March 27, 2000
United States
Securities and Exchange Commission
Washington, D.C. 20549
RE: Century Properties Fund XIV
Form 10-KSB
File No. 0-9242
To Whom it May Concern:
The accompanying Form 10-KSB for the year ended December 31, 1999 describes a
change in the method of accounting to capitalize exterior painting and major
landscaping, which would have been expensed under the old policy. The
Partnership believes that this accounting principle change is preferable because
it provides a better matching of expenses with the related benefit of the
expenditures and it is consistent with industry practice and the policies of the
Managing General Partner.
Please do not hesitate to contact the undersigned with any questions or comments
that you might have.
Very truly yours,
Stephen Waters
Real Estate Controller
<PAGE>
FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(d)
Form 10-KSB
(MarkOne)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [No Fee Required]
For the fiscal year ended December 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
[No Fee Required]
For the transition period from _________to _________
Commission file number 0-9242
CENTURY PROPERTIES FUND XIV
(Name of small business issuer in its charter)
California 94-2535195
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, PO 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 Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Limited Partnership Units
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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___
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the registrant's knowledge in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year. $5,828,000
State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests as of December 31, 1999. No market exists for the limited partnership
interests of the Registrant, and, therefore, no aggregate market value can be
determined.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
PART I
Item 1. Description of Business
Century Properties Fund XIV (the "Partnership" or "Registrant") was organized in
1978 as a California limited partnership under the Uniform Limited Partnership
Act of the California Corporation Code. Fox Capital Management Corporation (the
"Managing General Partner" or "FCMC"), a California corporation, and Fox Realty
Investors ("FRI"), a California general partnership, are the general partners of
the Partnership. The Managing General Partner, as well as the managing general
partner of FRI, are subsidiaries of Apartment Investment and Management Company
("AIMCO"). The Partnership Agreement provides that the Partnership is to
terminate on December 31, 2012 unless terminated prior to such date.
From June 1979 through December 1979, the Partnership offered and sold, pursuant
to a Registration statement filed with the Securities and Exchange Commission,
64,806 Limited Partnership Units aggregating $64,806,000. The net proceeds of
this offering were used to purchase nineteen income-producing real estate
properties, or interest therein. Since its initial offering, the Partnership has
not received, nor are limited partners required to make, additional capital
contributions. The Partnership, which is engaged in the business of operating
and holding real estate properties for investment, presently owns three
residential apartment complexes, two of which are located in Nevada and the
other is located in Arizona. See "Item 2. Description of Properties" for a
further description of the Partnership's properties.
The Partnership has no employees. Management and administrative services are
performed by the Managing General Partner and by agents retained by the Managing
General Partner. An affiliate of the Managing General Partner has been providing
property management services for the Partnership's investment properties.
The real estate business in which the Partnership is engaged is highly
competitive. There are other residential properties within the market area of
the Partnership's properties. The number and quality of competitive properties,
including those which may be managed by an affiliate of the Managing General
Partner, in such market area could have a material effect on the rental market
for the apartments at the Partnership's properties and the rents that may be
charged for such apartments. While the Managing General Partner and its
affiliates own and/or control a significant number of apartment units in the
United States, such units represent an insignificant percentage of total
apartment units in the United States and competition for apartments is local.
Both the income and expenses of operating the properties owned by the
Partnership are subject to factors outside of the Partnership's control, such as
changes in the supply and demand for similar properties resulting from various
market conditions, increases/decreases in unemployment or population shifts,
changes in the availability of permanent mortgage financing, changes in zoning
laws, or changes in patterns or needs of users. In addition, there are risks
inherent in owning and operating residential properties because such properties
are susceptible to the impact of economic and other conditions outside of the
control of the Partnership.
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 Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.
The Partnership 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 Partnership 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 "Management's
Discussion and Analysis or Plan of Operation" included in "Item 6" of this Form
10-KSB.
Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into AIMCO, a publicly traded real estate investment trust, with AIMCO
being the surviving corporation (the "Insignia Merger"). As a result, AIMCO
ultimately acquired 100% ownership interest in the Managing General Partner. The
Managing General Partner does not believe that this transaction has had or will
have a material effect on the affairs and operations of the Partnership.
