-----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, RK0+2Z64W5D+5odIto7MhCcvwCo7j5aoZXWCRY0S4ac3C6pObgr3MDuZXwpYZr6F c88Wl4QnlpNQIFJnz9K4nw== 0000720460-97-000011.txt : 19970515 0000720460-97-000011.hdr.sgml : 19970515 ACCESSION NUMBER: 0000720460-97-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTURY PENSION INCOME FUND XXIII CENTRAL INDEX KEY: 0000764543 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 942963120 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 002-96389 FILM NUMBER: 97605723 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 DR NW CITY: ATLANTA STATE: GA ZIP: 30328 10-Q 1 FORM 10-Q--QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] Quarterly Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 For the quarterly period ended March 31, 1997 or [ ] 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.) One Insignia Financial Plaza Greenville, South Carolina 29602 (Address of principal executive offices) (Zip Code) (864) 239-1000 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 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 BALANCE SHEETS (in thousands, except unit data) March 31, December 31, 1997 1996 (Unaudited) (Note) Assets Cash and cash equivalents $ 8,113 $ 8,289 Restricted cash -- 80 Receivables and deposits 1,190 1,647 Other assets 1,968 2,007 Mortgage loan receivable 1,137 1,137 Investment properties: Land 16,384 18,165 Buildings and related personal property 63,730 69,172 80,114 87,337 Less accumulated depreciation (20,620) (21,604) 59,494 65,733 $ 71,902 $ 78,893 Liabilities and Partners' Deficit Liabilities Accounts payable $ 107 $ 58 Tenant security deposits 361 413 Accrued taxes 379 277 Accrued interest - promissory notes 524 1,048 Accrued interest on notes payable 207 1,565 Other liabilities 219 375 Notes payable, $10,100 in default at December 31, 1996, (Note C) 6,856 16,956 Non-recourse promissory notes: Principal 41,939 41,939 Deferred interest payable 32,502 31,810 Minority interest in consolidated joint ventures 7,931 7,844 Partners' Deficit General partner's (1,181) (2,206) Limited partners' (95,789 units issued and outstanding at March 31, 1997 and December 31, 1996) (17,942) (21,186) (19,123) (23,392) $ 71,902 $ 78,893 Note: The balance sheet at December 31, 1996, has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See Accompanying Notes to Consolidated Financial Statements b) CENTURY PENSION INCOME FUND XXIII CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data) Three Months Ended March 31, 1997 1996 Revenues: Rental income $ 2,764 $ 2,835 Interest income on mortgage loan 20 20 Other income 134 139 Total revenues 2,918 2,994 Expenses: Interest to promissory note holders 1,216 1,216 Amortization of sales commissions and organizational costs 105 104 Operating 1,257 1,104 Depreciation 621 643 Interest of notes payable 432 432 General and administrative 247 295 Total expenses 3,878 3,794 Loss before minority interest in joint ventures' operations and extraordinary gain on foreclosure (960) (800) Minority interest in joint ventures' operations (87) (64) Loss before extraordinary gain (1,047) (864) Extraordinary gain on foreclosure 5,337 -- Net income (loss) $ 4,290 $ (864) Net income (loss) allocated to general partner $ 1,046 $ (17) Net income (loss) allocated to limited partners 3,244 (847) $ 4,290 $ (864) Net income (loss) per limited partnership unit: Loss before extraordinary gain $ (10.71) $ (8.84) Extraordinary gain on foreclosure 44.58 -- Net income (loss) per limited partnership unit $ 33.87 $ (8.84) See Accompanying Notes to Consolidated Financial Statements c) CENTURY PENSION INCOME FUND XXIII CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Units Partner's Partners' Total Original capital contributions 95,789 $ 958 $ 47,894 $ 48,852 Partners' deficit at December 31, 1996 95,789 $ (2,206) $ (21,186) $ (23,392) Distribution to general partner -- (21) -- (21) Net income for the three months ended March 31, 1997 -- 1,046 3,244 4,290 Partners' deficit at March 31, 1997 95,789 $ (1,181) $ (17,942) $ (19,123) See Accompanying Notes to Consolidated Financial Statements
d) CENTURY PENSION INCOME FUND XXIII CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Three Months Ended March 31, 1997 1996 Cash flows from operating activities: Net income (loss) $ 4,290 $ (864) Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: Depreciation 621 643 Amortization of deferred charges 164 166 Minority interest in joint ventures' operations 87 64 Deferred interest on non-recourse promissory notes 692 692 Extraordinary gain on foreclosure (5,337) -- Change in accounts: Restricted cash 13 158 Receivables and deposits (139) (488) Other assets (152) (38) Accounts payable 49 26 Tenant security deposit liabilities (10) (5) Accrued taxes 102 389 Other liabilities (149) 69 Accrued interest on notes payable 233 70 Accrued interest - promissory notes (524) (524) Net cash (used in) provided by operating activities (60) 358 Cash flows from investing activities: Property replacements and improvements (95) (328) Net cash used in investing activities (95) (328) Cash flows from financing activities: Joint venture partner contributions -- 38 Cash distributions to general partner (21) (21) Net cash (used in) provided by financing activities (21) 17 Net (decrease) increase in cash and cash equivalents (176) 47 Cash and cash equivalents at beginning of period 8,289 6,378 Cash and cash equivalents at end of period $ 8,113 $ 6,425 Supplemental disclosure of cash flow information: Cash paid for interest - notes payable $ 199 $ 363 Cash paid for interest - non-recourse promissory notes $ 1,048 $ 1,048 See Accompanying Notes to Consolidated Financial Statements
