-----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, HBMGKgGaMYuy8EqOOTUKVEQBg2el2cLijWI+rXlFyi3qNNNFi8dEkGBQE5bHoHpT u6DOfI1cM4HOA/J4ubTvlA== 0000950148-96-002652.txt : 19961118 0000950148-96-002652.hdr.sgml : 19961118 ACCESSION NUMBER: 0000950148-96-002652 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTURY HILLCRESTE APARTMENT INVESTORS L P CENTRAL INDEX KEY: 0000835596 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF APARTMENT BUILDINGS [6513] IRS NUMBER: 954166241 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-22857 FILM NUMBER: 96663030 BUSINESS ADDRESS: STREET 1: 9090 WILSHIRE BLVD STE 201 CITY: BEVERLY HILLS STATE: CA ZIP: 90211 BUSINESS PHONE: 3102782191 MAIL ADDRESS: STREET 1: 9090 WILSHIRE BLVD STREET 2: STE 201 CITY: BEVERLY HILLS STATE: CA ZIP: 90211 10-Q 1 FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended SEPTEMBER 30, 1996 Commission File Number 33-22857 CENTURY HILLCRESTE APARTMENT INVESTORS, L.P. (A California Limited Partnership) I.R.S. Employer Identification No. 95-4166241 9090 WILSHIRE BLVD., SUITE 201 BEVERLY HILLS, CALIF. 90211 Registrant's Telephone Number, Including Area Code (310) 278-2191 Indicate by check mark whether the registrant (1) has filed all documents and reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve 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 ---- ---- 2 CENTURY HILLCRESTE APARTMENT INVESTORS, L.P. (A CALIFORNIA LIMITED PARTNERSHIP) INDEX TO FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1996 PART I. FINANCIAL INFORMATION Item 1. Financial Statements and Notes to Financial Statements Balance Sheets, September 30, 1996 and December 31, 1995 . . . . . . . . . . . . . . 1 Statements of Operations, Nine and Three Months Ended September 30, 1996 and 1995 . . . . . . . . . . . 2 Statement of Partners' Capital (Deficiency) Nine Months Ended September 30, 1996 . . . . . . . . . . . . . . . . . . . . 3 Statements of Cash Flows Nine Months Ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . . 4 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . 11 PART II. OTHER INFORMATION Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . 13 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3 CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P. (A CALIFORNIA LIMITED PARTNERSHIP) BALANCE SHEETS SEPTEMBER 30, 1996 AND DECEMBER 31, 1995 ASSETS
1996 1995 (Unaudited) (Audited) ------------- ------------- RENTAL PROPERTY (Notes 1, 2 and 3) $ 34,248,165 $ 34,772,331 CASH AND CASH EQUIVALENTS (Note 1) 3,596,995 2,738,045 RESTRICTED CASH (Notes 1 and 4) 158,700 158,700 OTHER ASSETS (Note 5) 92,512 15,102 ------------- ------------- $ 38,096,372 $ 37,684,178 ============= ============= LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Note 3) $ 579,132 $ 359,359 DUE TO GENERAL PARTNER (Note 3) - 150,000 PREPAID RENT 70,445 46,965 SECURITY DEPOSITS 328,526 310,099 ------------- ------------- 978,103 866,423 COMMITMENTS AND CONTINGENCIES (Note 4) PARTNERS' CAPITAL (Note 1) 37,118,269 36,817,755 ------------- ------------- $ 38,096,372 $ 37,684,178 ============= =============
The accompanying notes are an integral part of these financial statements. 1 4 CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P. (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF INCOME NINE AND THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 (Unaudited)
Nine months Three months Nine months Three months ended ended ended ended Sept. 30, 1996 Sept. 30, 1996 Sept. 30, 1995 Sept. 30, 1995 --------------- --------------- --------------- --------------- REVENUES Rental income $ 3,966,912 $ 1,364,743 $ 4,045,047 $ 1,353,957 Interest and other income (Notes 1 and 3) 178,793 46,967 368,163 177,432 --------------- --------------- --------------- --------------- 4,145,705 1,411,710 4,413,210 1,531,389 --------------- --------------- --------------- --------------- EXPENSES Operating (Note 3) 859,409 333,754 993,132 288,079 Property taxes 312,340 178,818 408,076 134,741 Management fee - related party in 1995 (Note 3) 150,550 71,038 142,543 41,026 General and administrative (Note 3) 325,400 90,870 440,256 226,788 Depreciation 529,166 176,389 536,667 178,889 Earthquake loss - - 25,000 25,000 --------------- --------------- --------------- --------------- 2,176,865 850,869 2,545,674 894,523 --------------- --------------- --------------- --------------- NET INCOME $ 1,968,840 $ 560,841 $ 1,867,536 $ 636,866 =============== =============== =============== =============== NET INCOME PER LIMITED PARTNERSHIP INTEREST $ 0.27 $ 0.08 $ 0.26 $ 0.09 =============== =============== =============== ===============
