September 30, 2000. Note D - Sale of Investment Properties On June 29, 2000, the Partnership sold Interrich Plaza to an unaffiliated third party for net sales proceeds of approximately $1,609,000 after the payment of closing costs. The Partnership's net sales proceeds were paid to the indenture trustee to be applied to the amounts due to the noteholders. On June 8, 2000, the Partnership sold Regency Center to an unaffiliated third party for net sales proceeds of approximately $12,025,000 after the payment of closing costs. The Partnership's net sales proceeds were paid to the indenture trustee to be applied to the amounts due to the noteholders. On May 26, 2000, the Partnership sold The Enclaves Apartments to an unaffiliated third party for net sales proceeds of approximately $14,545,000 after the payment of closing costs. A portion of the proceeds were used to pay off the first mortgage encumbering the property. In addition, a $775,000 reserve was held in escrow. The remaining proceeds of approximately $6,779,000 were paid to the indenture trustee to be applied to the amounts due to the noteholders. On January 19, 2000, Coral Palm Joint Venture, a joint venture in which the Partnership has a controlling interest, sold Coral Palm Plaza, to an unaffiliated third party for net sales proceeds of approximately $5,992,000 after payment of closing costs. The Partnership's share of the net sales proceeds is approximately $3,995,000 and the minority's share is approximately $1,997,000, which was distributed during the nine months ended September 30, 2000. The Partnership's share of the net sales proceeds was used to pay a portion of the principal and accrued interest on the Nonrecourse Promissory Notes. On June 1, 1999, Minneapolis Business Park Joint Venture ("Minneapolis"), a joint venture in which the Partnership has a controlling interest, sold Alpha Business Center, Plymouth Service Center, and Westpoint Service Center to an unaffiliated third party for net sales proceeds of approximately $14,202,000 after payment of closing costs. The Partnership's share of the net sales proceeds was approximately $9,657,000 and the minority holder's share was approximately $4,545,000. Minneapolis realized a loss of approximately $433,000 on the sale. The Partnership's share of the loss on the sale was approximately $294,000 and the minority holder's share was approximately $139,000, which was allocated to the minority holder through the minority interest in joint ventures' operations. The Partnership's share of the net sales proceeds were used to pay a portion of the principal and accrued interest on the Nonrecourse Promissory Notes. Note E - Mortgage Loans Receivable The Partnership entered into various agreements with the borrowers on two of the Partnership's second mortgage loans receivable which were cross collateralized and in default. The properties are located in Irvine ("Irvine") and Costa Mesa, California ("Costa Mesa"). The borrower on the Irvine property had terminated payments on the mortgage loan receivable in October 1994, and in January 1995, a court appointed receiver was placed on the Irvine property. As a result, on April 20, 1995, the Partnership acquired the Irvine property through a deed in lieu of foreclosure and satisfied the existing first mortgage encumbering the property in the principal amount (including expense) of approximately $1,114,000. On May 31, 1995, the receiver on the Irvine property was dismissed. The Partnership commenced operating the property on June 1, 1995. The mortgage loan receivable, net of the previously recorded provision for impairment of value of $1,250,000 was reclassified as real estate in 1995. The mortgagor of the Costa Mesa property assumed $400,000 of the principal amount of the debt encumbering the Irvine property resulting in an aggregate outstanding principal balance of $1,137,000. The Partnership extended the maturity date of the loan on the Costa Mesa property to March 31, 2000. Monthly payments to the Partnership remained the same. As of December 31, 1999, the Partnership determined that this receivable was impaired and its value was written down approximately $137,000 to reflect its fair value at December 31, 1999 of $1,000,000. During the second quarter of 2000, the mortgager repaid this note in full. The Partnership waived its right to receive a contingent interest of 50% of the amount received in excess of the current debt upon the sale of the property in exchange for immediate full repayment. Note F - Segment Reporting Description of the types of products and services from which the reportable segment derives its revenues: The Partnership had two reportable segments: residential properties and commercial properties. The Partnership's residential property segment consisted of one apartment complex located in Atlanta, Georgia. The Partnership rented apartment units to tenants for terms that are typically twelve months or less. This apartment complex was sold on May 26, 2000 (see "Note D - Sale of Investment Properties"). The commercial property segment consists of two business parks located in Florida and North Carolina and one shopping center located in Georgia. In addition, the Partnership also owned a controlling interest in a joint venture whose property was sold January 19, 2000. The Partnership also owned a controlling interest in a joint venture whose properties were sold June 1, 1999. Effective December 31, 1999, the Partnership adopted the liquidation basis of accounting (see "Note A - Basis of Presentation"). As a result, segment information is only provided for the three and nine month periods ended September 30, 1999. Measurement of segment profit or loss: The Partnership evaluated performance based on segment profit (loss) before depreciation. The accounting policies of the reportable segments are the same as those of the Partnership as described in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1999. Factors management used to identify the Partnership's reportable segments: The Partnership's reportable segments consisted of investment properties that offered different products and services. The reportable segments were each managed separately because they provided distinct services with different types of products and customers. Segment information for the three and nine month periods ended September 30, 1999, 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 segments.
