-----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, CijcrQfI9MgH/w+fT0/5BzZfrlIAYzh0DkD+MV3HqVqoywd6GsnBU6V25MR1IRE+ 7kA9AjyAeS2sP0e1zj2TcA== 0000764543-97-000001.txt : 19971117 0000764543-97-000001.hdr.sgml : 19971117 ACCESSION NUMBER: 0000764543-97-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 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: SEC FILE NUMBER: 002-96389 FILM NUMBER: 97720440 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 September 30, 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) (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) September 30, December 31, 1997 1996 (Unaudited) (Note) Assets Cash and cash equivalents $ 8,723 $ 8,289 Restricted cash -- 80 Receivables and other assets, net 1,660 1,667 Deferred charges 1,848 1,987 Mortgage loan receivable 1,137 1,137 Investment properties: Land 16,384 18,165 Buildings and related personal property 63,972 69,172 80,356 87,337 Less accumulated depreciation (21,758) (21,604) 58,598 65,733 $ 71,966 $ 78,893 Liabilities and Partners' Deficit Liabilities Deferred income, accrued expenses and other liabilities $ 1,510 $ 1,189 Accrued interest - promissory notes 524 1,048 Deferred interest - notes payable 157 1,499 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 33,885 31,810 Minority interest in consolidated joint ventures 8,062 7,844 Partners' Deficit General partner's (1,239) (2,206) Limited partners' (95,789 units issued and outstanding at September 30, 1997 and December 31, 1996) (19,728) (21,186) (20,967) (23,392) $ 71,966 $ 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 Nine Months Ended September 30, September 30, 1997 1996 1997 1996 Revenues: Rental income $ 2,559 $ 2,826 $ 7,898 $ 8,353 Interest income on mortgage loan 20 20 61 61 Other income 149 165 416 436 Total revenues 2,728 3,011 8,375 8,850 Expenses: Interest to promissory note holders 1,216 1,216 3,647 3,647 Amortization of sales commissions and organizational costs 104 107 314 314 Operating 1,236 1,206 3,643 3,602 Depreciation 578 603 1,784 1,818 Interest on notes payable 207 446 846 1,311 General and administrative 281 301 792 847 Total expenses 3,622 3,879 11,026 11,539 Loss before minority interest in joint ventures' operations and extraordinary gain on foreclosure (894) (868) (2,651) (2,689) Minority interest in joint ventures' operations (41) (127) (218) (283) Loss before extraordinary gain (935) (995) (2,869) (2,972) Extraordinary gain on foreclosure -- -- 5,337 -- Net (loss) income $ (935) $ (995) $ 2,468 $ (2,972) Net (loss) income allocated to general partner $ (18) $ (20) $ 1,010 $ (59) Net (loss) income allocated to limited partners (917) (975) 1,458 (2,913) $ (935) $ (995) $ 2,468 $ (2,972) Net (loss) income per limited partnership unit: Loss before extraordinary gain $ (9.58) $ (10.18) $ (29.36) $ (30.41) Extraordinary gain on foreclosure -- -- 44.58 -- Net (loss) income per Limited Partnership Unit $ (9.58) $ (10.18) $ 15.22 $ (30.41) 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 Partners' Total Original capital contributions 95,789 $ 958 $ 47,894 $ 48,852 Partners' deficit at December 31, 1995 95,789 $(2,089) $(17,579) $(19,668) Distributions to partners -- (43) -- (43) Net loss for the nine months ended September 30, 1996 -- (59) (2,913) (2,972) Partners' deficit at September 30, 1996 95,789 $(2,191) $(20,492) $(22,683) Partners' deficit at December 31, 1996 95,789 $(2,206) $(21,186) $(23,392) Distributions to partners -- (43) -- (43) Net income for the nine months ended September 30, 1997 -- 1,010 1,458 2,468 Partners' deficit at September 30, 1997 95,789 $(1,239) $(19,728) $(20,967) 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, 1997 1996 Cash flows from operating activities: Net income (loss) $ 2,468 $ (2,972) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 1,784 1,818 Amortization of deferred charges 500 503 Minority interest in joint ventures' operations 218 283 Deferred interest on non-recourse promissory notes 2,075 2,075 Extraordinary gain on foreclosure (5,337) -- Casualty gain (37) -- Change in accounts: Receivables and other assets (556) (801) Deferred charges (388) (25) Deferred income, accrued expenses and other liabilities (265) 174 Deferred interest - notes payable 249 551 Net cash provided by operating activities 711 1,606 Cash flows from investing activities: Restricted cash 13 (62) Insurance proceeds 100 -- Property replacements and improvements (347) (628) Net cash used in investing activities (234) (690) Cash flows from financing activities: Joint venture partner contributions -- 38 Cash distributions to general partner (43) (43) Net cash used in financing activities (43) (5) Net increase in cash and cash equivalents 434 911 Cash and cash equivalents at beginning of period 8,289 6,378 Cash and cash equivalents at end of period $ 8,723 $ 7,289 Supplemental disclosure of cash flow information: Cash paid for interest - notes payable $ 596 $ 761 Cash paid for interest - non-recourse promissory notes $ 2,097 $ 2,097 See Accompanying Notes to Consolidated Financial Statements