The accompanying notes are an integral part of these financial statements. 2 5 CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P. (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENT OF PARTNERS' CAPITAL (DEFICIENCY) NINE MONTHS ENDED SEPTEMBER 30, 1996 (Unaudited)
Special Limited General Limited Partner Partners Partners (Note 1) Total ------------- ------------- --------------- ------------- PARTNERSHIP INTERESTS, September 30, 1996 7,258,000 ============= BALANCE, January 1, 1996 $ (287,786) $ 37,105,541 $ - $ 36,817,755 Distributions (11,250) (1,657,076) - (1,668,326) Net income for the nine months ended September 30, 1996 19,688 1,949,152 - 1,968,840 ------------- ------------- --------------- ------------- BALANCE, September 30, 1996 $ (279,348) $ 37,397,617 $ - $ 37,118,269 ============= ============= ================ =============
The accompanying notes are an integral part of these financial statements. 3 6 CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P. (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 (Unaudited)
1996 1995 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,968,840 $ 1,867,536 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 529,166 536,667 (Increase) decrease in other assets (77,410) 289,098 Increase (decrease) in accounts payable and accrued liabilities 219,773 (575,688) Decrease in due to general partner (150,000) (91,331) Increase (decrease) in security deposits 18,427 (3,808) Increase (decrease) in prepaid rent 23,480 (6,251) ------------ ------------ Net cash provided by operating activities 2,532,276 2,016,223 ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Increase in fixed assets (180,000) - Payments pursuant to the minimum distribution guarantee 175,000 175,000 Distributions to partners (1,668,326) (1,628,576) ------------ ------------ NET INCREASE IN CASH AND CASH EQUIVALENTS 858,950 562,647 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,738,045 2,425,486 ------------ ------------ CASH AND CASH EQUIVALENTS, END OF PERIOD $ 3,596,995 $ 2,988,133 ============ ============
The accompanying notes are an integral part of these financial statements. 4 7 CENTURY HILLCRESTE APARTMENT INVESTORS, L.P. (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1996 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES GENERAL The information contained in the following notes to the financial statements is condensed from that which would appear in the annual financial statements; accordingly, the financial statements included herein should be reviewed in conjunction with the financial statements and related notes thereto contained in the Annual Report for the year ended December 31, 1995 prepared by Century HillCreste Apartment Investors, L.P. (the "Partnership"). Accounting measurements at interim dates inherently involve greater reliance on estimates than at year end. The results of operations for the interim periods presented are not necessarily indicative of the results for the entire year. In the opinion of NAPICO, the accompanying unaudited financial statements contain all adjustments (consisting primarily of normal recurring accruals) necessary to present fairly the financial position as of September 30, 1996, and the results of operations for the nine and three months then ended and changes in cash flows for the nine months then ended. ORGANIZATION The Partnership, a California limited partnership, was formed on June 6, 1988, with National Partnership Investments Corp. ("NAPICO" or the "Managing General Partner"), and HillCreste Properties Inc. (the Non-Managing General Partner") as general partners. On October 26, 1988, the Partnership issued to investors (the "Limited Partners") 7,258,000 depositary units (each depositary unit being entitled to the beneficial interest of a limited partnership interest) for a total amount raised of $72,580,000, through a public offering. Concurrent with the issuance of the depositary units, the Partnership purchased a 315-unit luxury apartment complex in West Los Angeles, California (the "Property") from Casden Properties (hereinafter referred to as the "Seller"), an affiliate of the Managing General Partner. To complete the purchase of the Property, the Seller purchased a 10% special limited partnership interest in the Partnership for $6,855,000. For its contribution, the Seller has rights to receive an allocation of the Partnership's net cash from operations after the Limited Partners receive a specified priority return, all as more particularly set forth in the Partnership Agreement. Among other provisions, the Partnership Agreement provides that the 10% special limited partnership interest is subordinate to the other Limited Partners' specified priority return in the case of distributions of net cash flow from operations, plus the other Limited Partners' return of capital in the case of net sales or refinancing proceeds. Casden Investment Corporation, an affiliate of the Seller, owns all of the outstanding common stock of NAPICO. DA Group Holdings Inc. owns 100% of the stock of HillCreste Properties Inc. 5 8 CENTURY HILLCRESTE APARTMENT INVESTORS, L.P. (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1996 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. MINIMUM DISTRIBUTION GUARANTEE The Minimum Distribution Guarantee Agreement (the "Guarantee Agreement") required the Seller, who is also the special limited partner of the Partnership, to make certain payments to the Partnership, if and when necessary, in an amount sufficient to enable the Partnership to provide the Limited Partners with distributions sufficient to achieve a minimum annual return based upon the Limited Partners' investment in the Partnership, through December 31, 1993, as follows:
Years Ended December 31, Annual Return on Investment ------------------------ --------------------------- 1988 8.0% 1989 8.0% 1990 8.5% 1991 9.0% 1992 9.0% 1993 9.0%
Pursuant to a Memorandum of Understanding entered into on August 11, 1995, the Seller agreed to pay to the Partnership the sum of $350,000 in two equal installments of $175,000 each; the first such $175,000 payment was made in August 1995 and the second payment was made in May 1996. These payments represent the amount of a real estate tax refund received in 1994 for overpayment of prior year taxes which had previously been offset against amounts receivable from the Seller under the Guarantee Agreement. Through September 30, 1996, the Seller has funded a total of $13,130,998 directly to the Partnership for distributions to the Limited Partners pursuant to the Guarantee Agreement, which amount includes the $350,000 referred to above. The period covered by the Guarantee Agreement expired on December 31, 1993. Except with respect to the payments made pursuant to the Memorandum of Understanding, commencing in 1994, distributions, if any, to the Partners are made from cash flow from operations. The minimum distribution guarantee payments from the Seller have been reflected as a reduction in the carrying amount of the Property. In addition, in August 1995, the Seller made an additional payment of $135,000 to the Partnership pursuant to the Memorandum of Understanding, which amount represents interest on late payments to the Partnership made pursuant to the Guarantee Agreement covering the period from the second quarter of 1991 to the fourth quarter of 1993. 6 9 CENTURY HILLCRESTE APARTMENT INVESTORS, L.P. (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1996 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) DEPRECIATION Depreciation is reported using the straight-line method over the estimated useful lives of the buildings and equipment as follows: Buildings 35 years Furniture and equipment 5 years
CASH AND CASH EQUIVALENTS Cash and cash equivalents consists of cash and bank certificates of deposit with an original maturity of three months or less. RESTRICTED CASH Restricted cash consists of bank certificates of deposits assigned to the City of Los Angeles in lieu of purchasing a subdivision improvement bond to effectuate the privatization of streets located within the Property's perimeter (see Note 4). INCOME TAXES No provision has been made for income taxes in the accompanying financial statements as such taxes, if any, are the liability of the individual partners. NET INCOME PER LIMITED PARTNERSHIP UNIT Net income per limited partner unit was computed by dividing the limited partners' share of net income (99%) by the number of limited partner units outstanding during the year. The number of limited partner units was 7,258,000 for the periods presented. RECLASSIFICATIONS Certain reclassifications have been made in the 1995 financial statements to conform to the 1996 presentation. 7 10 CENTURY HILLCRESTE APARTMENT INVESTORS, L.P. (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1996 NOTE 2 - RENTAL PROPERTY At September 30, 1996 and December 31, 1995, the rental property consists of the following:
1996 1995 ------------ ------------ Land $ 16,175,000 $ 16,175,000 Building 24,694,402 24,869,402 Furniture and equipment 3,870,000 3,870,000 Exterior improvements in progress 180,000 - ------------ ------------ 44,919,412 44,914,402 Less accumulated depreciation (10,671,237) 10,142,071 ------------ ------------ $ 34,248,165 $ 34,772,331 ============ ============
Payments made pursuant to the Guarantee Agreement have been reflected as a reduction in the carrying value of the Property (see Note 1). NOTE 3 - FEES PAID TO GENERAL PARTNERS AND AFFILIATES In accordance with the Partnership Agreement certain fees and reimbursements are paid to the general partners and their affiliates as follows: (a) A Partnership management fee payable to the Managing General Partner of $50,000 annually. The fee is included in general and administrative expenses. (b) Through December 31, 1995, the Property was managed by an affiliate of the Managing General Partner for a fee of 3% of rental revenue (5% prior to February 1, 1995). The property management was transferred to an unaffiliated agent, on January 1, 1996, who manages the property for a management fee of 3% of rental revenue. (c) Partnership expense reimbursements, payable to the Non-Managing General Partner, not to exceed $50,000 annually. The 1990 reimbursement has been accrued and is included in accounts payable and accrued liabilities at September 30, 1996 and December 31, 1995. The Non-Managing General partner has requested reimbursement for expenses for 1991 through September 30, 1996, however, the Managing General Partner is disputing such reimbursement and none have been accrued. (d) The Partnership is obligated to pay fees to the Managing General Partner or its affiliates upon sale of the Property based upon the form of such sale. The payment of such fees are subordinated to certain preferred returns to the Limited Partners. (e) 1% of distributions (as defined in the Partnership Agreement) is payable quarterly to the Managing General Partner. 8 11 CENTURY HILLCRESTE APARTMENT INVESTORS, L.P. (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1996 NOTE 3 - FEES PAID TO GENERAL PARTNERS AND AFFILIATES (CONTINUED) (f) Due to the complexity of the storm drain work (Note 4), an affiliate of the Operating General Partner is providing construction supervision of the storm drain improvements at a cost not to exceed $1,820. (g) Pursuant to the Memorandum of Understanding entered into on August 11, 1995, the previously affiliated management company paid to the Partnership $8,095 in interest on May 1, 1996, related to funds it maintained in a master disbursement account, and the Seller made payments to the Partnership in the amount of $485,000, as more particularly described above. In addition, the Partnership on May 1, 1996 reimbursed the Non-Managing General Partner $90,000 for professional fees, which were estimated to have been paid on behalf of the Partnership in connection with issues raised in the Memorandum of Understanding. NOTE 4 - COMMITMENTS AND CONTINGENCIES a. Approvals from the City of Los Angeles were obtained to "privatize" the streets and alleys providing access to the Property and to construct wrought iron security fencing with controlled entrances into the Property. The final resolution vacating the streets and alleys was approved by the City on December 31, 1994. Landscape and architectural drawings have been prepared for the construction of the perimeter fencing and related improvements, including a guardhouse at the Ambassador Street entrance and a directory/trellis at the Peerless Street location. These plans were approved and a building permit was issued by the City of Los Angeles on June 20, 1995. This permit was to expire on December 20, 1995, however, an extension to December 31, 1996 was approved. As a condition to its approval of the proposed "privatization", the City of Los Angeles requires the construction of a storm drain and related improvements, for which an improvement agreement and guarantee in the amount $158,000 has been filed with the City of Los Angeles. The Partnership has pledged a Certificate of Deposit in such amount to the City to secure the improvement guarantee. Contracts in the amount of $683,000 and $49,975 have been awarded to construct the wrought iron security fencing and to construct a storm drain and related improvements, respectively, for which construction work has commenced in September 1996. As of September 30, 1996, $180,000 has been paid to the contractor. b. The Managing General Partner of the Partnership is a plaintiff in various lawsuits and has also been named as a defendant in other lawsuits arising from transactions in the ordinary course of business. In the opinion the Managing General Partner, the claims will not result in any material liability to the Partnership. 9 12 CENTURY HILLCRESTE APARTMENT INVESTORS, L.P. (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1996 NOTE 5 - FAIR VALUE OF FINANCIAL INSTRUMENTS Statement of Financial Accounting Standards No. 107, "Disclosure about Fair Value of Financial Instruments," requires disclosure of fair value information about financial instruments. The carrying amount of assets and liabilities reported on the balance sheets that require such disclosure approximates fair value due to their short-term maturity. 10 13 CENTURY HILLCRESTE APARTMENT INVESTORS, L.P. (A CALIFORNIA LIMITED PARTNERSHIP) SEPTEMBER 30, 1996 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS CAPITAL RESOURCES AND LIQUIDITY The Partnership raised proceeds of $72,580,000 from the sale of limited partnership interests, pursuant to a public offering and received additional capital contributions from the General Partners of $1,050 and from the special limited partner of $6,855,000, all of which funds were previously expended. Currently, the only sources of Partnership revenue consist of income from rental operations at the Property and interest earned on Partnership reserves. Concurrent with the issuance of depositary units to the Limited Partners, the Partnership received the Guarantee Agreement from the Seller, (an affiliate of the Managing General Partner), which required the Seller to make payments or loans as provided therein, if and when necessary, in an amount sufficient to enable the Partnership to provide the Limited Partners with minimum distributions through December 1993. Pursuant to the Memorandum of Understanding entered into on August 11, 1995, the Seller agreed to pay to the Partnership the sum of $350,000 in two equal installments of $175,000 each; the first such $175,000 payment was made in August 1995 and the second payment was made in May 1996. These payments represent the amount of a real estate tax refund received in 1994 for overpayment of prior year taxes which had previously been offset against amounts receivable from the Seller under the Guarantee Agreement. Through June 30, 1996, the Seller has funded $13,130,998 directly to the Partnership for distributions to the Limited Partners pursuant to the Guarantee Agreement, which includes the $350,000 referred to above. Concurrent with the execution of the Memorandum of Understanding on August 11, 1995, the Partnership received the sum of $135,000 from the Seller as compensation for late distribution payments under the Guarantee Agreement. This amount was distributed pro rata to the Limited Partners and represents interest on such late payments calculated at the rate of approximately five percent (5%) per annum, from the date that each such distribution was required to be made to Limited Partners to the date such distribution was actually made. This payment primarily accounts for the decrease in interest income in 1996, as compared to 1995. Approvals from the City of Los Angeles were obtained to "privatize" the streets and alleys providing access to the Property and to construct wrought iron security fencing with controlled entrances into the Property. The final resolution vacating the streets and alleys was approved by the City on December 31, 1994. Landscape and architectural drawings have been prepared for the construction of the perimeter fencing and related improvements, including a guardhouse at the Ambassador Street entrance and a directory/trellis at the Peerless Street location. These plans were approved and a building permit was issued by the City of Los Angeles on June 20, 1995. This permit was to expire on December 20, 1995, however, an extension to December 31, 1996 was approved. Contract in the amount of $683,000 and $49,975 have been awarded to construct the wrought iron security fencing and to construct storm 11 14 CENTURY HILLCRESTE APARTMENT INVESTORS, L.P. (A CALIFORNIA LIMITED PARTNERSHIP) JUNE 30, 1995 ITEM 2. MANAGEMENT'S ANALYSIS AND DISCUSSION OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (CONTINUED) drain and related improvements, respectively, for which construction work has commenced in 1996. As of September 30, 1996, $180,000 has been paid to the contractor. Due to the complexity of the storm drain work, an affiliate of the Operating General Partner is providing construction supervision of the storm drain improvements at a cost not to exceed $1,800. As a condition to its approval of the proposed "privatization", the City of Los Angeles requires the construction of a storm drain and related improvements, for which an improvement agreement and guarantee in the amount $158,000 has been filed with the City of Los Angeles. The Partnership has pledged a Certificate of Deposit in such amount to the City to secure the improvement guarantee. RESULTS OF OPERATIONS Occupancy averaged 95% for the nine months ended September 30, 1996 and 1995. Operating expenses decreased primarily due to reduced repairs and maintenance expense in 1996. Since the investigation and recommendation of the staff of the Securities and Exchange Commission (the "Commission") (see "Legal Proceedings" for further discussion) concerning the Partnership's financial statements and Commission filings, a portion of the legal fees incurred in responding to the staff have been allocated to and charged to the Partnership by the Managing General Partner. These legal fees primarily account for the decrease in general and administrative expenses in 1996. In the opinion of the Managing General Partner, any action that might result from the Commission staff's investigation is not likely to have a material adverse effect on the Partnership. 12 15 CENTURY HILLCRESTE APARTMENT INVESTORS, L.P. (A CALIFORNIA LIMITED PARTNERSHIP) SEPTEMBER 30, 1996 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS As of September 30, 1996, NAPICO was a plaintiff or defendant in several lawsuits. None of these suits are related to the Partnership. The staff of the Securities and Exchange Commission (the "Commission") informed the Partnership and NAPICO in August 1995 that it intended to recommend that the Commission institute a civil proceeding against the Partnership, NAPICO and others that would be based, in part, on allegations that certain of the Partnership's financial statements in 1991, 1992 and 1993 should have characterized certain current assets deposited in the master disbursement account of the Partnership's property management company as accounts receivable from a related party rather than as cash. The Partnership and NAPICO have strongly disagreed with the staff's contentions, which have not yet been considered by the Commission. During the past several months there have been discussions with the Commission staff to determine whether the staff's concerns might be resolved by an administrative consent order. Those discussions are still underway. In the opinion of NAPICO, any action that might result from the staff's recommendation, including any consent order that might resolve the staff's concerns, is not likely to have a material adverse effect on the Partnership. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) No reports on Form 8-K were filed during the quarter ended September 30, 1996. 13 16 CENTURY HILLCRESTE APARTMENT INVESTORS, L.P. (A CALIFORNIA LIMITED PARTNERSHIP) SEPTEMBER 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 HILLCRESTE APARTMENT INVESTORS, L.P. (a California limited partnership) By: National Partnership Investments Corp. Managing General Partner Date: ---------------------------------------- By: ---------------------------------------- Bruce Nelson President Date: ---------------------------------------- By: ---------------------------------------- Shawn Horwitz Executive Vice President and Chief Financial Officer 14 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PARTNERSHIP'S STATEMENT OF EARNINGS AND BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 3,596,995 0 0 0 0 3,848,207 44,919,402 10,671,237 38,096,372 579,132 0 0 0 0 37,118,269 38,096,372 0 4,145,705 0 0 2,176,865 0 0 1,968,840 0 1,968,840 0 0 0 1,968,840 0 0
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