Item 2. Description of Properties
The following table sets forth the Partnership's remaining investment
properties:
<TABLE>
<CAPTION>
Date of
Property Purchase Type of Ownership Use
<S> <C> <C> <C>
Torrey Pines Village Apartments 09/79 Fee ownership subject Apartment
Las Vegas, Nevada to a first mortgage (1) 204 units
St. Charleston Village Apartments 09/79 Fee ownership subject Apartment
Las Vegas, Nevada to a first mortgage. (1) 312 units
Sun River Apartments 11/80 Fee ownership subject Apartment
Tempe, Arizona to a first mortgage. (1) 334 units
</TABLE>
(1) Each property is held by a limited partnership in which the Partnership
owns a 99% interest.
Schedule of Properties
Set forth below for each of the Partnership's properties is the gross carrying
value, accumulated depreciation, depreciable life, method of depreciation and
Federal tax basis.
<TABLE>
<CAPTION>
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Torrey Pines $ 6,500 $ 3,663 5-30 SL $ 2,295
St. Charleston 10,151 5,927 5-30 SL 3,482
Sun River 11,543 6,304 5-30 SL 2,097
Total $28,194 $15,894 $ 7,874
</TABLE>
See "Note A" to the consolidated financial statements included in "Item 7.
Financial Statements" for a description of the Partnership's depreciation policy
and "Note J - Change in Accounting Principle".
Schedule of Property Indebtedness
The following table sets forth certain information relating to the loans
encumbering the Partnership's properties.
<TABLE>
<CAPTION>
Principal Principal
Balance At Stated Balance
December 31, Interest Period Maturity Due At
Property 1999 Rate Amortized Date Maturity (1)
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Torrey Pines (2) $ 3,607 9.88% 30 years 7/1/01 $ 3,552
St. Charleston (2) 6,061 9.88% 30 years 7/1/01 5,967
Sun River 6,126 9.88% 30 years 7/1/01 6,032
Total $15,794 $15,551
</TABLE>
(1) See "Item 7. Financial Statements - Note D" for information with respect
to the Partnership's ability to prepay these loans and other specific
details about these loans.
(2) On February 2, 2000, the Partnership refinanced the mortgages encumbering
Torrey Pines Apartments and St. Charleston Apartments. The refinancing
replaced indebtedness of approximately $3,604,000 and $6,056,000,
respectively, with new mortgages of $4,825,000 and $7,325,000,
respectively. The mortgages were refinanced at a rate equal to 8.34%
compared to the prior rate of 9.88%, and mature on March 1, 2020.
Capitalized loan costs incurred for the refinancing were approximately
$110,000 and $117,000. The Partnership paid approximately $72,000 and
$121,000 in prepayment penalties and wrote off approximately $22,000 and
$32,000, respectively, in unamortized loan costs, resulting in an
extraordinary loss on early extinguishment of debt in the amount of
approximately $247,000 during the first quarter of 2000.
Schedule of Rental Rates and Occupancy
Average annual rental rate and occupancy for 1999 and 1998 for each property:
Average Annual Average Annual
Rental Rate Occupancy
(per unit)
Property 1999 1998 1999 1998
Torrey Pines $6,993 $6,887 95% 93%
St. Charleston 7,117 7,014 95% 93%
Sun River 7,535 7,395 88% 95%
The Managing General Partner attributes the decrease in occupancy at Sun River
Apartments to a change in demographics in the area. The Managing General Partner
has increased its marketing efforts and has increased concessions to tenants in
an attempt to increase occupancy.
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. All of the properties of the Partnership are subject to
competition from other properties in the area. The Managing General Partner
believes that all the properties are adequately insured. Each property is an
apartment complex which leases units for lease terms of one year or less. No
individual residential property tenant leases 10% or more of the available
rental space. All of the properties are in good physical condition, subject to
depreciation and deterioration as is typical for assets of this type and age.
Schedule of Real Estate Taxes and Rates
Real estate taxes and rates in 1999 for each property were:
1999 1999
Billing Rate
(in thousands)
Torrey Pines $ 82 3.11%
St. Charleston 140 3.11%
Sun River 129 1.11%
Capital Improvements
Torrey Pines Village Apartments
The Partnership completed approximately $237,000 in capital expenditures at
Torrey Pines Village Apartments as of December 31, 1999, consisting primarily of
roof replacement, carpet and vinyl replacement, structural improvements,
recreational facilities upgrades, and appliances. These improvements were funded
from operating cash flow and Partnership reserves. The Partnership is currently
evaluating the capital improvement needs of the property for the upcoming year.
The minimum amount to be budgeted is expected to be $300 per unit or $61,200.
Additional improvements may be considered and will depend on the physical
condition of the property as well as replacement reserves and anticipated cash
flow generated by the property.
St. Charleston Place Apartments
The Partnership completed approximately $348,000 in capital expenditures at St.