CENTURY PENSION INCOME FUND XXIII SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES Foreclosure: During the nine months ended September 30, 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 Casualty Loss: The Partnership recorded a net casualty gain during the nine months ended September 30, 1997, resulting from a fire at The Enclaves which destroyed six apartment units. The damage resulted in a net gain of approximately $37,000. The following balance sheet accounts were adjusted by the non-cash amounts noted below (in thousands): 1997 Receivables and other assets $ 33 Building and related personal property 111 Other liabilities 111 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 and nine month periods ended September 30, 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 connection 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 nine month periods ended September 30, 1997 and 1996 (in thousands): 1997 1996 Property management fees (included in operating expenses) $ 111 $ 101 Reimbursement for services of affiliates (included in general and administrative expenses) 147 183 Partnership management fee (included in general and administrative expenses) 111 111 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 August 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 master policy. The 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 Managing General Partner received cash distributions totaling approximately $43,000 during each of the nine month periods ended September 30, 1997 and 1996. NOTE C - FORECLOSURE OF SUNNYMEAD TOWNE SHOPPING CENTER On March 27, 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 nine months ended September 30, 1997 and 1996: Average Occupancy Property 1997 1996 Commerce Plaza 100% 96% Tampa, Florida Regency Centre 95% 96% Lexington, Kentucky Highland Park Commerce 89% 95% Center - Phase II Charlotte, North Carolina Interrich Plaza 64% 64% Richardson, Texas Centre Stage Shopping Center 99% 99% Norcross, Georgia The Enclaves 92% 96% Atlanta, Georgia Medtronics 100% 100% Irvine, California Coral Palm Plaza Joint Venture: Coral Palm Plaza 72% 73% Coral Springs, Florida Minneapolis Business Parks Joint Venture: Alpha Business Center 90% 93% Bloomington, Minnesota Plymouth Service Center 100% 99% Plymouth, Minnesota Westpoint Business Center 96% 97% 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 Highland Park decreased as a result of two tenants vacating the property in 1996. Occupancy at The Enclaves has decreased as a result of upgrades and concessions offered at competing apartment complexes. Occupancy at Alpha Business Center decreased as a result of two tenants vacating the property in 1997 and to lease turnover in 1997. The Partnership's net income for the nine months ended September 30, 1997, was approximately $2,468,000 compared to a net loss of approximately $2,972,000 for the corresponding period of 1996. The Partnership's net loss for the three months ended September 30, 1997, was approximately $935,000 compared to a net loss of approximately $995,000 for the corresponding period of 1996. The increase in net income for the nine months ended September 30, 1997, is primarily attributable to the gain on foreclosure of Sunnymead Towne Shopping Center during the first quarter of 1997. The Partnership recognized an extraordinary gain on foreclosure of approximately $5,337,000 (see Note C - Foreclosure of Sunnymead Towne Shopping Center). The Partnership's loss before extraordinary gain for the nine month period ended September 30, 1997 was approximately $2,869,000 compared to approximately $2,972,000 for the corresponding period of 1996. The decrease in net loss before extraordinary gain for the three and nine month periods ended September 30, 1997 was primarily due to a decrease in interest on notes payable. The decrease in interest on notes payable is a result of the foreclosure on the Sunnymead Towne Center property as discussed above. This decrease in interest on notes payable was partially offset by a decrease in rental income, which was also the result of the Sunnymead Towne Center foreclosure. Despite the foreclosure on the Sunnymead Towne Center, operating expenses increased due to increases in these expenses at The Enclaves, Alpha Business Center, and Coral Palm Plaza. The increase in operating expense at The Enclaves is the result of increased sewer expenses, business license and permits, interior and exterior building improvements and tax expenses. Tax expenses increased due to an increased assessment from the taxing authorities. Operating expenses increased at Alpha Business Center due to exterior painting, roof repairs and paving expenses in 1997. The increase in operating expense at Coral Palm Plaza was due to exterior painting and roof repairs. 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 September 30, 1997, the Partnership had unrestricted cash of approximately $8,723,000 compared to approximately $7,289,000 at September 30, 1996. Net cash provided by operating activities decreased as a result of an increase in cash used for deferred charges and other liabilities. Net cash used in investing activities decreased due to decreased property improvements and replacements in 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 $75,824,000, including deferred interest of approximately $33,885,000, 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 nine months ended September 30, 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 September 30, 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: November 14, 1997 EX-27 2
5 This schedule contains summary financial information extracted from Century Properties Income Fund XXIII 1997 Third Quarter 10-Q and is qualified in its entirety by reference to such 10-Q filing. 0000764543 CENTURY PENSION INCOME FUND XXIII 1,000 9-MOS DEC-31-1997 SEP-30-1997 8,723 0 1,660 0 0 0 80,356 (21,758) 71,966 0 48,795 0 0 0 (20,967) 71,966 0 8,375 0 0 11,026 0 846 0 0 0 0 5,337 0 2,468 15.22 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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