-----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, My9O3W45HuHDknyCj1ymgwZnqSV/zR7Kns9r9sunIGnPS26xZCxuOl55HHwmm0Z2 8iefbm8JSXpH8D8tg6kFBQ== 0000780590-97-000002.txt : 19970320 0000780590-97-000002.hdr.sgml : 19970320 ACCESSION NUMBER: 0000780590-97-000002 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970319 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTURY PENSION INCOME FUND XXIV CENTRAL INDEX KEY: 0000780590 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 942984976 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-15710 FILM NUMBER: 97558950 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-K 1 FORM 10-K - ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (As last amended in Rel No. 34-31905, eff. 10/26/93.) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the fiscal year ended December 31, 1996 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from___________to____________ Commission file number 0-15710 CENTURY PENSION INCOME FUND XXIV California 94-2984976 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Insignia Financial Plaza, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (Zip Code) Issuer's telephone number (864) 239-1000 Securities registered under Section 12(b) of the Act: None Securities registered under Section 12(g) of the Exchange Act: Individual Investor Units and Pension Investor Notes (Title of each class) 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 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K X State the aggregate market value of the voting stock held by non-affiliates of the registrant. The aggregate market value shall be computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of a specified date within 60 days prior to the date of filing. Market value information for Registrants's Partnership Interests is not available. DOCUMENTS INCORPORATED BY REFERENCE None PART I Item 1. Business Century Pension Income Fund XXIV (the "Partnership" or "Registrant") was organized in June 1984 as a California limited partnership under the Uniform Limited Partnership Act of the California Corporations Code. Fox Partners VI, a California general partnership, is the general partner of the Registrant. Fox Capital Management Corporation (the "Managing General Partner") and Fox Realty Investors ("FRI") are the general partners of Fox Partners VI. The Registrant's Registration Statement, filed pursuant to the Securities Act of 1933 (No. 33-1261), was declared effective by the Securities and Exchange Commission on June 9, 1986. The Registrant marketed its securities pursuant to its Prospectus dated June 9, 1986, which was thereafter supplemented (hereinafter the "Prospectus"). This Prospectus was filed with the Securities and Exchange Commission pursuant to Rule 424(b) of the Securities Act of 1933. The principal business of the Registrant is to acquire, manage and ultimately sell income-producing real properties. The Registrant is a "closed" limited partnership real estate syndicate of the unspecified asset type. Beginning in July 1986, the Registrant offered $50,000,000 in Limited Partnership Assignee Units. The offering was completed on March 31, 1988, with Limited Partnership Assignee Units having an initial price of $36,670,500 being sold. The net proceeds of this offering were used to acquire three properties and interests in four other properties through two joint ventures with an affiliated partnership. The Registrant's property portfolio is geographically diversified with properties acquired in five states. See "Item 2, Properties" below for a description of the Registrant's properties. The Registrant is involved in only one industry segment as described above. The Registrant does not engage in any foreign operations or derive revenues from foreign services. Both the income and expenses of operating the properties which are owned by the Registrant are subject to factors beyond the Registrant's control, such as oversupply of similar rental facilities as a result of overbuilding, increases in unemployment or population shifts, changes in zoning laws or changes in patterns of needs of the users. Expenses, such as local real estate taxes and management expenses, are subject to change and cannot always be reflected in rental increases due to market conditions or existing leases. The profitability and marketability of developed real property may be adversely affected by changes in general and local economic conditions and in prevailing interest rates, and favorable changes in such factors will not necessarily enhance the profitability or marketability of such property. Even under the most favorable market conditions there is no guarantee that any property owned by the Registrant can be sold by it or, if sold, that such sale can be made upon favorable terms. It is possible that legislation on the state or local level may be enacted in states where the Registrant's properties are located which may include some form of rent control. There have been, and it is possible there may be other, Federal, state and local legislation and regulations enacted relating to the protection of the environment. The Managing General Partner is unable to predict the extent, if any, to which such existing or new legislation or regulations might adversely affect the properties owned by the Registrant. The Registrant monitors its properties for evidence of pollutants, toxins and other dangerous substances, including the presence of asbestos. In certain cases environmental testing has been performed, which resulted in no material adverse conditions or liabilities. In no case has the Registrant received notice that it is a potentially responsible party with respect to an environmental clean up site. A further description of the Partnership's business is included in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" included in this Form 10-K. The Registrant has no employees. Management and administrative services are performed by the Managing General Partner, Insignia Commercial Group, L.P., an affiliate of Insignia Financial Group, Inc. ("Insignia"), the ultimate parent company of the Managing General Partner, and a third party management company. Pursuant to a management agreement between them, Insignia Commercial Group, L.P., and a third party management company provide property management services to the Registrant. The real estate business in which the Partnership is engaged is highly competitive, and the Partnership is not a significant factor in this industry. The Registrant's properties are subject to competition from similar properties in the vicinity in which the properties are located. In addition, various limited partnerships have been formed by the General Partners and/or their affiliates to engage in business which may be competitive with the Registrant. In January 1995, the Registrant's Coral Palm Plaza joint venture in which the Registrant has a one-third interest received an $800,000 payment from a former significant tenant that had occupied 27,000 square feet at Coral Palm Plaza. 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. During September 1995, management re-leased the remaining 7,000 square feet of the unoccupied space, on similar terms, and recognized the remaining portion of the lease buy-out fee as rental income in 1995, which represents the amortization of the fee prior to the new tenants' lease commencement dates. In addition, in October 1995, the Coral Palm Plaza Joint Venture accepted a lease buy-out from a tenant that occupied 11,300 square feet of space for $300,000. Management is currently attempting to release the vacated space. From March 1988 through December 1993, the Registrant's affairs were managed by Metric Management, Inc. ("MMI") or a predecessor. On December 16, 1993, the services agreement with MMI was modified and, as a result thereof, the Managing General Partner began directly providing real estate advisory and asset management services to the Registrant. As advisor, such affiliate provides all partnership accounting and administrative services, investment management, and supervisory services over property management and leasing. On December 6, 1993, the shareholders of the Managing General Partner entered into a Voting Trust Agreement with NPI Equity Investments II, Inc. ("NPI Equity II") pursuant to which NPI Equity II was granted the right to vote 100% of the outstanding stock of the Managing General Partner. In addition, NPI Equity II became the managing partner of FRI. As a result, NPI Equity II indirectly became responsible for the operation and management of the business and affairs of the Registrant and the other investment partnerships originally sponsored by the Managing General Partner and/or FRI. The individuals who had served previously as partners of FRI and as officers and directors of the Managing General Partner contributed their general partnership interests in FRI to a newly formed limited partnership, Portfolio Realty Associates, L.P. ("PRA"), in exchange for limited partnership interests in PRA. The shareholders of the Managing General Partner and the prior partners of FRI, in their capacity as limited partners of PRA, continue to hold, indirectly, certain economic interests in the Registrant and such other investment limited partnerships, but have ceased to be responsible for the operation and management of the Registrant and such other partnerships. On January 19, 1996, IFGP Corporation, an affiliate of Insignia, acquired for $1,000,000 all of the issued and outstanding shares of capital stock of National Property Investors, Inc. ("NPI"). NPI is the sole shareholder of NPI Equity II, the Managing General Partner of FRI, and the entity which controlled the Managing General Partner. In addition, on June 1996, an affiliate of Insignia purchased all of issued and outstanding shares of capital stock of the Managing General Partner. As a result of the foregoing transactions, IFGP Corporation caused new officers and directors of NPI Equity II and the Managing General Partner to be elected. See "Item 10, Directors and Executive Officers of the Registrant." Item 2. Properties The following table sets forth the Partnership's investments in properties: Date of Property Purchase Type Size Butler Square Center 01/88 Shopping 80,000 Mauldin, South Carolina Center sq.ft. Kenilworth Commons Shopping Center 08/88 Shopping 38,000 Charlotte, North Carolina Center sq.ft. Plantation Pointe Shopping Center 04/89 Shopping 63,000 Smyrna, Georgia Center sq.ft. The Partnership owns 33 1/3% of a joint venture, Coral Palm Plaza Joint Venture, with Century Pension Income Fund XXIII, an affiliated partnership. The joint venture owns one property, Coral Palm Plaza, located in Coral Springs, Florida. The Partnership owns 32% of a joint venture, Minneapolis Business Parks Joint Venture, with Century Pension Income Fund XXIII, an affiliated partnership. The joint venture owns three properties, Alpha Business Center, Plymouth Service Center and Westpoint Business Center, all of which are located in Minnesota. Schedule of Properties (in thousands): Gross Carrying Accumulated Federal Property Value Depreciation Rate Method Tax Basis Butler Square $ 6,709 $ 1,689 3-39 yrs S/L $ 5,549 Kenilworth Commons 4,564 804 5-39 yrs S/L 3,992 Plantation Pointe 6,503 1,211 4-39 yrs S/L 5,605 $17,776 $ 3,704 $15,146 See "Note A" of the financial statements included in "Item 8" for a description of the Partnership's depreciation policy. Schedule of Average Rental Rates and Occupancy Average Annual Rental Rates Average Annual Occupancy Property 1996 1995 1996 1995 Butler Square $ 8.28 sq.ft. $ 7.46 sq.ft. 99% 94% Kenilworth Commons 12.28 sq.ft. 12.19 sq.ft. 100% 100% Plantation Pointe 9.21 sq.ft. 9.03 sq.ft. 98% 98% The Managing General Partner attributes the increased occupancy at Butler Square Shopping Center primarily to the growing local economy which has been strongly influenced by the introduction of two major employers into the market. As noted under "Item 1. Business," the real estate industry is highly competitive. All of the properties of the Partnership are subject to competition from other commercial buildings in the area. The Managing General Partner believes that all of the properties are adequately insured. The following is a schedule of the lease expirations at the Registrant's properties for the years beginning 1997 through the maturities of current leases: Number of % of Gross Expirations Square Feet Annual Rent Annual Rent Butler Square 1997 2 2,900 $ 37,000 5.67% 1998 3 5,075 54,000 8.17% 1999 8 27,656 225,000 34.20% 2000 1 6,000 39,000 5.93% 2007 1 38,654 303,000 46.03% Kenilworth Commons 1997 3 3,211 63,000 13.10% 1998 2 2,259 46,000 9.67% 1999 2 2,284 45,000 9.32% 2000 1 1,125 21,000 4.35% 2001 2 2,267 49,000 10.28% 2008 1 26,000 234,000 48.92% Plantation Pointe 1997 3 5,650 82,000 14.21% 1998 2 4,880 78,000 13.44% 2000 1 2,030 29,000 5.07% 2001 1 4,435 50,000 8.64% 2008 1 44,000 308,000 53.31% Real estate taxes (in thousands) and rates in 1996 for each property were: 1996 1996 Billing Rate Butler Square $ 66 24.92% Kenilworth Commons 42 1.26% Plantation Pointe 53 4.11% SIGNIFICANT TENANTS (1) December 31, 1996 Annualized Square Nature of Expiration Base Rent Footage Business of Lease Per Year Butler Square Center Bi-Lo Inc. 38,654 Grocer 2007 $302,660 Revco D.S. 8,470 Retail 1999 $ 59,290 Kenilworth Commons Shopping Center Harris-Teeter 26,000 Grocer 2008 $234,000 Plantation Pointe Shopping Center Winn Dixie 44,000 Grocer 2008 $308,000 (1) Tenant occupying 10% or more of total rentable square footage of the property. Item 3. Legal Proceedings The Registrant is unaware of any pending or outstanding litigation that is not of a routine nature. The Managing General Partner of the Registrant believes that all such pending or outstanding litigation will be resolved without a material adverse effect upon the business, financial condition, or operations of the Partnership. Item 4. Submission of Matter to a Vote of Security Holders During the year ended December 31, 1996, no matter was submitted to a vote of unit holders through the solicitation of proxies or otherwise. PART II Item 5. Market for the Registrant's Equity and Related Security Holder Matters The Partnership, a publicly-held limited partnership, sold 73,341 Limited Partnership Assignee Units aggregating $36,670,500. The Partnership currently has 73,341 units outstanding and 3,982 partners of record. There is no intention to sell additional Limited Partnership Assignee Units nor is there an established market for these units. During the years ended December 31, 1996 and 1995, the Partnership distributed quarterly distributions totaling approximately $1,111,000 to the partners. The limited partners received approximately $1,100,000 ($15.00 per limited partnership units) and the general partner received approximately $11,000. The amounts represent a distribution of cash from operations. Item 6. Selected Financial Data The following represents selected financial data for the Registrant, for the years ended December 31, 1996, 1995, 1994, 1993, and 1992. The data should be read in conjunction with the consolidated financial statements included elsewhere herein. This data is not covered by the independent auditors' report. For the Year Ended December 31, 1996 1995 1994 1993 1992 (in thousands except per unit data) Total revenues $ 2,673 $ 2,519 $ 522 $ 1,897 $ 1,221 Net income (loss) $ 986 $ 1,017 $ (871)$ 567 $ 873 Net income (loss) per limited partnership assignee unit (1) $ 13.30 $ 13.44 $(11.75)$ 7.54 $ 11.43 Total Assets $24,333 $24,424 $24,566 $26,551 $27,386 Cash distribution per limited partnership assignee units $ 15.00 $ 15.00 $ 15.00 $ 18.75 $ 21.24 (1) $500 original contribution per unit, based on weighted average units outstanding during the period after giving effect to the allocation of net income (loss) to the general partner. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This item should be read in conjunction with the consolidated financial statements and other items contained elsewhere in this report. Liquidity and Capital Resources The Registrant's real estate properties consist of three shopping center properties and investments in two unconsolidated joint ventures. The three shopping centers are located in South Carolina, North Carolina and Georgia. The unconsolidated joint venture properties include one shopping center in Florida and three business parks in Minnesota. The properties are leased to tenants subject to leases with remaining lease terms of up to twelve years. The Registrant receives rental income from its properties and is responsible for operating expenses, administrative expenses and capital improvements. All of the Registrant's properties generated positive cash flow for the year ended December 31, 1996. At December 31, 1996, the Partnership had unrestricted cash of approximately $1,929,000 as compared to $2,190,000 at December 31, 1995. Net cash provided by operating activities increased primarily due to the increase in accrued expenses and other liabilities due to timing of payments to vendors. Net cash used in investing activities increased primarily due to a distribution from unconsolidated joint ventures in 1995, as opposed to a Partnership contribution to Coral Palm in 1996. Partially offsetting this increase in cash used in investing activities was a decrease in property improvements and replacements due to 1995 tenant improvements at the Partnership's Butler Square Center. Net cash used in financing activities remained constant representing distributions to the partners for both years ending December 31, 1996 and 1995. The Registrant uses working capital reserves provided from any undistributed cash flow from operations and distributions from unconsolidated joint ventures as its primary source of liquidity. For the long term, cash from operations and distributions from unconsolidated joint ventures will remain the Registrant's primary source of liquidity. The Partnership has no material capital programs scheduled to be performed in 1997, although certain routine capital expenditures and maintenance expenses have been budgeted. These capital expenditures and maintenance expenses will be incurred only if cash is available from operations or is received from the capital reserve account. 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 property 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 Partnership distributed a total of $1,111,000 to the partners during each of the years ended December 31, 1996, 1995, and 1994. These distributions included $11,000 to the general partner, and $1,100,000 ($15.00 per unit) to the limited partners. Future cash distributions will depend on the levels of cash generated from operations, property sales, and the availability of cash reserves, however, quarterly distributions are expected to continue throughout 1997. The level of such distributions will be contingent upon successful future operations. The business in which the Registrant is engaged is highly competitive, and the Registrant is not a significant factor in its industry. Each investment property is located in or near a major urban area and, accordingly, competes for rentals not only with similar properties in its immediate area but with hundreds of similar properties throughout the urban area. Such competition is primarily on the basis of location, rents, services and amenities. In addition, the Registrant competes with significant numbers of individuals and organizations (including similar partnerships, real estate investment trusts and financial institutions) with respect to the sale of improved real properties, primarily on the basis of the prices and terms of such transactions. Results of Operations 1996 Compared to 1995 The Partnership's net income for the year ended December 31, 1996, was approximately $986,000 versus approximately $1,017,000 for the year ended December 31, 1995. The decline in net income is attributable to a decrease in equity in income of the unconsolidated 33.3% owned joint venture, and increases in operating and general and administrative expenses. The decrease in equity in joint venture operations is the result of the recognition of income in 1995 relating to a lease buy-out at the Partnership's unconsolidated joint venture property, Coral Palm Plaza. In December 1994, Coral Palm Plaza accepted a lease buy-out of $800,000 from a significant tenant that had occupied 27,000 square feet. The payment was received in 1995. During 1995, Coral Palm Plaza re- leased all of the unoccupied space, on similar terms, and recognized the remaining portion of the lease buy-out in the amount of $699,000 as other income. Operating expense increased due to parking lot repairs and increased management fees at Butler Square. Included in operating expense is approximately $21,000 of major repairs and maintenance comprised of exterior building, exterior painting and parking lot for the year ended December 31, 1996. The increase in general and administrative expenses is partially due to an increase in expense reimbursements. The increase in expense reimbursements during the year ended December 31, 1996, is directly attributable to the combined transition efforts of the Greenville, South Carolina and Atlanta, Georgia administrative offices during the year-end close, preparation of the 10-K and tax returns (including the limited partner K-1's), filing for the first two quarterly reports and transition of asset management responsibilities to the new administration. These increases were partially offset by increased rental revenue at Butler Square due to increased occupancy. 1995 Compared to 1994 Operating results improved by $1,888,000 for the year ended December 31, 1995, as compared to 1994, due to an increase in revenues of $1,997,000, which was only slightly offset by an increase in expenses of $109,000. Revenues increased by $1,997,000 for the year ended December 31, 1995, as compared to 1994, due to increases in equity in unconsolidated joint venture operations of $1,752,000, rental income of $206,000 and interest income of $19,000. Equity in unconsolidated joint ventures' operations increased due to the Registrant's $1,500,000 allocated portion of the provision for impairment of value recorded in 1994 on the Coral Palm Plaza joint venture property and the recognition of the termination payment accepted from a major tenant at Coral Palm Plaza in 1995. Rental income increased primarily due to increased rental rates and occupancy at the Registrant's Butler Square Center property. Interest income increased primarily due to an increase in average working capital reserves available for investment. Expenses increased by $109,000 for the year ended December 31, 1995, as compared to 1994, due to increases in operating expenses of $76,000, general and administrative expenses of $10,000 and depreciation expense of $23,000. Operating expense increased primarily due to increased repairs and maintenance and an increase in amortization of leasing commissions at the Registrant's Butler Square Center property. Depreciation expense increased due to significant tenant improvements at the Registrant's Butler Square Center property. General and administrative expenses remained relatively constant. During 1996, 1995, and 1994, the Registrant was allocated its equity income (loss) in the operations of, and in 1995 and 1994, received cash distributions from, the unconsolidated joint ventures. The financial statements for the unconsolidated joint ventures are presented in Exhibit 99.1. The 1996 Results of Operations compared to the 1995 Results of Operations was discussed above. A discussion of their 1995 Results of Operations compared to their 1994 Results of Operations follows: Equity income from unconsolidated joint ventures' operations increased $1,752,000 in 1995, as compared to 1994, primarily due to the recognition of the termination payment accepted from a major tenant at the Registrant's Coral Palm Plaza property and the provision for impairment recognized in 1994. Revenues at Minneapolis Business Parks Joint Venture properties increased due to an increase in occupancy at the joint venture's Alpha Business Center and Westpoint Business Center properties and an increase in rental rates at all of the Registrant's Minneapolis Business Park Joint Venture properties, which was only slightly offset by a decrease in occupancy at the Registrant's Plymouth Service Center property. Expenses increased at all of the Registrant's Minneapolis Business Park Joint Venture properties due to an increase in repairs and maintenance. 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. Item 8. Financial Statements and Supplementary Data CENTURY PENSION INCOME FUND XXIV, List of Financial Statements Independent Auditors' Reports Balance Sheets - December 31, 1996 and 1995 Statements of Operations-Years Ended December 31, 1996, 1995 and 1994 Statements of Changes in Partners' Capital-Years Ended December 31, 1996, 1995 and 1994 Statements of Cash Flows-Years Ended December 31, 1996, 1995 and 1994 Notes to Financial Statements To the Partners Century Pension Income Fund XXIV, A California Limited Partnership Greenville, South Carolina Independent Auditors' Report We have audited the accompanying balance sheets of Century Pension Income Fund XXIV, A California Limited Partnership (the "Partnership") as of December 31, 1996 and 1995, and the related statements of operations, partners' capital and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Century Pension Income Fund XXIV, A California Limited Partnership, as of December 31, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996 in conformity with generally accepted accounting principles. /s/ Imowitz Koenig & Co., LLP New York, N.Y. February 18, 1997 CENTURY PENSION INCOME FUND XXIV BALANCE SHEETS (in thousands, except unit data) December 31, 1996 1995 Assets Cash and cash equivalents $ 1,929 $ 2,190 Receivables and other assets 488 340 Investments in unconsolidated joint ventures 7,844 7,383 Investment properties: Land 4,397 4,410 Buildings & related personal property 13,379 13,327 17,776 17,737 Less accumulated depreciation (3,704) (3,226) 14,072 14,511 $ 24,333 $ 24,424 Liabilities and Partners' Capital Liabilities Accrued expenses and other liabilities $ 140 $ 106 Partners' Capital General partners' -- -- Limited partners' (73,341 units issued and outstanding at December 31, 1996 and 1995) 24,193 24,318 Total partners' capital 24,193 24,318 $ 24,333 $ 24,424 See Accompanying Notes to Financial Statements CENTURY PENSION INCOME FUND XXIV STATEMENTS OF OPERATIONS (in thousands, except unit data) Years Ended December 31, 1996 1995 1994 Revenues: Rental income $2,133 $1,895 $ 1,689 Other income 117 117 78 Total revenues 2,250 2,012 1,767 Expenses (including $249, $236 and $221 paid to the general partner and affiliates in 1996, 1995 and 1994): Operating 553 528 457 General and administrative 656 512 497 Depreciation 478 462 439 Total expenses 1,687 1,502 1,393 Equity in income (loss) of unconsolidated joint ventures 423 507 (1,245) Net income (loss) $ 986 $1,017 $ (871) Net income (loss) allocated to general partner $ 11 $ 31 $ (9) Net income (loss) allocated to limited partners 975 986 (862) $ 986 $1,017 $ (871) Net income (loss) per limited partnership unit $13.30 $13.44 $(11.75) Distribution per limited partnership unit $15.00 $15.00 $ 15.00 See Accompanying Notes to Financial Statements CENTURY PENSION INCOME FUND XXIV STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (in thousands, except unit data) Limited Partnership General Limited Units Partner's Partners' Total Original capital contributions 73,341 $ -- $ 36,671 $ 36,671 Partners' capital at January 1, 1994 73,341 $ -- $ 26,394 $ 26,394 Net loss for the year ended December 31, 1994 (9) (862) (871) Distributions to partners (11) (1,100) (1,111) Partners' Capital at December 31, 1994 73,341 (20) 24,432 24,412 Net income for the year ended December 31, 1995 31 986 1,017 Distributions to partners (11) (1,100) (1,111) Partners' capital at December 31, 1995 73,341 -- 24,318 24,318 Net income for the year ended December 31, 1996 11 975 986 Distributions to partners (11) (1,100) (1,111) Partners' capital at December 31, 1996 73,341 $ -- $ 24,193 $ 24,193 See Accompanying Notes to Financial Statements CENTURY PENSION INCOME FUND XXIV STATEMENTS OF CASH FLOWS (in thousands) Years Ended December 31, 1996 1995 1994 Cash flows from operating activities: Net income (loss) $ 986 $ 1,017 $ (871) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 522 500 459 Equity in income of unconsolidated joint ventures' operations (423) (507) 1,245 Change in accounts: Receivables and other assets (192) (91) (90) Accrued expenses and other liabilities 34 (48) (3) Net cash provided by operating activities 927 871 740 Cash flows from investing activities: Property improvements and replacements (39) (413) (60) Distributions received from unconsolidated joint ventures -- 805 150 Contributions to unconsolidated joint ventures (38) -- -- Proceeds from cash investments -- -- 1,283 Net cash (used in) provided by investing activities (77) 392 1,373 Cash flows from financing activities: Distributions to partners (1,111) (1,111) (1,111) Net cash used in financing activities (1,111) (1,111) (1,111) (Decrease) increase in cash and cash equivalents (261) 152 1,002 Cash and cash equivalents at beginning of period 2,190 2,038 1,036 Cash and cash equivalents at end of period $ 1,929 $ 2,190 $ 2,038 See Accompanying Notes to Financial Statements Century Pension Income Fund XXIV Notes to Financial Statements December 31, 1996 Note A - Organization And Summary Of Significant Accounting Policies Century Pension Income Fund XXIV (the "Partnership") is a limited partnership organized in 1984 under the laws of the State of California to acquire, manage and ultimately sell income-producing real estate. The Partnership currently owns three shopping centers located in South Carolina, North Carolina and Georgia. The Partnership also holds joint venture interests in a shopping center in Florida and in three business parks in Minnesota. The general partner is Fox Partners VI, a California general partnership, whose general partners are Fox Capital Management Corporation ("FCMC"), a California corporation and Fox Realty Investors ("FRI"), a California general partnership. The capital contributions of $36,670,500 ($500 per assignee unit) were made by Limited Partnership Assignee Unit Holders. On December 6, 1993, the shareholders of FCMC entered into a Voting Trust Agreement with NPI Equity Investments II, Inc. ("NPI Equity" or the "Managing General Partner") pursuant to which NPI Equity was granted the right to vote 100 percent of the outstanding stock of FCMC and NPI Equity became the managing general partner of FRI. As a result, NPI Equity became responsible for the operation and management of the business and affairs of the Partnership and the other investment partnerships originally sponsored by FCMC and/or FRI. NPI Equity is a wholly-owned subsidiary of National Property Investors, Inc. ("NPI, Inc."). The shareholders of FCMC and the partners in FRI retain indirect economic interests in the Partnership and such other investment limited partnerships, but have ceased to be responsible for the operation and management of the Partnership and such other partnerships. On January 19, 1996, the stockholders of NPI, Inc. sold all of the issued and outstanding stock of NPI, Inc. to an affiliate of Insignia Financial Group, Inc. ("Insignia"). In addition, on June 1996, an affiliate of Insignia purchased all of issued and outstanding shares of capital stock of the Managing General Partner. As a result of the foregoing transactions, IFGP Corporation caused new officers and directors of NPI Equity II and the Managing General Partner to be elected. See "Item 10, Directors and Executive Officers of the Registrant." Basis of Presentation: The Partnership's investments in unconsolidated joint ventures are accounted for under the equity method of accounting. Distributions: Cash distributions from operations were made at annualized rates of 3.0 percent of original capital contributions for each of the years 1996, 1995 and 1994. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents: The Partnership considers all highly liquid investments with a maturity, when purchased, of three months or less at the time of purchase to be cash equivalents. Leases: The Partnership leases certain commercial space to tenants under various lease terms. The leases are accounted for as operating leases in accordance with "Financial Accounting Standards Board Statement No. 13." Some of the leases contain stated rental increases during their term. For leases with fixed rental increases, rents are recognized on a straight-line basis over the terms of the lease. This straight-line basis recognized $39,000 more in rental income than was collected in 1996. This amount will be collected in future years as cash collections under the terms of the leases exceed the straight-line basis of revenue recognition. For all other leases, minimum rents are recognized over the terms of the leases. Concentration of Credit Risk: The Partnership maintains cash balances at institutions insured up to $100,000 by the Federal Deposit Insurance Corporation. Balances in excess of $100,000 are usually invested in money market accounts and repurchase agreements, which are collateralized by United States Treasury obligations. At certain times, the cash balances may exceed these insured levels. Fair Value In 1995, the Partnership implemented "Statement of Financial Accounting Standards ("SFAS") No. 107, Disclosures about Fair Value of Financial Instruments," as amended by "SFAS No. 119, Disclosures about Derivative Financial Instruments and Fair Value of Financial Instruments," which requires disclosure of fair value information about financial instruments for which it is practicable to estimate fair value. The carrying amount of the Partnership's cash and cash equivalents approximates fair value due to their short-term maturities. Real Estate: Real estate is stated at cost. Acquisition fees are capitalized as a cost of real estate. In 1995, the Partnership adopted "SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which requires impairment losses to be recognized for long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows are not sufficient to recover the asset's carrying amount. The impairment loss is measured by comparing the fair value of the asset to its carrying amount. The adoption of the SFAS had no effect on the Partnership's financial statements. Depreciation: Depreciation is computed by the straight-line method over estimated useful lives ranging from 30 to 39 years for buildings and improvements and three to six years for furnishings. Deferred Leasing Commissions: Leasing commissions are deferred and amortized over the lives of the related leases. At December 31, 1996 and 1995, accumulated amortization of deferred leasing commissions totaled $71,000 and $72,000, respectively. Net Income (Loss) Per Limited Partnership Assignee Unit: Net income (loss) per limited partnership assignee unit is computed by dividing the net income (loss) allocated to the unit holders by 73,341 units outstanding. Income Taxes: Taxable income or loss of the Partnership is reported in the income tax returns of its partners. Accordingly, no provision for income taxes is made in the financial statements of the Partnership. Net Income Allocation: In accordance with the partnership agreement, the general partner was allocated its one percent continuing interest in the Partnership's net loss and taxable loss and cash distributions. Net income and taxable income have been allocated to the general partner in an amount equal to the amount of cash distributions received by the general partner. Reclassification: Certain reclassifications have been made to the 1995 and 1994 balances 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 affiliates of the Managing General Partner were charged to expense in 1996, 1995 and 1994 (in thousands): For the Year Ended December 31, 1996 1995 1994 Partnership management fee (included in general and administrative expenses) (i) $123 $123 $123 Real estate tax reduction fees -- 16 10 Reimbursement for services of affiliates (included in general and administrative expenses) 126 97 88 (i) The Partnership Agreement provides for the payment of a partnership management fee to the general partner equal to ten percent of cash available for distribution. This management fee is intended to defray some of the expenses related to services provided by the general partner, or an affiliate, but not reimbursed by the Partnership. For the period from January 19, 1996, to December 31, 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. The general partner received cash distributions of $11,000 during the year ended December 31, 1996, 1995, and 1994. Note C - Investments In Unconsolidated Joint Ventures The Partnership has investments in two unconsolidated joint ventures as follows: Coral Palm Plaza Joint Venture On January 23, 1987, the Partnership acquired a 33.33% ownership interest in Coral Palm Plaza Joint Venture ("Coral Palm"), a joint venture with Century Pension Income Fund XXIII, a California Limited Partnership ("CPIF XXIII") and an affiliate of FCMC and FRI. Also, on January 23, 1987, Coral Palm Plaza Joint Venture acquired the Coral Palm Plaza, a shopping center located in Coral Springs, Florida. The Partnership's interest in the Coral Palm Plaza Joint Venture is reported using the equity method of accounting. Summary financial information for Coral Palm Plaza Joint Venture is as follows (in thousands): December 31, 1996 1995 Total assets $ 7,301 $ 6,690 Total liabilities (468) (345) Total ventures' equity $ 6,833 $ 6,345 December 31, 1996 1995 Total revenues $ 1,183 $ 1,656 Total expenses (807) (853) Net income $ 376 $ 803 In 1996, the Partnership paid contributions of approximately $38,000 to the Joint Venture. In 1995, the Partnership received distributions of approximately $323,000 from the Joint Venture. Minneapolis Business Parks Joint Venture On April 30, 1987, the Partnership acquired a 32% ownership interest in Minneapolis Business Parks Joint Venture, a joint venture with CPIF XXIII. On May 5, 1987, Minneapolis Business Parks Joint Venture acquired Alpha Business Center located in Bloomington, Minnesota; Plymouth Service Center located in Plymouth, Minnesota, and Westpoint Business Center located in Plymouth, Minnesota. The Partnership's interest in the Minneapolis Business Parks Joint Venture is reported using the equity method of accounting. Summary financial information for Minneapolis Business Park Joint Venture is as follows (in thousands): December 31, 1996 1995 Total assets $17,412 $16,459 Total liabilities (176) (157) Total ventures' equity $17,236 $16,302 December 31, 1996 1995 Total revenues $ 3,136 $ 2,881 Total expenses (2,202) (2,133) Net income $ 934 $ 748 In 1996, the Partnership did not receive a distribution from the Joint Venture. In 1995, the Partnership received distributions of approximately $482,000 from the Joint Venture. Note D - Minimum Future Rental Revenues Minimum future rental revenues from operating leases having non-cancelable lease terms in excess of one year at December 31, 1996, are as follows (in thousands): 1997 $ 1,582 1998 1,428 1999 1,198 2000 961 2001 892 Thereafter 5,354 Total $11,415 The Partnership had one tenant at each of its properties whose rental revenue was in excess of 10% of total Partnership rental revenue. At December 31, 1996, 1995 and 1994, the percentages were as follows: Percentage of Total Rental Revenue 1996 1995 1994 Butler Square Center 14% 18% 15% Kenilworth Commons Shopping Center 11% 15% 18% Plantation Pointe Shopping Center 14% 18% 20% Amortization of leasing commissions totaled $44,000, $38,000 and $20,000 in 1996, 1995 and 1994, respectively. Note E - Reconciliation To Income Tax Method Of Accounting The differences between the accrual method of accounting for income tax reporting and the accrual method of accounting used in the financial statements are as follows (in thousands): 1996 1995 1994 Net income (loss) - financial statements $ 986 $ 1,017 $ (871) Differences resulted from: Depreciation 132 130 114 Equity in unconsolidated joint ventures' operations (16) (178) 1,819 Other (38) (2) 3 Net income - income tax method $ 1,064 $ 967 $ 1,065 Taxable income per limited partnership assignee unit after giving effect to the allocation to the general partner $ 14 $ 13 $ 14 Partner's equity - financial statements $24,193 $24,318 $24,412 Differences resulted from: Sales commissions 3,050 3,050 3,050 Organization expenses 2,452 2,452 2,452 Depreciation 961 829 699 Payments credited to rental properties 112 112 112 Equity in unconsolidated joint ventures' operations 3,534 3,550 3,728 Other (44) (6) (4) Partners' equity - income tax method $34,258 $34,305 $34,449 Note F - Real Estate and Accumulated Depreciation (in thousands) Initial Cost to Partnership Buildings Cost Capitalized and Related (written down) Personal Subsequent to Description Encumbrances Land Property Acquisition Butler Square Center $ -- $ 873 $ 5,396 $ 440 Kenilworth Commons Shopping Center -- 1,701 2,895 (32) Plantation Pointe Shopping Center -- 1,865 4,563 75 TOTAL $ - $4,439 $12,854 $ 483
Gross Amount at Which Carried at December 31, 1996 Buildings Accumu- Year of and lated Con- Improve- Deprecia- struc- Date of Depreciable Land ments Total tion tion Acquisition Life-Years (in thousands) Butler Square Center $ 866 $ 5,843 $ 6,709 $ 1,689 1987 1/88 3 to 39 years Kenilworth Commons Shopping Center 1,679 2,885 4,564 804 1988 8/88 5 to 39 years Plantation Pointe Shopping Center 1,852 4,651 6,503 1,211 1988 4/89 4 to 39 years TOTAL $4,397 $13,379 $17,776 $ 3,704
Reconciliation of Real Estate and Accumulated Depreciation (in thousands): Real Estate: Years ended December 31, 1996 1995 1994 Balance at beginning of year $17,737 $17,324 $17,264 Property Improvements 39 413 60 $17,776 $17,737 $17,324 Accumulated Depreciation: Balance at beginning of year $ 3,226 $ 2,764 $ 2,325 Additions charged to expense 478 462 439 Balance at end of year $ 3,704 $ 3,226 $ 2,764 The aggregate cost of the investment properties for Federal income tax purposes at December 31, 1996, 1995 and 1994, is approximately $17,888,000, $17,849,000 and $17,436,000, respectively. The accumulated depreciation taken for Federal income tax purposes at December 31, 1996, 1995 and 1994, is approximately $2,743,000, $2,397,000 and $2,065,000, respectively. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures None PART III Item 10. Directors and Executive Officers of the Registrant Neither the Registrant nor Fox Partners VI ("Fox"), the general partner of the Registrant, has any officers or directors. Fox Capital Management Corporation (the "Managing General Partner"), the managing general partner of Fox, manages and controls substantially all of the Registrant's affairs and has general responsibility and ultimate authority in all matters affecting its business. The Managing General Partner is a wholly-owned affiliate of Insignia. The names and ages of, as well as the positions held by the officers and directors of the Managing General Partner are as follows. No family relationships exist among any of the officers or directors of the Managing General Partner: Name Age Positions Held William H. Jarrard, Jr. 50 President and Director Ronald Uretta 40 Vice President and Treasurer John K. Lines, Esquire 37 Vice President and Secretary Kelley M. Buechler 39 Assistant Secretary William H. Jarrard, Jr. has been Managing Director - Partnership Administration of Insignia since January 1991. Mr. Jarrard served as Managing Director - Partnership Administration & Asset Management from July 1994 until January 1996. Ronald Uretta has been Insignia's Treasurer since January 1992. Since August 1996, he has also served as Chief Operating Officer. He also served as Secretary from January 1992 to June 1994 and as Chief Financial Officer from January 1992 to August 1996. Since September 1990, Mr. Uretta has also served as the Chief Financial Officer and Controller of Metropolitan Asset Group. John K. Lines, Esquire has been Vice President and Secretary of the Managing General Partner since January 1996, Insignia's General Counsel since June 1994, and General Counsel and Secretary since July 1994. From May 1993 until June 1994, Mr. Lines was the Assistant General Counsel and Vice President of Ocwen Financial Corporation, West Palm Beach, Florida. From October 1991 until May 1993, Mr. Lines was a Senior Attorney with Banc One Corporation, Columbus, Ohio. From May 1984 until October 1991, Mr. Lines was an attorney with Squire Sanders & Dempsey, Columbus, Ohio. Kelley M. Buechler has been the Assistant Secretary of the Managing General Partner since January 1996 and Assistant Secretary of Insignia since 1991. Each director and officer of the Managing General Partner will hold office until the next annual meeting of stockholders of the Managing General Partner and until his successor is elected and qualified. Item 11. Executive Compensation The Registrant is not required to and did not pay any compensation to the officers or directors of the Managing General Partner. The Managing General Partner does not presently pay any compensation to any of its officers or directors. (See "Item 13, Certain Relationships and Related Transactions.") Item 12. Security Ownership of Certain Beneficial Owners and Management There is no person known to the Registrant who owns beneficially or of record more than five percent of the voting securities of the Registrant. The Registrant is a limited partnership and has no officers or directors. The Managing General Partner, as managing general partner of Fox, has discretionary control over most of the decisions made by or for the Registrant in accordance with the terms of the Partnership Agreement. The directors and officers of the Managing General Partner and its affiliates, as a group do not own any of the Registrant's voting securities. There are no arrangements known to the Registrant, the operation of which may, at a subsequent date, result in a change in control of the Registrant. Item 13. Certain Relationships and Related Transactions 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 affiliates of the Managing General Partner were charged to expense in 1996, 1995 and 1994 (in thousands): For the Year Ended December 31, 1996 1995 1994 Partnership management fee (included in general and administrative expenses) (i) $123 $123 $123 Real estate tax reduction fees -- 16 10 Reimbursement for services of affiliates (included in general and administrative expenses) 126 97 88 (i)The Partnership Agreement provides for the payment of a partnership management fee to the general partner equal to ten percent of cash available for distribution. This management fee is intended to defray some of the expenses related to services provided by the general partner, or an affiliate, but not reimbursed by the Partnership. For the period from January 19, 1996, to December 31, 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. In accordance with the partnership agreement, the general partner was allocated its one percent continuing interest in the Partnership's net loss and taxable loss and cash distributions. Net income and taxable income have been allocated to the general partner in an amount equal to the amount of cash distributions received by the general partner. The general partner received cash distributions of $11,000 during the years ended December 31, 1996, 1995, and 1994. PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a)(1)(2) Financial Statements and Financial Statement Schedules: See "Item 8" of this Form 10=K for Financial Statements of the Registrant, Notes thereto, and Financial Statement Schedules. (A Table of Contents to Financial Statements and Financial Statement Schedules is included in "Item 8" and incorporated herein by reference.) (a)(3) Exhibits: 2. NPI, Inc. Stock Purchase Agreement, dated as of August 17, 1995, incorporated by reference to the Registrant's Current Report on Form 8-K dated August 17, 1995. 3 4. Agreement of Limited Partnership, incorporated by reference to Exhibit A to the Prospectus of the Registrant dated June 9, 1986 and thereafter supplemented included in the Registrant's Registration Statement on Form S-11 (Reg. No. 33-1261) 16. Letter dated April 27, 1994 from the Registrant's Former Independent Auditors incorporated by reference to the Registrant's Current Report on Form 8-K dated April 22, 1994. 27. Financial Data Schedule 99.1 Coral Palm Plaza Joint Venture and audited financial statements for the years ended December 31, 1996, 1995 and 1994. 99.2 Minneapolis Business Parks Joint Venture and audited financial statements for the years ended December 31, 1996, 1995 and 1994. (b) Reports on Form 8-K: None SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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 this 18th day of March 1997. CENTURY PENSION INCOME FUND XXIV By: Fox Partners VI Its General Partner By: Fox Capital Management Corporation Its Managing General Partner By: William H. Jarrard, Jr. William H. Jarrard, Jr. President Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated. /s/ William H. Jarrard, Jr. President and William H. Jarrard, Jr. Director /s/ Ronald Uretta Principal Financial Ronald Uretta Officer and Principal Accounting Officer EXHIBIT 99.1 CORAL PALM PLAZA JOINT VENTURE FINANCIAL STATEMENTS DECEMBER 31, 1996, 1995 and 1994 List of Financial Statements Independent Auditors' Reports Balance Sheets - December 31, 1996 and 1995 Statements of Operations-Years Ended December 31, 1996, 1995 and 1994 Statements of Changes in Partners' Capital-Years Ended December 31, 1996, 1995 and 1994 Statements of Cash Flows-Years Ended December 31, 1996, 1995 and 1994 Notes to Financial Statements To the Partners Coral Palm Plaza Joint Venture Greenville, South Carolina Independent Auditors' Report We have audited the accompanying balance sheets of Coral Palm Plaza Joint Venture (the "Partnership") as of December 31, 1996 and 1995, and the related statements of operations, changes in partners capital and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Coral Palm Plaza Joint Venture as of December 31, 1995 and 1994, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996 in conformity with generally accepted accounting principles. /s/ Imowitz Koenig & Co., LLP New York, N.Y. February 18, 1997 BALANCE SHEETS (in thousands) December 31, 1996 1995 Assets Cash and cash equivalents $ 458 $ 263 Receivables and other assets 613 424 Investment properties: Land 2,393 2,393 Buildings and related personal property 7,133 6,656 9,526 9,049 Less accumulated depreciation (3,296) (3,046) 6,230 6,003 $ 7,301 $ 6,690 Liabilities and Partners' Capital Accrued expenses and other liabilities $ 468 $ 345 Partners' Capital: Century Pension Income Fund XXIII 4,557 4,231 Century Pension Income Fund XXIV 2,276 2,114 Total partners' capital 6,833 6,345 $ 7,301 $ 6,690 See Accompanying Notes to Financial Statements STATEMENTS OF OPERATIONS (in thousands) Years Ended December 31, 1996 1995 1994 Revenues: Rental $ 1,157 $ 939 $ 1,084 Other income 26 717 6 Total revenues 1,183 1,656 1,090 Expenses: Provision for impairment of value -- -- 4,500 Operating 541 625 573 Depreciation 250 217 351 General and administrative 16 11 15 Total expenses 807 853 5,439 Net income (loss) $ 376 $ 803 $(4,349) Allocation of net income (loss): Century Pension Income Fund XXIII $ 252 $ 535 $(2,899) Century Pension Income Fund XXIV 124 268 (1,450) $ 376 $ 803 $(4,349) See Accompanying Notes to Financial Statements STATEMENTS OF PARTNERS' CAPITAL Years Ended December 31, 1996, 1995, and 1994 (in thousands) Century Pension Century Pension Income Fund Income Fund XXIII XXIV Total Partners' capital at January 1, 1994 $ 7,538 $ 3,769 $11,307 Net loss for the year ended December 31, 1994 (2,899) (1,450) (4,349) Distributions to partners (300) (150) (450) Partners' capital at December 31, 1994 4,339 2,169 6,508 Net income for the year ended December 31, 1995 535 268 803 Distributions to partners (643) (323) (966) Partners' capital at December 31, 1995 4,231 2,114 6,345 Net income for the year ended December 31, 1996 252 124 376 Contributions from partners 74 38 112 Partners' capital at December 31, 1996 $ 4,557 $ 2,276 $ 6,833 See Accompanying Notes to Financial Statements STATEMENTS OF CASH FLOWS (in thousands) Years Ended December 31, 1996 1995 1994 Cash Flows From Operating Activities: Net income (loss) $ 376 $ 803 $(4,349) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 287 249 380 Provision for impairment of value -- -- 4,500 Change in accounts: Receivables and other assets (226) 512 (663) Accrued expenses and other liabilities 123 (499) 749 Net cash provided by operating activities 560 1,065 617 Cash Flows From Investing Activities: Additions to real estate (477) (75) (26) Cash used in investing activities (477) (75) (26) Cash Flows From Financing Activities: Joint venture partners' distributions paid -- (966) (450) Contributions received 112 -- -- Cash provided by (used in) financing activities 112 (966) (450) Increase in Cash and Cash Equivalents 195 24 141 Cash and Cash equivalents at Beginning of Year 263 239 98 Cash and Cash equivalents at End of Year $ 458 $ 263 $ 239 See Accompanying Notes to Financial Statements Notes To Financial Statements Note A - Organization And Summary Of Significant Accounting Policies Organization: Coral Palm Plaza Joint Venture (the "Partnership") is a general partnership organized in 1987 under the laws of the State of California to acquire Coral Palm Plaza, a shopping center located in Coral Springs, Florida. The general partners are Century Pension Income Fund XXIII ("XXIII") and Century Pension Income Fund XXIV ("XXIV"), California limited partnerships affiliated through their general partners. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amount reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents: The Partnership considers all highly liquid investments with an original maturity date of three months or less at the time of purchase to be cash equivalents. At certain times, the amount of cash deposited at a bank may exceed the limit on insured deposits. Leases: The Partnership leases certain commercial space to tenants under various lease terms. The leases are accounted for as operating leases in accordance with "Financial Accounting Standards Board Statement No. 13." Some of the leases contain stated rental increases during their term. For leases with fixed rental increases, rents are recognized on a straight-line basis over the terms of the lease. This straight-line basis recognized $119,000 more in rental income than was collected in 1996. This amount will be collected in future years as cash collections under the terms of the leases exceed the straight-line basis of revenue recognition. For all other leases, minimum rents are recognized over the terms of the leases. Investment Properties: Real estate is stated at cost. Acquisition fees are capitalized as a cost of real estate. In 1995, the Partnership adopted "SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Asset to be Disposed Of", which requires impairment losses to be recognized for long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows are not sufficient to recover the asset's carrying amount. The impairment loss is measured by comparing the fair value of the asset to its carrying amount. The adoption of the SFAS had no effect on the Partnership's financial statements. Depreciation: Depreciation is computed by the straight-line method over estimated useful lives ranging from 4 to 39 years for buildings and improvements. Deferred Leasing Commission: Leasing commissions are deferred and amortized over the lives of the related leases, which range from one to eleven years. At December 31, 1996 and 1995, accumulated amortization of deferred leasing commissions totaled $85,000 and $90,000, respectively. Net Income (Loss) Allocation: Net income (loss) is allocated based on the ratio of each partner's capital contribution to the joint venture. Income Taxes: Taxable income or loss of the Partnership is reported in the income tax returns of its partners. Accordingly, no provision for income taxes is made in the financial statements of the Partnership. Reclassification: Certain reclassifications have been made to the 1995 and 1994 balances to conform to the 1996 presentation. Note B - Related Party Transactions During 1996 and 1995, the Partnership paid an affiliate of the general partner a $18,000 and $16,000 fee, respectively, relating to a successful real estate tax appeal for the joint venture. These fees were allocated 66.67% to XXIII and 33.33% to XXIV, in accordance with the partnership agreement. Note C - Allowance for impairment of Value During 1994, based upon current economic conditions and projected future operational cash flows, the Partnership determined that the decline in value of the Coral Palm Plaza Shopping Center was other then temporary and that recovery of its carrying value was not likely. Accordingly, the property's carrying value was reduced by $4,500,000 to an amount equal to its estimated fair value. Due to the current real estate market it is reasonably possible that the Partnership's estimate of fair value will change within the next year. Note D - Termination Agreement with Former Tenant In December 1994, the Partnership accepted a lease buy-out of $800,000 from a significant tenant that had occupied 27,000 square feet. The payment was received in 1995. During 1995, management re-leased all of the unoccupied space, on similar terms, and recognized the remaining portion of the lease buy- out in the amount of $699,000 as other income. In October 1995, the Partnership accepted a lease buy-out and termination agreement with a former tenant at the Partnership's property. The $300,000 termination payment, has been deferred and is being amortized into income on a straight-line basis over the remaining three years of the former tenant's lease. Note E - Minimum Future Rental Revenues Minimum future rental revenues from operating leases having non-cancelable lease terms in excess of one year at December 31, 1996 are as follows: 1997 $ 790 1998 772 1999 678 2000 652 2001 516 Thereafter 1,602 Total $5,010 Rental revenue from one tenant was 12 percent, 20 percent and 22 percent of total rental revenues in 1996, 1995 and 1994, respectively. Rental revenue from another tenant was 12 percent, 19 percent and 13 percent of total rental revenues in 1996, 1995, and 1994, respectively. Rental revenues included percentage and other contingent rentals of $33,000, $59,000 and $40,000 in 1996, 1995 and 1994, respectively. Amortization of deferred leasing commissions totaled $37,000, $32,000 and $29,000 for the years ended December 31, 1996, 1995, and 1994, respectively. Note F - Real Estate and Accumulated Depreciation Initial Cost to Partnership Cost Capitalized Related (removed) Personal subsequent Description Encumbrances Land Property to acquisition ( in thousands) Coral Palm Plaza Coral Springs, Florida $ -- $ 5,009 $11,046 $(6,529)
Gross Amount at Which Carried at December 31, 1996 Accumulated Buildings Depreciation and and Provision Year of Date of Depreciable Description Land Improvements Total for Impairment Construction Acquisition Life-Years (in thousands) Coral Palm Plaza $2,393 $7,133 $9,526 $3,296 1985 1/87 4 to 39 yrs
Reconciliation of Real Estate and Accumulated Depreciation (in thousands) Real Estate: Years ended December 31, 1996 1995 1994 Balance at beginning of year $ 9,049 $ 8,974 $13,448 Property improvements 477 75 26 Allowance for impairment of value -- -- (4,500) $ 9,526 $ 9,049 $ 8,974 Accumulated Depreciation: Balance at beginning of year $ 3,046 $ 2,829 $ 2,478 Additions charged to expense 250 217 351 Balance at end of year $ 3,296 $ 3,046 $ 2,829 The aggregate cost of the real estate for Federal income tax purposes at December 31, 1996, 1995 and 1994, is $17,044,000, $16,567,000 and $16,492,000, respectively. The accumulated depreciation taken for Federal income tax purposes at December 31, 1996 and 1995, is $3,324,000, $2,976,000 and $2,637,000, respectively. EXHIBIT 99.2 MINNEAPOLIS BUSINESS PARKS JOINT VENTURE FINANCIAL STATEMENTS DECEMBER 31, 1996, 1995 and 1994 List of Financial Statements Independent Auditors' Reports Balance Sheets - December 31, 1996 and 1995 Statements of Operations-Years Ended December 31, 1996, 1995 and 1994 Statements of Changes in Partners' Capital-Years Ended December 31, 1996, 1995 and 1994 Statements of Cash Flows-Years Ended December 31, 1996, 1995 and 1994 Notes to Financial Statements To the Partners Minneapolis Business Parks Joint Venture Greenville, South Carolina Independent Auditors' Report We have audited the accompanying balance sheets of Minneapolis Business Parks Joint Venture (the "Partnership") as of December 31, 1996 and 1995, and the related statements of operations, changes in partners' capital and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Minneapolis Business Parks Joint Venture as of December 31, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996 in conformity with generally accepted accounting principles. /s/ Imowitz Koenig & Co., LLP New York, N.Y. February 18, 1997 BALANCE SHEETS (in thousands) December 31, 1996 1995 Assets Cash and cash equivalents $ 1,543 $ 159 Receivables and other assets 507 436 Investment Properties: Land 4,523 4,523 Building and related personal property 16,035 15,944 20,558 20,467 Less accumulated depreciation (5,196) (4,603) 15,362 15,864 $17,412 $16,459 Liabilities and Partners' Capital Accrued expenses and other liabilities $ 176 $ 157 Partners' Capital: Century Pension Income Fund XXIII 11,668 11,033 Century Pension Income Fund XXIV 5,568 5,269 Total partners' capital 17,236 16,302 $17,412 $16,459 See Accompanying Notes to Financial Statements STATEMENTS OF OPERATIONS (in thousands) Years Ended December 31, 1996 1995 1994 Revenues: Rental $3,000 $2,833 $2,648 Other income 136 48 18 Total revenues $3,136 2,881 2,666 Expenses: Operating 1,593 1,521 1,402 Depreciation 593 604 613 General and administrative 16 8 11 Total expenses 2,202 2,133 2,026 Net income $ 934 $ 748 $ 640 Allocation of net income: Century Pension Income Fund XXIII $ 635 $ 509 $ 435 Century Pension Income Fund XXIV 299 239 205 $ 934 $ 748 $ 640 See Accompanying Notes to Financial Statements STATEMENTS OF PARTNERS' CAPITAL YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994 (in thousands) Century Pension Century Pension Income Fund Income Fund XXIII XXIV Total Partners' capital at January 1, 1994 $11,113 $5,307 $16,420 Net income for the year ended December 31, 1994 435 205 640 Partners' capital at December 31, 1994 11,548 5,512 17,060 Net income for the year ended December 31, 1995 509 239 748 Distributions to partners (1,024) (482) (1,506) Partners' capital at December 31, 1995 11,033 5,269 16,302 Net income for the year ended December 31, 1996 635 299 934 Partners' capital at December 31, 1996 $11,668 $5,568 $17,236 See Accompanying Notes to Financial Statements STATEMENTS OF CASH FLOWS (in thousands) Years Ended December 31, 1996 1995 1994 Cash Flows From Operating Activities: Net income $ 934 $ 748 $ 640 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 677 683 685 Change in accounts: Receivables and other assets (155) (167) (221) Accrued expenses and other liabilities 19 6 8 Net cash provided by operating activities 1,475 1,270 1,112 Cash Flows From Investing Activities: Additions to real estate (91) (253) (560) Cash used in investing activities (91) (253) (560) Cash Flows From Financing Activities: Joint venture partners' distributions paid -- (1,506) -- Cash used in financing activities -- (1,506) -- Increase (decrease) in Cash and Cash Equivalents 1,384 (489) 552 Cash and Cash equivalents at Beginning of Year 159 648 96 Cash and Cash equivalents at End of Year $1,543 $ 159 $ 648 See Accompanying Notes to Financial Statements Note A - Organization and Summary of Significant Accounting Policies Minneapolis Business Parks Joint Venture (the "Partnership") is a general partnership organized in 1987 under the laws of the State of California to acquire three business parks in Minnesota. The general partners are Century Pension Income Fund XXIII ("XXIII") and Century Pension Income Fund XXIV ("XXIV"), both are California limited partnerships which are affiliated through their general partners. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents: The Partnership considers all highly liquid investments with an original maturity date of three months or less at the time of purchase to be cash equivalents. At certain times, the amount of cash deposited at a bank may exceed the limit on insured deposits. Leases: The Partnership leases certain commercial space to tenants under various lease terms. The leases are accounted for as operating leases in accordance with "Financial Accounting Standards Board Statement No. 13." Some of the leases contain stated rental increases during their term. For leases with fixed rental increases, rents are recognized on a straight-line basis over the terms of the lease. This straight-line basis recognized $96,000 more in rental income than was collected in 1996. This amount will be collected in future years as cash collections under the terms of the leases exceed the straight-line basis of revenue recognition. For all other leases, minimum rents are recognized over the terms of the leases. Investment Properties: Real estate is stated at cost. Acquisition fees are capitalized as a cost of real estate. In 1995, the Partnership adopted "SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Asset to be Disposed Of", which requires impairment losses to be recognized for long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows are not sufficient to recover the asset's carrying amount. The impairment loss is measured by comparing the fair value of the asset to its carrying amount. The adoption of the SFAS had no effect on the Partnership's financial statements. Depreciation: Depreciation is computed by the straight-line method over estimated useful lives ranging from 30 to 39 years for buildings and improvements. Deferred Leasing Commission: Leasing commissions are deferred and amortized over the lives of the related leases, which range from one to eleven years. At December 31, 1996 and 1995, accumulated amortization of deferred leasing commissions totaled $221,000 and $205,000, respectively. Net Income Allocation: Net income is allocated based on the ratio of each partner's capital contribution to the joint venture. Income Taxes: Taxable income or loss of the Partnership is reported in the income tax returns of its partners. Accordingly, no provision for income taxes is made in the financial statements of the Partnership. Reclassification: Certain reclassifications have been made to the 1995 and 1994 balances to conform to the 1996 presentation. Note B - Related Party Transactions During 1995, the Partnership paid an affiliate of the general partner a $33,000 fee relating to a successful real estate tax appeal on Alpha and Westpoint Business Center joint venture properties. These fees were allocated 68% to XXIII and 32% to XXIV, in accordance with the partnership agreement. Note C - Minimum Future Rental Revenues Minimum future rental revenues from operating leases having non-cancelable lease terms in excess of one year at December 31, 1996, are as follows: 1997 $ 2,351 1998 1,943 1999 1,310 2000 765 2001 463 Thereafter 403 Total $ 7,235 Amortization of deferred leasing commissions totaled $84,000, $79,000, and $72,000 for the years ended December 31, 1996, 1995, and 1994, respectively. Note D - Real Estate and Accumulated Depreciation
December 31, 1996 Initial Cost to Partnership Buildings and Cost Capitalized Related Personal (removed) subsequent Description Encumbrances Land Property to acquisition (Amounts in Thousands) Alpha Business Center $ -- $3,199 $ 6,735 $485 Plymouth Service -- 475 2,306 (40) Westpoint Business -- 1,166 5,987 245 Total $ -- $4,840 $15,028 $690
Gross Amount at Which Carried at December 31, 1996 Buildings and Accumulated Year of Date of Depreciable Description Land Improvements Total Depreciation Construction Acquisition Life-Years (amounts in thousands) Alpha Business Center $3,002 $ 7,417 $10,419 $2,448 1979 5/87 30-39 Years Plymouth Service 419 2,322 2,741 712 1979 5/87 30-39 Years Westpoint Business 1,102 6,296 7,398 2,036 1979 5/87 30-39 Years Total $4,523 $16,035 $20,558 $5,196
Notes To Financial Statements Years Ended December 31, 1996, 1995 and 1994 Reconciliation of Real Estate and Accumulated Depreciation (in thousands) Real Estate: Years ended December 31, 1996 1995 1994 Balance at beginning of year $20,467 $20,214 $19,654 Property improvements 91 253 560 Balance at end of year $20,558 $20,467 $20,214 Accumulated Depreciation: Balance at beginning of year $ 4,603 $ 3,999 $ 3,386 Additions charged to expense 593 604 613 Balance at end of year $ 5,196 $ 4,603 $ 3,999 The aggregate cost of the real estate for Federal income tax purposes at December 31, 1996, 1995 and 1994, is $21,891,000, $21,800,000 and $21,547,000, respectively. The accumulated depreciation taken for Federal income tax purposes at December 31, 1996, 1995 and 1994, is $4,496,000, $3,993,000 and $3,499,000, respectively. EX-27 2
5 This schedule contains summary financial information extracted from Century Pension Income Fund XXIV 1996 Year-End 10-K and is qualified in its entirety by reference to such 10-K filing. 0000780590 CENTURY PENSION INCOME FUND XXIV 1,000 12-MOS DEC-31-1996 DEC-31-1996 1,929 0 0 0 0 0 17,776 (3,704) 24,333 0 0 0 0 0 24,193 24,333 0 2,250 0 1,687 0 0 0 0 0 0 0 0 0 986 13.30 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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