For the Three Months Ended September 30, 1999 Residential Commercial Other Totals Rental income $ 621 $ 1,430 $ -- $ 2,051 Interest income on mortgage loans -- -- 20 20 Other income 10 8 241 259 Interest expense 206 -- 1,216 1,422 Depreciation 91 369 -- 460 General and administrative expense -- -- 649 649 Gain on disposal of investment properties -- 3 -- 3 Minority interest in joint ventures' operations -- (124) -- (124) Segment profit (loss) 94 484 (1,604) (1,026) For the Nine Months Ended September 30, 1999 Residential Commercial Other Totals Rental income $ 1,844 $ 5,731 $ -- $ 7,575 Interest income on mortgage loans -- -- 61 61 Other income 36 306 594 936 Interest expense 620 -- 3,647 4,267 Amortization of deferred costs -- -- 52 52 Depreciation 266 1,390 -- 1,656 General and administrative expense -- -- 1,184 1,184 Loss on disposal of investment properties -- (433) -- (433) Minority interest in joint ventures' operations -- (149) -- (149) Segment profit (loss) 208 1,852 (4,228) (2,168) Total assets 8,965 33,212 5,110 47,287 Capital expenditures for investment properties 98 222 -- 320
Note G - 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, its Managing General Partner and several of their affiliated partnerships and corporate entities. The action purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging the acquisition of interests in certain general partner entities by Insignia Financial Group, Inc. ("Insignia") and entities which were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; the management of partnerships by the Insignia affiliates; and the Insignia Merger. The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the Managing General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs have filed an amended complaint. The Managing General Partner filed demurrers to the amended complaint which were heard February 1999. Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to final court approval, on behalf of the Partnership and all limited partners who owned units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Court, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing, the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of prior lead counsel to enter the settlement. On December 14, 1999, the Managing General Partner and its affiliates terminated the proposed settlement. In February 2000, counsel for some of the named plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated the settlement. On June 27, 2000, the Court entered an order disqualifying them from the case. The Court is considering applications for lead counsel and has currently scheduled a hearing on the matter for November 20, 2000. The Managing General Partner does not anticipate that costs associated with this case will be material to the Partnership's overall operations. The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature arising in the ordinary course of business. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The matters discussed in this Form 10-QSB contain certain forward-looking statements and involve risks and uncertainties (including changing market conditions, competitive and regulatory matters, etc.) detailed in the disclosures contained in this Form 10-QSB and the other filings with the Securities and Exchange Commission made by the Partnership from time to time. The discussion of the Partnership's business and results of operations, including forward-looking statements pertaining to such matters, does not take into account the effects of any changes to the Registrant's business and results of operations. Accordingly, actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including those identified herein. The Partnership's remaining investment properties consist of two business parks and one shopping center. The following table sets forth the average occupancy for each of the Partnership's investment properties for the nine months ended September 30, 2000 and 1999: Average Occupancy Property 2000 1999 Commerce Plaza 73% 100% Tampa, Florida Highland Park III 92% 94% Charlotte, North Carolina Centre Stage Shopping Center 99% 97% Norcross, Georgia The Managing General Partner attributes the decrease in occupancy at Commerce Plaza to a major tenant vacating the property during the first quarter of 2000 when its lease expired. A portion of the space was leased to a new tenant and the Managing General Partner is actively marketing the remaining space. The Partnership's Centre Stage Shopping Center is currently under contract for sale to an unaffiliated third party. This sale, which is subject to the purchaser's completing its due diligence review and other customary closing conditions, is expected to close, if at all, during the fourth quarter of 2000 at its estimated liquidation value. There can be no assurance, however, that this transaction will be consummated or as to what the final sales terms will be. The Partnership's Highland Park III and Commerce Plaza are being marketed for sale. As of December 31, 1999, the Partnership adopted the liquidation basis of accounting due to the imminent loss of its investment properties. The Nonrecourse Promissory Notes had a balance of principal and deferred interest of approximately $80,000,000 at their maturity date of February 15, 1999. The Partnership was unable to satisfy the Nonrecourse Promissory Notes at maturity and as a result, the Partnership was in default on the Nonrecourse Promissory Notes. Fox Capital Management Corporation ("FCMC" or the "Managing General Partner"), the Managing General Partner of the Partnership's general partner, contacted the indenture trustee for the Nonrecourse Promissory Notes regarding this default. The trustee has indicated, however, that it will extend the