CENTURY PENSION INCOME FUND XXIII SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES Foreclosure: During the three months ended March 31, 1997, Sunnymead Towne Center was foreclosed upon by the lender. In connection with this foreclosure, approximately $67,000 in cash was transferred to the lender as partial settlement on the outstanding debt. This cash was previously classified as restricted cash on the Partnership's balance sheet. In addition, the following balance sheet accounts were adjusted by the non-cash amounts noted below (in thousands): 1997 Receivables and deposits $ (596) Other assets (27) Investment properties (5,713) Tenant security deposit liabilities 42 Accrued interest on notes payable 1,591 Other liabilities 7 Notes payable 10,100 e) CENTURY PENSION INCOME FUND XXIII NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited financial statements of Century Pension Income Fund XXIII (the "Partnership") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of Fox Capital Management Corporation ("FCMC" or the "Managing General Partner"), a California corporation, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 1997, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1997. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-K for the year ended December 31, 1996. Certain reclassifications have been made to the 1996 information to conform to the 1997 presentation. NOTE B - 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 payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The general partner of the Partnership is Fox Partners V, a California general partnership, whose general partners are FCMC and Fox Realty Investors ("FRI"), a California general partnership. Pursuant to a series of transactions which closed during the first half of 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"). In addition with these transactions, affiliates of Insignia appointed new officers and directors of NPI Equity and FCMC. The following transactions with affiliates of Insignia, NPI, and affiliates of NPI were incurred during the three month periods ended March 31, 1997 and 1996 (in thousands): Three Months Ended March 31, 1997 1996 Property management fees (included in operating expenses) $ 38 $ 28 Reimbursement for services of affiliates (included in general and administrative expenses) 24 71 Partnership management fee (included in general and administrative expenses) 55 55 Affiliates of the Managing General Partner performed property management services for The Enclaves during 1996 and 1997. Effective May 1, 1996, an affiliate of Insignia began performing property management services for Coral Palm Plaza. For the period from January 19, 1996, to March 31, 1997, the Partnership insured its properties under a master policy through an agency and 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 current year's master policy. The current agent assumed the financial obligations to the affiliate of the Managing General Partner who received 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 is not significant. The general partner received cash distributions totaling approximately $21,000 during the three month periods ended March 31, 1997 and 1996. NOTE C - FORECLOSURE OF SUNNYMEAD TOWNE SHOPPING CENTER In March 1997, the Sunnymead Towne Shopping Center ("Sunnymead") located in Moreno Valley, California, was foreclosed on. Sunnymead had a significant tenant, which occupied 98,000 square feet, vacate in 1995. During February 1996, another major tenant vacated 11,000 square feet, leaving the property approximately 25% physically occupied. Effective March 1, 1996, the Partnership ceased making debt service payments, as the value of Sunnymead was estimated at less than the debt. The property was placed in receivership on May 1, 1996. In 1995, a $2,900,000 provision for impairment of value was recorded on the Sunnymead property. The Partnership determined that, based on economic conditions at the time as well as projected future operational cash flows, the decline in value was other than temporary and recovery of the carrying value was not likely. Accordingly, the property's carrying value was reduced to an amount equal to its estimated fair value. In the Managing general Partner's opinion, it was not in the Partnership's best interest to contest the foreclosure action. As a result of the foreclosure, the Partnership recorded a gain on foreclosure of approximately $5,337,000. Prior to the foreclosure, the outstanding debt on the property was a note payable with a principal balance of $10,100,000 and accrued interest of approximately $1,591,000. NOTE D - RESTRICTED CASH Restricted cash at December 31, 1996 represents cash partially securing the Sunnymead note payable, which was restricted as to its use pursuant to a court approved reorganization plan and the modified note agreements (see "Note C"). ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Partnership's remaining investment properties consist of one apartment complex, four business parks and two shopping centers, as well as three business parks and a shopping center owned by two consolidated joint ventures between the Partnership and an affiliated partnership. The following table sets forth the average physical occupancy for the three months ended March 31, 1997 and 1996: Average Occupancy Property 1997 1996 Commerce Plaza 100% 92% Tampa, Florida Regency Centre 95% 99% Lexington, Kentucky Highland Park Commerce 89% 97% Center - Phase II Charlotte, North Carolina Interrich Plaza 64% 64% Richardson, Texas Centre Stage Shopping Center 99% 96% Norcross, Georgia The Enclaves 93% 95% Atlanta, Georgia Medtronics 100% 100% Irvine, California Coral Palm Plaza Joint Venture: Coral Palm Plaza 74% 76% Coral Springs, Florida Minneapolis Business Parks Joint