-----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, C7SWMgDKknOP0fbQf3fJihg8sYI/zAN+E/tT9rNdSqC1HunHcn/SLzFcGsseQplR 88H3N3L0tRY//c10KlCxlQ== 0000950148-99-001274.txt : 19990623 0000950148-99-001274.hdr.sgml : 19990623 ACCESSION NUMBER: 0000950148-99-001274 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990524 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: SEC FILE NUMBER: 033-22857 FILM NUMBER: 99633080 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 MARCH 31, 1999 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 MARCH 31, 1999
PART I. FINANCIAL INFORMATION Item 1. Financial Statements and Notes to Financial Statements Balance Sheets, March 31, 1999 and December 31, 1998 .....................1 Statements of Operations, Three Months Ended March 31, 1999 and 1998..........................2 Statement of Partners' Capital (Deficiency) Three Months Ended March 31, 1999 ..................................3 Statements of Cash Flows Three Months Ended March 31, 1999 and 1998..........................4 Notes to Financial Statements ............................................5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ................................9 PART II. OTHER INFORMATION Item 1. Legal Proceedings............................................................9 Item 6. Exhibits and Reports on Form 8-K.............................................9 Signatures ..........................................................................10
3 CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P. (A CALIFORNIA LIMITED PARTNERSHIP) BALANCE SHEETS MARCH 31, 1999 AND DECEMBER 31, 1998 ASSETS
1999 1998 (Unaudited) (Audited) ------------- -------------- CASH DUE FROM ESCROW (Note 2) $ -- $57,836,152 CASH AND CASH EQUIVALENTS (Note 1) 1,510,342 5,505,534 RESTRICTED CASH (Notes 1) 158,700 158,700 OTHER ASSETS (Note 5) 84,542 94,363 ----------- ----------- $ 1,753,584 $63,594,749 =========== =========== LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS PAYABLE AND ACCRUED LIABILITIES $ 9,556 $ 436,035 COMMITMENTS AND CONTINGENCIES (Note 4) PARTNERS' CAPITAL (Note 1) 1,744,028 63,158,714 ----------- ----------- $ 1,753,584 $63,594,749 =========== ===========
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 FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998 (Unaudited)
1998 1998 ---------- ---------- REVENUES Rental income $ $1,492,831 Interest and other income 209,843 87,447 ---------- ---------- 209,843 1,580,278 ---------- ---------- EXPENSES Operating 51,813 311,750 Property taxes 64,067 Management fee 45,213 General and administrative (Note 3) 118,364 91,088 Depreciation 176,389 ---------- ---------- 170,177 688,507 ---------- ---------- NET INCOME $ 39,666 $ 891,771 ========== ========== NET INCOME PER DEPOSITORY UNIT $ 0.01 $ 0.12 ========== ==========
The accompanying notes are an integral part of these financial statements. 2 5 CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P. (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF PARTNERS' CAPITAL (DEFICIENCY) THREE MONTHS ENDED MARCH 31, 1999 (Unaudited)
Special Limited General Limited Partner Partners Partners (Note 1) Total ------------ ------------ --------------- ------------ PARTNERSHIP INTERESTS ============ BALANCE, JANUARY 1, 1999 $ (18,942) $ 61,605,222 $ 1,572,434 $ 63,158,714 DISTRIBUTIONS (Note 2) (228,545) (59,653,373) (1,572,434) (61,454,352) NET INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1999 397 39,269 39,666 ------------ ------------ ------------ ------------ BALANCE, MARCH 31, 1999 $ (247,090) $ 1,991,118 $ 0 $ 1,744,028 ============ ============ ============ ============
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 THREE MONTHS ENDED MARCH 31, 1999 AND 1998
1999 1998 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 39,666 $ 891,771 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation 176,389 Decrease (increase) in other assets 9,821 28,477 Increase (decrease) in accounts payable and accrued liabilities (426,479) 12,872 Increase (decrease) in security deposits 9,889 Increase (decrease) in prepaid rent (4,431) ------------ ------------ Net cash (used in) provided by operating activities (376,992) 1,114,967 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Cash proceeds from escrow 57,836,152 -- Increase in rental property -- (1,840) ------------ ------------ Net cash provided by (used in) investing activities 57,836,152 (1,840) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Distributions to partners (61,454,352) (601,022) ------------ ------------ NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (3,995,192) 512,105 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 5,505,534 4,100,537 ------------ ------------ CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,510,342 $ 4,612,642 ============ ============
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 MARCH 31, 1999 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, 1998 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 National Partnership Investments Corp. ("NAPICO"), the accompanying unaudited financial statements contain all adjustments (consisting primarily of normal recurring accruals) necessary to present fairly the financial position as of March 31, 1999, and the results of operations and changes in cash flows for the three months then ended. ORGANIZATION Century HillCreste Apartment Investors, L.P. (the "Partnership"), a California limited partnership, was formed on June 6, 1988, with National Partnership Investments Corp. (the "Managing General Partner"), and HillCreste Properties Inc. (the "Non-Managing General Partner") as the general partners (collectively, the "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. Prior to December 30, 1998, NAPICO was a wholly owned subsidiary of Casden Investment Corporation ("CIC"), which is wholly owned by Alan I. Casden. On December 30, 1998, Casden Properties Operating Partnership, L.P., (the "Operating Partnership"), a majority owned subsidiary of Casden Properties Inc., a real estate investment trust organized by Alan I. Casden, purchased a 95.25% economic interest in NAPICO. Concurrent with the issuance of the depositary units, the Partnership purchased a 315-unit apartment complex in the Century City area of Los Angeles, California (the "Property") from Casden Properties (the "Seller"). To complete the purchase of the Property, the Seller purchased a 10% special limited partnership interest in the Partnership for $6,855,000 and became the Special Limited Partner of the Partnership. Among other things, the Partnership Agreement provides that the 10% special limited partnership interest be 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 distribution proceeds. 5 8 CENTURY HILLCRESTE APARTMENT INVESTORS, L.P. (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS (CONTINUED) MARCH 31, 1999 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) On December 30, 1998, the Partnership sold the Property for $58,500,000 to the Operating Partnership. The partners intend to dissolve the Partnership in 1999. 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 payments from the seller have been reflected as a reduction in the carrying amount of the Property. 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. The Partnership has its cash and cash equivalents on deposit primarily with one money market mutual fund. Such cash and cash equivalents are uninsured. 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 city streets located within the Property's perimeter during 1998. The Partnership is in process of having the assignment released. 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 partners. NET INCOME PER DEPOSITORY UNIT Net income per depository unit was computed by dividing the limited partners' share of net income (99 percent) by the number of depository units outstanding during the year. The number of depository units was 7,258,000 for the periods presented. 6 9 CENTURY HILLCRESTE APARTMENT INVESTORS, L.P. (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS (CONTINUED) MARCH 31, 1999 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) IMPAIRMENT OF LONG-LIVED ASSETS The Partnership reviews long-lived assets to determine if there has been any permanent impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the sum of the expected future cash flows is less than the carrying amount of the assets, the Partnership recognizes an impairment loss. NOTE 2 - RENTAL PROPERTY On December 30, 1998, the Partnership sold the Property for $58,500,000 to the Operating Partnership, an affiliate of NAPICO. The sale resulted in net cash proceeds to the Partnership of $57,916,894 and a gain of $24,646,417. The cash proceeds were held in escrow at December 31, 1998 and were collected in 1999. In March 1999, the Partnership made cash distributions of $59,653,373 to the limited partners, $1,572,434 to the special limited partner and $228,545 to the general partners, primarily using proceeds from the sale of the building. 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) The Managing General Partner is entitled to receive 1 percent of distributions (as defined in the Partnership Agreement). This is paid quarterly by the Partnership to the Managing General Partner. NOTE 4 - COMMITMENTS AND CONTINGENCIES a. 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 of management and the Managing General Partner, the claims will not result in any material liability to the Partnership. In addition, the Partnership is involved in the actions described below: b. The order concerns, in part, the treatment of Partnership funds deposited between September 1991 and July 1993 in a master disbursement 7 10 CENTURY HILLCRESTE APARTMENT INVESTORS, L.P. (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS (CONTINUED) MARCH 31, 1999 NOTE 4 - COMMITMENTS AND CONTINGENCIES (CONTINUED) account used by the Partnership's previous property management company. The Commission found that those funds should have been recorded on the Partnership's books and reported in its financial statements as related party accounts