forebearance period to accommodate the completion of the sale of the Partnership's remaining properties, one of which is currently under contract for sale and two of which are being marketed for sale. In turn, the Partnership agreed to (a) deliver to the indenture trustee for the benefit of the noteholders all of the accumulated cash of the Partnership, less certain reserves and anticipated operating expenses, (b) market all of its properties for sale, (c) deliver all net cash proceeds from any sales to the indenture trustee until the notes are fully satisfied and (d) comply with the reporting requirements under the indenture. Based on the proceeds received to date from sales of Partnership assets and the anticipated net proceeds from sales of the Partnership's remaining properties, it is unlikely that the sale of the Partnership's assets will generate sufficient proceeds to pay off the Nonrecourse Promissory Notes in full and accordingly, generate any cash for distribution. Upon the sale or disposal of the last property, the Partnership is expected to terminate. The statement of net liabilities in liquidation as of September 30, 2000 includes approximately $853,000 of costs, net of income, that the Managing General Partner estimates will be incurred during the period of liquidation, based on the assumption that the liquidation process will be completed by April 30, 2001. Because the success in realization of assets and the settlement of liabilities is based on the Managing General Partner's best estimates, the liquidation period may be shorter or extended beyond the projected period. On June 29, 2000, the Partnership sold Interrich Plaza to an unaffiliated third party for net sales proceeds of approximately $1,609,000 after the payment of closing costs. The Partnership's net sales proceeds are held by the indenture trustee to be applied to the amounts due to the noteholders. On June 8, 2000, the Partnership sold Regency Center to an unaffiliated third party for net sales proceeds of approximately $12,025,000 after the payment of closing costs. The Partnership's net sales proceeds are held by the indenture trustee to be applied to the amounts due to the noteholders. On May 26, 2000, the Partnership sold The Enclaves Apartments to an unaffiliated third party for net sales proceeds of approximately $14,545,000 after the payment of closing costs. A portion of the proceeds were used to pay off the first mortgage encumbering the property. In addition, a $775,000 reserve was held in escrow. The remaining proceeds of approximately $6,779,000 are held by the indenture trustee to be applied to the amounts due to the noteholders. On January 19, 2000, Coral Palm Joint Venture, a joint venture in which the Partnership has a controlling interest, sold Coral Palm Plaza, to an unaffiliated third party for net sales proceeds of approximately $5,992,000 after payment of closing costs. The Partnership's share of the net sales proceeds is approximately $3,995,000 and the minority's share is approximately $1,997,000, which was distributed during the nine months ended September 30, 2000. The Partnership's share of the net sales proceeds was used to pay a portion of the principal and accrued interest on the Nonrecourse Promissory Notes. On June 1, 1999, Minneapolis Business Park Joint Venture ("Minneapolis"), a joint venture in which the Partnership has a controlling interest, sold Alpha Business Center, Plymouth Service Center, and Westpoint Service Center to an unaffiliated third party for net sales proceeds of approximately $14,202,000 after payment of closing costs. The Partnership's share of the net sales proceeds was approximately $9,657,000 and the minority holder's share was approximately $4,545,000. Minneapolis realized a loss of approximately $433,000 on the sale. The Partnership's share of the loss on the sale was approximately $294,000 and the minority holder's share was approximately $139,000, which was allocated to the minority holder through the minority interest in joint ventures' operations. The Partnership's share of the net sales proceeds were used to pay a portion of the principal and accrued interest on the Nonrecourse Promissory Notes. The Partnership's Centre Stage Shopping Center is currently under contract for sale to an unaffiliated third party. This sale, which is subject to the purchasers completing their due diligence review and other customary closing conditions, is expected to close, if at all, during the fourth quarter of 2000 at their estimated liquidation value. There can be no assurance, however, that this transaction will be consummated or as to what the final sale terms will be. The Partnership's Highland Park III and Commerce Plaza are being marketed for sale. The Partnership entered into various agreements with the borrowers on two of the Partnership's second mortgage loans receivable which were cross collateralized and in default. The properties are located in Irvine ("Irvine") and Costa Mesa, California ("Costa Mesa"). The borrower on the Irvine property had terminated payments on the mortgage loan receivable in October 1994, and in January 1995, a court appointed receiver was placed on the Irvine property. As a result, on April 20, 1995, the Partnership acquired the Irvine property through a deed in lieu of foreclosure and satisfied the existing first mortgage encumbering the property in the principal amount (including expense) of approximately $1,114,000. On May 31, 1995, the receiver on the Irvine property was dismissed. The Partnership commenced operating the property on June 1, 1995. The mortgage loan receivable, net of the previously recorded provision for impairment of value of $1,250,000 was reclassified as real estate in 1995. The mortgagor of the Costa Mesa property assumed $400,000 of the principal amount of the debt encumbering the Irvine property resulting in an aggregate outstanding principal balance of $1,137,000. The Partnership extended the maturity date of the loan on the Costa Mesa property to March 31, 2000. Monthly payments to the Partnership remained the same. As