Venture: Alpha Business Center 95% 93% Bloomington, Minnesota Plymouth Service Center 100% 100% Plymouth, Minnesota Westpoint Business Center 99% 96% Plymouth, Minnesota The Managing General Partner attributes the increase in occupancy at Commerce Plaza to the leasing of the remaining available space to a new tenant during the second quarter of 1996. Occupancy at Regency Centre decreased primarily as a result of a tenant vacating the property at the end of its lease in 1996. New leases have been executed for most of the currently vacant space, with the tenants scheduled to move in during the second quarter of 1997. Occupancy at Highland Park decreased as a result of two tenants vacating the property in 1996. Occupancy at Highland Park increased to 92% at March 31, 1997, as management continues to market the vacant space. The Partnership's net income for the three months ended March 31, 1997, was approximately $4,290,000 compared to a net loss of approximately $864,000 for the corresponding period of 1996. The increase in net income is primarily attributable to the gain on the foreclosure of Sunnymead Towne Shopping Center during the three months ended March 31, 1997 (see "Item 1. Financial Statements, Note C"). The Partnership recognized an extraordinary gain on foreclosure of approximately $5,337,000. The Partnership's loss before the extraordinary gain was approximately $960,000 for the three months ended March 31, 1997 compared to approximately $800,000 for the comparable period in 1996. The increase in loss before the extraordinary gain was primarily due to an increase in operating expenses. Included in operating expense for the three months ended March 31, 1997, is approximately $14,000 of major repairs and maintenance comprised primarily of exterior building repairs. There were no expenditures for major repairs and maintenance during the three months ended March 31, 1996. Also contributing to the increase in operating expenses was an increase in contract security costs at Sunnymead as a result of the poor local economy. Snow removal costs at the Minnesota properties increased due to the severity of the winter. Operating expenses at The Enclaves increased partially due to a 1994 real estate tax assessment increase being received and paid in the first quarter of 1997. The Enclaves also had increases in sewer and electricity charges, landscaping materials, and interior painting expense. Partially offsetting the increase in operating expenses was the decrease in general and administrative expenses as a result of increased expense reimbursements in 1996, related to the costs incurred in connection with the transition and relocation of the partnership administrative offices during the first quarter of 1996. As part of the ongoing business plan of the Partnership, the Managing General Partner monitors the rental market environment of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expense. As part of this plan, the Managing General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the Managing General Partner will be able to sustain such a plan. At March 31, 1997, the Partnership had unrestricted cash of approximately $8,113,000 compared to approximately $6,425,000 at March 31, 1996. Net cash used in operating activities increased partially due to increases in operating expenses as discussed above. Also contributing to the increase in cash used in operating activities was an increase in cash used for accrued taxes and other liabilities related to the timing of payments. Net cash used in investing activities decreased due to decreased property improvements and replacements in the first quarter of 1997. Net cash used in financing activities increased due to a contribution from the minority interest in the joint venture in 1996. The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the properties to adequately maintain the physical assets and other operating needs of the Partnership. Such assets are currently thought to be sufficient for any near-term needs of the Partnership. The mortgage indebtedness of approximately $6,856,000, requires interest only payments with a balloon payment due in 2001. Also, the Partnership's Non- Recourse Promissory Notes of approximately $74,441,000, including deferred interest of approximately $32,502,000, require minimum interest payments of 5% on principal per year and mature on February 15, 1999, at which time the Partnership will have to extend the due dates of these notes, find replacement funding, or sell properties. Future cash distributions will depend on the levels of cash generated from operations and the availability of cash reserves. No cash distributions to the limited partners were made in 1996 or during the three months ended March 31, 1997. Currently, the Managing General Partner is evaluating the feasibility of a distribution from cash reserves in 1997. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: None filed during the quarter ended March 31, 1997. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly 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/William H. Jarrard, Jr. William H. Jarrard, Jr. President and Director By: /s/Ronald Uretta Ronald Uretta Vice President and Treasurer Date: May 14, 1997 EX-27 2
5 This schedule contains summary financial information extracted from Century Pension Income Fund XXIII 1997 First Quarter 10-Q and is qualified in its entirety by reference to such 10-Q filing. 0000764543 CENTURY PENSION INCOME FUND XXIII 1,000 3-MOS DEC-31-1997 MAR-31-1997 8,113 0 0 0 0 0 80,114 20,620 71,902 0 48,795 0 0 0 (19,123) 71,902 0 2,918 0 0 3,878 0 1,648 0 0 0 0 5,337 0 4,290 33.87 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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