receivable rather than as cash as done so by the Partnership's auditors. Although the Commission found that this misclassification of current assets violated federal securities laws, the Commission did not find that these violations were intentional nor did the Commission find that limited partners had suffered any loss or damage as a result of these violations. Moreover, the Commission's order does not impose any cost, burden or penalty on the Partnership and does not impact NAPICO's ability to serve as the Partnership's Managing General Partner. The events that gave rise to the Commission's order occurred in or before 1993. Subsequent corrective action by the Partnership and its general partners precludes any recurrence of the cash management issues described in the Commission's order. c. On February 13, 1997, J/B Investment Partners ("J/B") filed an action in the Los Angeles Superior Court (the "J/B Lawsuit"), against the Managing General Partner and its directors, and Casden Properties and certain of its affiliates (collectively, the "Defendants"). By order dated November 25, 1997, the Los Angeles Superior Court dismissed the J/B Lawsuit with prejudice. No appeal has been taken. The J/B Lawsuit was styled as a class action brought against the Defendants on behalf of all limited partners of the Partnership, and a derivative action brought on behalf of the Partnership itself. The Partnership was named as a "nominal defendant." The complaint in the J/B Lawsuit contained four causes of action: (a) breach of fiduciary duty; (b) breach of contract; (c) unjust enrichment; and (d) equitable relief. d. The Partnership has assessed the potential impact of the Year 2000 computer systems issue on its operations. The Partnership believes that no significant actions are required to be taken by the Partnership to address the issue and that the impact of the Year 2000 computer systems issue will not materially affect the Partnership's future operating results or financial condition. 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 amounts of assets and liabilities reported on the balance sheets that require such disclosure approximate fair value due to their short-term maturity. 8 11 CENTURY HILLCRESTE APARTMENT INVESTORS, L.P. (A CALIFORNIA LIMITED PARTNERSHIP) MARCH 31, 1999 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 depository units, 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. Currently, the only sources of Partnership income consist of income from rental operations at the Property and interest earned on Partnership reserves. The Partnership pledged a certificate of deposit in the amount of $158,700 to the City of Los Angeles, to secure an improvement guarantee on the construction of a storm drain and related improvement, which was completed in 1998. Upon final inspection, the Partnership will receive its deposit of $158,700. RESULTS OF OPERATIONS Due to the sale of the building on December 31, 1999, operations in 1999 consist of interest and other income and general and administrative expenses. Included in the interest and other income is interest income earned on cash and cash equivalents of $206,756 and $58,000 for the three months ended March 31, 1999 and 1998, respectively. Interest income increased in 1998 as compared to 1998 as a result of interest earned on cash proceeds from the sale of the Property. The Partnership has its cash and cash equivalents on deposit primarily with one money market mutual fund. The Partnership has assessed the potential impact of the Year 2000 computer systems issue on its operations. The Partnership believes that no significant actions are required to be taken by the Partnership to address the issue and that the impact of the Year 2000 computer systems issue will not materially affect the Partnership's future operating results or financial condition. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS As of March 31, 1999, NAPICO, the Managing General Partner, was a plaintiff or defendant in several lawsuits, which are unrelated to the Partnership. In addition, the Partnership is involved in the actions described below: ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) No reports on Form 8-K were filed during the quarter ended March 31, 1999. 9 12 CENTURY HILLCRESTE APARTMENT INVESTORS, L.P. (A CALIFORNIA LIMITED PARTNERSHIP) MARCH 31, 1999 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 /s/ BRUCE NELSON --------------------------------------- Bruce Nelson President Date: May 20, 1999 --------------------------------------- /s/ CHARLES H. BOXENBAUM --------------------------------------- Charles H. Boxenbaum Chief Executive Officer Date: May 20, 1999 -------------------------------------- 10 EX-27 2 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE PARTNERSHIP'S STATEMENTS OF EARNINGS AND BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 1,510,342 0 0 0 0 1,510,342 0 0 1,753,584 9,556 0 0 0 0 1,744,028 1,753,584 0 209,843 0 0 170,177 0 0 39,666 0 39,666 0 0 0 39,666 0 0
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