of December 31, 1999, the Partnership determined that this receivable was impaired and its value was written down approximately $137,000 to reflect its fair value at December 31, 1999 of $1,000,000. During the second quarter of 2000, the mortgager repaid this note in full. The Partnership waived its right to receive a contingent interest of 50% of the amount received in excess of the current debt upon the sale of the property in exchange for immediate full repayment. In light of the maturity of the Notes, no distributions were made to the limited partners for the nine month periods ended September 30, 2000 and 1999. In accordance with the Partnership Agreement, the General Partner received cash distributions equal to 2% of the interest payments on the nonrecourse promissory notes which amounted to approximately $21,000 during the nine months ended September 30, 1999. The following is a general description of the tax consequences that my result to a limited partner upon the sale of the Partnership's remaining properties. Each limited partner should consult with his or her own tax advisor to determine his or her particular tax consequences. The taxable gain and income resulting from the sale of the Partnership's properties will pass through to the limited partners, and will likely result in income tax liability to the limited partners without any distribution of cash from the Partnership. Capital improvements for each of the Partnership's properties are detailed below. Additional capital expenditures will be incurred only if cash is available from operations. Commerce Plaza: During the nine months ended September 30, 2000, the Partnership spent approximately $71,000 in capital improvements at Commerce Plaza consisting of tenant improvements. The improvements were funded from operating cash flow. The Partnership has not budgeted capital improvements for 2000 but will make capital improvements as they are needed. Regency Centre: During the nine months ended September 30, 2000, the Partnership did not complete any capital improvements at Regency Center. This property was sold June 8, 2000. Highland Park III: During the nine months ended September 30, 2000, the Partnership did not complete any capital improvements at Highland Park Commerce Center. The Partnership has not budgeted capital improvements for 2000 but will make capital improvements as they are needed. Interrich Plaza: During the nine months ended September 30, 2000, the Partnership spent approximately $9,000 in capital improvements at Interrich Plaza consisting of tenant improvements. This property was sold June 29, 2000. Centre Stage Shopping Center: During the nine months ended September 30, 2000, the Partnership spent approximately $9,000 in capital improvements at Centre Stage Shopping Center consisting of tenant improvements. These improvements were funded from operating cash flow. The Partnership has not budgeted capital improvements for 2000 but will make capital improvements as they are needed. The Enclaves: During the nine months ended September 30, 2000, the Partnership spent approximately $55,000 for capital improvements consisting primarily of carpet replacement, plumbing upgrades, and wall covering replacements. These improvements were funded from operating cash flow. This property was sold May 26, 2000. Coral Palm Plaza: During the period January 1, 2000 through January 19, 2000, the Partnership completed approximately $29,000 of capital improvements at Coral Palm Plaza consisting of tenant improvements. These improvements were funded from operating cash flow. The property was sold January 19, 2000. As part of the ongoing business plan of the Partnership, the Managing General Partner monitors the rental market environment of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the Managing General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the Managing General Partner will be able to sustain such a plan. 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, its Managing General Partner and several of their affiliated partnerships and corporate entities. The action purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging the acquisition of interests in certain general partner entities by Insignia Financial Group, Inc. ("Insignia") and entities which were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; the management of partnerships by the Insignia affiliates; and the Insignia Merger. The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the Managing General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs have filed an amended complaint. The Managing General Partner filed demurrers to the amended complaint which were heard February 1999. Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to final court approval, on behalf of the Partnership and all limited partners who owned units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Court, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing, the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of prior lead counsel to enter the settlement. On December 14, 1999, the Managing General Partner and its affiliates terminated the proposed settlement. In February 2000, counsel for some of the named plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated the settlement. On June 27, 2000, the Court entered an order disqualifying them from the case. The Court is considering applications for lead counsel and has currently scheduled a hearing on the matter for November 20, 2000. The Managing General Partner does not anticipate that costs associated with this case will be material to the Partnership's overall operations. ITEM 2. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: None filed during the quarter ended September 30, 2000. 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 PENSION INCOME FUND XXIII By: FOX PARTNERS V Its General Partner By: FOX CAPITAL MANAGEMENT CORPORATION Its Managing General Partner By: /s/Patrick J. Foye Patrick J. Foye Executive Vice President By: /s/Martha L. Long Martha L. Long Senior Vice President and Controller Date: