-----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, NdiPlsMBrJD68U+7FxgjwAdb19NcVivH0uCt0cU28zeFrUWx5PKRiGg9vz1SQAEH 1uou5b3OaieBDxsah545bg== 0000764543-96-000003.txt : 19960816 0000764543-96-000003.hdr.sgml : 19960816 ACCESSION NUMBER: 0000764543-96-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 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: 96614622 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 (As last amended in Rel. No. 312905, eff. 4/26/93.) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 For the quarterly period ended June 30, 1996 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period.........to......... (Amended by Exchange Act Rel. No. 312905, eff. 4/26/93.) 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) Registrant's telephone number (864) 239-1000 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) June 30, December 31, 1996 1995 (Unaudited) (Note) Assets Cash and cash equivalents $ 7,404 $ 6,378 Restricted cash -- 158 Other assets 1,308 894 Mortgage loans receivable, net 1,137 1,137 Deferred sales commissions, net 693 823 Deferred organization expenses, net 412 489 Deferred leasing commissions, net 838 857 Investment properties: Land 18,165 18,165 Buildings and related personal 68,857 68,347 87,022 86,512 Less accumulated depreciation (20,309) (19,094) 66,713 67,418 $ 78,505 $ 78,154 Liabilities and Partners' Deficit Liabilities Accrued expenses and other liabilities $ 1,207 $ 738 Accrued interest - notes payable 1,017 714 Notes payable 16,956 16,956 Non-recourse promissory notes: Principal 41,939 41,939 Deferred interest payable 31,476 30,092 Minority interest in consolidated joint ventures 7,576 7,383 Partners' Deficit General partner (2,150) (2,089) Limited partners (95,789 units issued and outstanding at June 30, 1996 and December 31, 1995) (19,516) (17,579) (21,666) (19,668) $ 78,505 $ 78,154 Note: The balance sheet at December 31, 1995, 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 Six Months Ended June 30, June 30, 1996 1995 1996 1995 Revenues: Rental income $ 2,691 $ 2,719 $ 5,527 $ 5,609 Interest income on mortgage loans 21 21 41 41 Other income 133 643 271 756 Total revenues 2,845 3,383 5,839 6,406 Expenses: Interest to promissory note holders 1,215 1,215 2,431 2,431 Amortization 171 164 337 333 Operating 1,224 1,146 2,266 2,183 Depreciation 572 652 1,215 1,281 Interest 433 419 865 827 General and administrative 251 173 546 397 Loss on satisfaction of mortgage of loan receivable -- -- -- 978 Total expenses 3,866 3,769 7,660 8,430 Loss before minority interest in joint ventures' operations (1,021) (386) (1,821) (2,024) Minority interest in joint ventures (92) (237) (156) (333) Net loss $ (1,113) $ (623) $ (1,977) $ (2,357) Net loss allocated to general partners 2% $ (22) $ (12) $ (40) $ (47) Net loss allocated to limited partners 98% (1,091) (611) (1,937) (2,310) $ (1,113) $ (623) $ (1,977) $ (2,357) Net loss per Limited Partnership Unit $ (11.39) $ (6.37) $ (20.23) $ (24.11) See Accompanying Notes to Consolidated Financial Statements
c) CENTURY PENSION INCOME FUND XXIII STATEMENT OF PARTNERS' CAPITAL (DEFICIT) (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Units Partner's Partners' Total Original capital contributions 95,789 $ 977 $ 47,894 $ 48,852 Partners' deficit at December 31, 1995 95,789 $ (2,089) $ (17,579) $ (19,668) Distributions -- (21) -- (21) Net loss for the six months ended June 30, 1996 -- (40) (1,937) (1,977) Partners' deficit at June 30, 1996 95,789 $ (2,150) $ (19,516) $ (21,666) See Accompanying Notes to Consolidated Financial Statements
d) CENTURY PENSION INCOME FUND XXIII CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Six Months Ended June 30, 1996 1995 Operating activities: Net loss $ (1,977) $ (2,357) Adjustments to reconcile net loss to cash provided by operating activities: Depreciation and amortization 1,552 1,614 Loss on satisfaction of mortgage loan receivable -- 978 Minority interest in joint ventures 156 333 Deferred interest added to note payable principal -- 6 Deferred costs paid (111) (156) Deferred interest on non-recourse promissory notes 1,384 1,383 Change in accounts: Receivables and other assets (414) 185 Accrued expenses and other liabilities 469 174 Accrued interest - notes payable 303 -- Net cash provided by operating activities 1,362 2,160 Investing activities: Property replacements and improvements (511) (358) Restricted cash 158 3 Cost of real estate acquired through foreclosure -- (1,114) Proceeds from satisfaction of mortgage loan receivable -- 1,007 Net cash used in investing activities (353) (462) Financing activities: Joint venture partner contributions 38 -- Joint venture partner distributions -- (573) Cash distribution to general partner (21) (21) Net cash provided by (used in) financing activities 17 (594) Increase in cash and cash equivalents 1,026 1,104 Cash and cash equivalents at beginning of period 6,378 5,202 Cash and cash equivalents at end of period $ 7,404 $ 6,306 Supplemental disclosure of cash flow information: Cash paid for interest - notes payable $ 562 $ 820 Cash paid for interest - non-recourse promissory notes $ 1,048 $ 1,048 Supplemental Disclosure of non-cash investing and financing activities: Deferred interest added to note payable principal $ -- $ 3 See Accompanying Notes to Consolidated Financial Statements
e) CENTURY PENSION INCOME FUND XXIII NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited financial statements of Century Properties 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"), 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, 1996, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1996. 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, 1995. Certain reclassifications have been made to the 1995 information to conform to the 1996 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 following transactions with Insignia Financial Group, Inc. ("Insignia"), National Property Investors, Inc., and affiliates were charged to expense in 1996 and 1995:
For the Six Months Ended June 30, 1996 1995 (in thousands) Property management fees (included in operating expense) $ 58 $ 51 Reimbursement for services of affiliates (included in general and administrative expenses) 148 52 Services relating to successful real estate tax appeals (included in operating expenses) -- 16 Partnership management fee (included in general and administrative expenses) 55 55
For the period from January 19, 1996, to June 30, 1996, 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. An affiliate of the general partner is entitled to receive a partnership management fee in an amount equal to 10 percent of cash available for distribution before interest payments to the Promissory Note Holders. The general partner received cash distributions totaling $21,000 which is equal to 2 percent of interest paid to Promissory Note holders, during the three month periods ended March 31, 1996 and 1995. The general partner of the Partnership is Fox Partners V, a California general partnership, whose general partners are FCMC, a California corporation 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 acquired (i) control of NPI Equity Investments II, Inc., the managing general partner of FRI, and (ii) all of the issued and outstanding shares of stock of FCMC. In connection with these transactions, affiliates of Insignia appointed new officers and directors of NPI Equity Investments II, Inc. and FCMC. Note C - Sunnymead Towne Shopping Center The Sunnymead Towne Shopping Center ("Sunnymead") located in Moreno Valley, California, 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 and does not intend to make any future payments as the value of Sunnymead is less than the debt. At June 30, 1996, the note had a principal balance of approximately $10,100,000 with accrued interest of approximately $900,000. The lender has notified the Partnership of its intent to foreclose on the property. The Partnership does not plan to challenge the foreclosure proceedings, which are expected to be concluded during the third quarter of 1996. 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. Note D - Loss on Satisfaction of Mortgage Loan Receivable on In-Substance Foreclosure Property On April 28, 1995, the Partnership received $1,007,000 in full satisfaction of its mortgage loan receivable on the Warren, Michigan property. The property had been classified as an in-substance foreclosure property. The Partnership accepted the discounted settlement because it determined that, based upon projected future operational cash flow of the property and the cost of litigation, it appeared likely that a substantial portion of contractual obligations would not be collected. The Partnership recorded a $978,000 loss on satisfaction of a mortgage loan receivable at June 30, 1995. A $1,850,000 provision for doubtful mortgage loan and interest receivable had previously been recorded in 1992. Note E - Other Income The Partnership accepted a lease buy-out of $800,000 in December 1994 from a significant tenant that had occupied 27,000 square feet at Coral Palm Plaza which was received in 1995. During June 1995, management re-leased 20,000 square feet of the unoccupied space, on similar terms, and recognized a portion of the lease buy-out in the amount of $517,000. The remaining portion was deferred and recognized as rental income in September 1995 when the remaining 7,000 square feet was re-leased on similar terms. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Partnership's investment properties consist of one apartment complex, four business parks and three 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 occupancy for the six months ended June 30, 1996 and 1995: Average Occupancy Property 1996 1995 Commerce Plaza 96% 96% Tampa, Florida Regency Centre 97% 99% Lexington, Kentucky Highland Park Commerce Center - Phase II 95% 92% Charlotte, North Carolina Interrich Plaza 64% 87% Richardson, Texas Centre Stage Shopping Center 98% 97% Norcross, Georgia Sunnymead Towne Center (1) 82% 91% Moreno Valley, California The Enclaves 96% 96% Atlanta, Georgia Medtronics (2) 100% 100% Irvine, California Coral Palm Plaza Joint Venture: Coral Palm Plaza 74% 67% Coral Springs, Florida Minneapolis Business Parks Joint Venture: Alpha Business Center 92% 95% Bloomington, Minnesota Plymouth Service Center 100% 100% Plymouth, Minnesota Westpoint Business Center 96% 91% Plymouth, Minnesota (1) Vacated tenant, which previously occupied 98,000 square feet, continues to make lease payments. Property is physically 25 percent occupied at June 30, 1996. (2) Property was acquired through deed in lieu of foreclosure of a mortgage loan receivable in April 1995. Occupancy at Interrich Plaza declined due to a major tenant vacating its space during the second quarter of 1995. Occupancy at Coral Palm Plaza increased due to the Partnership's ability to re-lease space vacated by a lease buyout from a major tenant in 1994. Partially offsetting this increase in occupancy at Coral Palm was the October 1995 lease buy-out and termination agreement with another tenant. The $300,000 termination payment has been deferred and is being amortized into income on a straight-line basis over the remainder of the former tenant's lease until the related, unoccupied space is leased again. Occupancy at Sunnymead Towne Center has decreased due to tenants vacating their space and poor economic conditions in the local area. Occupancy at Westpoint Business Center increased due to the execution of new leases and lease renewals during the second quarter of 1995. Occupancy at Highland Park Commerce Center increased due to the execution of new leases and lease renewals during the third quarter of 1995. The Partnership's net loss for the six months ended June 30, 1996, was approximately $1,977,000, of which $1,113,000 was recorded in the second quarter versus net losses of approximately $2,357,000 and $623,000 for the same periods of 1995. The decrease in the net loss is attributable to the loss on satisfaction of mortgage loan receivable of $978,000 recognized in 1995 as discussed in "Item 1. Financial Statements-Note D". Interest income on reserves, which is included in other income, increased in 1996 due to an increase in cash reserves as compared to the first six months of 1995. Partially offsetting the decrease in net loss was a decrease in other income and an increase in general and administrative expense. The decrease in other income in 1996 is the result of a lease buyout fee of $517,000 recognized in 1995 as discussed in "Item 1. Financial Statements-Note E". The increase in general and administrative expenses was due to increased costs associated with the transition of the partnership administration offices during the six months ended June 30, 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 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. At June 30, 1996, the Partnership had unrestricted cash of $7,404,000 as compared to $6,306,000 at June 30, 1995. Net cash provided by operating activities decreased primarily as a result of the increase in receivables and other assets. Receivables and other assets increased due to an increase in accounts receivable, and tax escrows. Net cash used in investing activities decreased due to a decrease in restricted cash which was offset by increased property replacements and improvements. Net cash provided by financing activities increased due to a contribution from the minority interest in the joint venture during the first quarter of 1996 versus the distribution to the joint venture partner in 1995. The Sunnymead Towne Shopping Center ("Sunnymead") located in Moreno Valley, California, 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 and does not intend to make any future payments as the value of Sunnymead is less than the debt. At June 30, 1996, the note had a principal balance of approximately $10,100,000 with accrued interest of approximately $900,000. The lender has notified the Partnership of its intent to foreclose on the property. The Partnership does not plan to challenge the foreclosure proceedings which are expected to be concluded during the third quarter of 1996. In 1995, the Partnership recorded a provision for impairment of value of $2,900,000. The Partnership estimates an extraordinary gain on extinguishment of debt of approximately $11,000,000 and a loss on foreclosure of approximately $6,000,000. The property was placed in receivership on May 1, 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 $6,856,000, excluding the Sunnymead indebtedness, requires interest only payments with a balloon payment due in 2001. Also, the Partnership's Non-Recourse Promissory Notes of $73,415,000, including deferred interest of $31,476,000, require minimum interest payments of 5% on principal per year and mature on February 15, 1999. Future cash distributions will depend on the levels of cash generated from operations, property sales, and the availability of cash reserves. Cash distributions totaling approximately $21,000, which were equal to 2 percent of interest paid to Promissory Note holders, were paid to the general partner during the six months ended June 30, 1996 and 1995. At this time it appears that the original investment objective of capital growth will not be attained and that investors will not receive a return of all their invested capital. As to the Promissory Note Holders and assuming the notes are held to maturity, the ability of the Registrant to make it's payments of principal and interest is dependent upon the ultimate sales prices, timing of sales of the remaining properties, net proceeds received by the Registrant from sales and refinancing and overall Partnership operations. Based on current projections, the Promissory Note Holders will not receive any payment of residual interest. 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 June 30, 1996. 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, A California Limited Partnership By: FOX PARTNERS V, its General Partner By: FOX CAPITAL MANAGEMENT CORPORATION, a General Partner By: /s/William H. Jarrard, Jr. William H. Jarrard, Jr. President and Director By: /s/Ronald Uretta Ronald Uretta Principal Financial Officer and Principal Accounting Officer Date: August 14, 1996 EX-27 2
5 This schedule contains summary financial information extracted from Century Pension Income Fund XXIII 1996 Second Quarter 10-Q and is qualified in its entirety by reference to such 10-Q. 0000764543 CENTURY PENSION INCOME FUND XXIII 1,000 6-MOS DEC-31-1996 JUN-30-1996 7,404 0 0 0 0 0 87,022 20,309 78,505 0 16,956 0 0 0 (21,666) 78,505 0 5,839 0 0 7,660 0 865 0 0 0 0 0 0 (1,977) (20.23) 0 The Registrant has an unclassified balance sheet. Multiplier is 1.
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