Charleston Place Apartments as of December 31, 1999, consisting primarily of
roof replacement, carpet and vinyl replacement, appliance replacement,
structural upgrades, roof replacement, fencing, and recreational facilities
upgrades. These improvements were funded primarily from operating cash flow and,
to a lessor extent, from Partnership reserves. The Partnership is currently
evaluating the capital improvement needs of the property for the upcoming year.
The minimum amount to be budgeted is expected to be $300 per unit or $93,600.
Additional improvements may be considered and will depend on the physical
condition of the property as well as replacement reserves and anticipated cash
flow generated by the property.
Sun River
The Partnership completed approximately $529,000 in capital expenditures at Sun
River Apartments as of December 31, 1999, consisting primarily of carpet and
vinyl replacement, roof replacement, parking lot upgrades, air conditioning unit
replacements, major landscaping, sign additions, and land improvements. These
improvements were funded primarily from operating cash flow and, to a lessor
extent, from Partnership reserves. The Partnership is currently evaluating the
capital improvement needs of the property for the upcoming year. The minimum
amount to be budgeted is expected to be $300 per unit or $100,200. Additional
improvements may be considered and will depend on the physical condition of the
property as well as replacement reserves and anticipated cash flow generated by
the property.
The capital improvements planned for the year 2000 at the Partnership's
properties will be made only to the extent of cash available from operations and
Partnership reserves. To the extent that such budgeted capital improvements are
completed, the Registrant's distributable cash flow, if any, may be adversely
affected at least in the short term.
Item 3. Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the Managing General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Item 7. Financial Statements, Note B - Transfer of Control"). The plaintiffs
seek monetary damages and equitable relief, including judicial dissolution of
the Partnership. On June 25, 1998, the Managing General Partner filed a motion
seeking dismissal of the action. In lieu of responding to the motion, the
plaintiffs have filed an amended complaint. The Managing General Partner filed
demurrers to the amended complaint which were heard February 1999. Pending the
ruling on such demurrers, settlement negotiations commenced. On November 2,
1999, the parties executed and filed a Stipulation of Settlement, settling
claims, subject to final court approval, on behalf of the Partnership and all
limited partners who own units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Superior Court of the
State of California, County of San Mateo, at which time the Court set a final
approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing
the Court received various objections to the settlement, including a challenge
to the Court's preliminary approval based upon the alleged lack of authority of
class plaintiffs' counsel to enter the settlement. On December 14, 1999, the
Managing General Partner and its affiliates terminated the proposed settlement.
Certain plaintiffs have filed a motion to disqualify some of the plaintiffs'
counsel in the action. The Managing General Partner does not anticipate that
costs associated with this case will be material to the Partnership's overall
operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
Item 4. Submission of Matters to a Vote of Security Holders
The unit holders of the Partnership did not vote on any matter during the
quarter ended December 31, 1999.
<PAGE>
PART II
Item 5. Market for the Partnership's Equity and Related Partner Matters
The Partnership, a publicly-held limited partnership, originally sold 64,806
Limited Partnership Units. As of December 31, 1999, the number of holders of
Limited Partnership Units was 2,458 owning an aggregate of 64,806 units.
Affiliates of the Managing General Partner owned 39,393.84 units or 60.79% at
December 31, 1999. There is no intention to sell additional Limited Partnership
Units nor is there an established public trading market for these Units.
The following table sets forth the distributions made by the Partnership for the
years ended December 31, 1999 and 1998 (see "Item 6. Management's Discussion and
Analysis or Plan of Operation" for further details):
Distributions
Per Limited
Aggregate Partnership Unit
(in thousands)
01/01/98 - 12/31/98 $3,503 (1) $52.97
01/01/99 - 12/31/99 $ 180 (2) $ 2.72
(1) Consists of $2,003,000 of cash from operations and $1,500,000 of cash from
previously undistributed surplus cash from the collection of a note.
(2) Distribution was made from cash from operations. Distribution was declared
as of December 31, 1999 and paid in January 2000.
Future cash distributions will depend on the levels of net cash generated from
operations, the availability of cash reserves, and the timing of debt
maturities, refinancings and/or property sales. The Partnership's distribution
policy is reviewed on a semi-annual basis. There can be no assurance, however,
that the Partnership will generate sufficient funds from operations after
required capital expenditures to permit distributions to its partners in the
year 2000 or subsequent periods. See "Item 2. Description of Properties -
Capital Improvements" for information relating to anticipated capital
expenditures at the properties.
Several tender offers were made by various parties, including affiliates of the
Managing General Partner, during the years ended December 31, 1999 and 1998. As
a result of these and prior tender offers, AIMCO and its affiliates currently
own 39,393.84 limited partnership units in the Partnership representing
approximately 60.79% of the outstanding units. It is possible that AIMCO or its
affiliates will make one or more additional offers to acquire additional limited
partnership interests in the Partnership for cash or in exchange for units in
the operating partnership of AIMCO. Consequently, AIMCO is in a position to
influence all voting decisions with respect to the Registrant. Under the
Partnership Agreement, unitholders holding a majority of the Units are entitled
to take action with respect to a variety of matters. When voting on matters,
AIMCO would in all likelihood vote the Units it acquired in a manner favorable
to the interest of the Managing General Partner because of their affiliation
with the Managing General Partner.
<PAGE>
Item 6. Management's Discussion and Analysis or Plan of Operation
The matters discussed in this Form 10-KSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the disclosure
contained in this Form 10-KSB and the other filings with the Securities and
Exchange Commission made by the Registrant from time to time. The discussion of
the Registrant's business and results of operations, including forward-looking
statements pertaining to such matters, does not take into account the effects of
any changes to the Registrant's business and results of operation. Accordingly,
actual results could differ materially from those projected in the
forward-looking statements as a result of a number of factors, including those
identified herein.
This item should be read in conjunction with the consolidated financial
statements and other items contained elsewhere in this report.
Results of Operations
The Partnership's net income for the year ended December 31, 1999 was
approximately $453,000 as compared to net income of approximately $119,000 for
the year ended December 31, 1998. The increase in net income for 1999 was
primarily due to a decrease in total expenses and, to a lessor extent, an
increase in total revenues. Total revenues increased due to a slight increase in
rental income. Rental income increased as a result of the increased rental rates
at all the Partnership's properties and increased occupancy at Torrey Pines and
St. Charleston which more than offset the decrease in occupancy at Sun River
Apartments.
Total expenses decreased primarily due to a decrease in operating expenses and
general and administrative expenses, partially offset by increased property tax
expense and depreciation expense. Operating expenses decreased mainly due to
decreases in maintenance expense and insurance expense and reduced payroll
expenses at all the Partnership's properties. Maintenance expenses decreased
primarily due to reduced contract labor expenses at St. Charleston Apartments
due to use of in-house employees, and decreases in repairs at all the
Partnership's properties. The decrease in insurance expense was due to a change
in insurance carrier late in 1998 for all the Partnership's properties. These
decreases were partially offset by an increase in advertising expense at all the
Partnership's properties. The decrease in general and administrative expense is
primarily due to the payment of Partnership management fees associated with
distributions from operations. Such distributions were $180,000 in 1999 as
compared to $2,003,000 in 1998. Therefore, the fees were higher in 1998. This
decrease was partially offset by increased legal fees due to the settlement of a
legal case as disclosed in the Annual Report on Form 10-KSB at December 31,
1998. Included in general and administrative expenses for the year ended
December 31, 1999 and 1998, are reimbursements to the General Partner allowed
under the Partnership Agreement associated with its management of the
Partnership. In addition, costs associated with the quarterly and annual
communications with investors and regulatory agencies and the annual audit
required by the Partnership Agreement are also included. Property taxes
increased at all the Partnership's properties due to an increase in the assessed
values of all three properties as well as a slight increase in the tax rate for
St. Charleston and Torrey Pines Apartments. Depreciation expense increased due
to capital improvements completed during the past twelve months which are now
being depreciated.
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping on a prospective
basis. The Partnership believes that this accounting principle change is
preferable because it provides a better matching of expenses with the related
benefit of the expenditures and it is consistent with industry practice and the
policies of the Managing General Partner. The effect of the change in 1999 was
not material. The cumulative effect, had this change been applied to prior
periods, is not material. The accounting principle change will not have an
effect on cash flow, funds available for distribution or fees payable to the
Managing General Partner and affiliates.
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.
Liquidity and Capital Resources
At December 31, 1999, the Partnership had cash and cash equivalents of
approximately $829,000 compared to approximately $716,000 at December 31, 1998.
The net increase in cash and cash equivalents for the year ended December 31,
1999 was approximately $113,000. The increase in cash and cash equivalents is
due to approximately $1,431,000 of cash provided by operating activities, which
was partially offset by approximately $1,175,000 and $143,000 of cash used in
investing and financing activities, respectively. Cash used in investing
activities consisted of property improvements and replacements and net deposits
to restricted escrows held by the mortgage lender. Cash used in financing
activities consisted of payments made on the mortgages encumbering the
Partnership's investment properties. The Partnership invests its working capital
reserves in money market accounts.
An affiliate of the Managing General Partner has made available to the
Partnership a credit line of up to $150,000 per property owned by the
Partnership. The Partnership has no outstanding amounts due under this line of
credit. Based on present plans, the Managing General Partner does not anticipate
the need to borrow in the near future. Other than cash and cash equivalents, the
line of credit is the Partnership's only unused source of liquidity.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the properties to adequately maintain the physical
assets and other operating needs of the Partnership and to comply with Federal,
state, and local legal and regulatory requirements. The Partnership is currently
evaluating the capital improvement needs of the property for the upcoming year.
The minimum amount to be budgeted is expected to be $300 per unit or $255,000.
Additional improvements may be considered and will depend on the physical
condition of the property as well as replacement reserves and anticipated cash
flow generated by the property. The capital expenditures will be incurred only
if cash is available from operations or from Partnership reserves. To the extent
that such budgeted capital improvements are completed, the Partnership's
distributable cash flow, if any, may be adversely effected at least in the short
term.
The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Partnership. The remaining
mortgage indebtedness of approximately $15,794,000 matures in July 2001, with a
balloon payment totaling approximately $15,551,000 due at maturity. As the
mortgages at Torrey Pines Apartments and St. Charleston Apartments were
subsequently refinanced (see discussion below), the Managing General Partner
will attempt to refinance the mortgage at Sun River Apartments and/or sell the
property prior to such maturity date. If the property cannot be refinanced or
sold for a sufficient amount, the Partnership will risk losing such property
through foreclosure.
On February 2, 2000, the Partnership refinanced the mortgages encumbering Torrey
Pines Apartments and St. Charleston Apartments. The refinancing replaced
indebtedness of approximately $3,604,000 and $6,056,000, respectively, with new
mortgages of $4,825,000 and $7,325,000, respectively. The mortgages were
refinanced at a rate equal to 8.34% compared to the prior rate of 9.88%, and
mature on March 1, 2020. Capitalized loan costs incurred for the refinancing
were approximately $110,000 and $117,000. The Partnership paid approximately
$72,000 and $121,000 in prepayment penalties and wrote off approximately $22,000
and $32,000, respectively, in unamortized loan costs, resulting in an
extraordinary loss on early extinguishment of debt in the amount of
approximately $247,000 during the first quarter of 2000.
During the year ended December 31, 1999, the Partnership declared a distribution
of approximately $180,000 ($176,000 to the limited partners or $2.72 per limited
partnership unit) from operations. This distribution was accrued at December 31,
1999 and paid in January 2000. During the year ended December 31, 1998, the
Partnership distributed approximately $3,503,000 (approximately $3,433,000 to
the limited partners or $52.97 per limited partnership unit) to the partners,
consisting of approximately $1,500,000 of sale proceeds ($1,470,000 to the
limited partners or $22.68 per limited partnership unit) from the collection of
the Waverley Apartments note and approximately $2,003,000 ($1,963,000 to the
limited partners or $30.29 per limited partnership unit) from operations. When
the Partnership sold the Waverly Apartments in 1987 it received a note for
$1,500,000 with a July 1997 maturity date. The note was collected in September
1997 and the total proceeds were distributed in 1998.
Several tender offers were made by various parties, including affiliates of the
Managing General Partner, during the years ended December 31, 1999 and 1998. As
a result of these and prior tender offers, AIMCO and its affiliates currently
own 39,393.84 limited partnership units in the Partnership representing
approximately 60.79% of the outstanding units. It is possible that AIMCO or its
affiliates will make one or more additional offers to acquire additional limited
partnership interests in the Partnership for cash or in exchange for units in
the operating partnership of AIMCO. Consequently, AIMCO is in a position to
influence all voting decisions with respect to the Registrant. Under the
Partnership Agreement, unitholders holding a majority of the Units are entitled
to take action with respect to a variety of matters. When voting on matters,
AIMCO would in all likelihood vote the Units it acquired in a manner favorable
to the interest of the Managing General Partner because of their affiliation
with the Managing General Partner.
Year 2000 Compliance
General Description
The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. The Partnership is
dependent upon the Managing General Partner and its affiliates for management
and administrative services ("Managing Agent"). Any of the Managing Agent's
computer programs or hardware that had date-sensitive software or embedded chips
might have recognized a date using "00" as the year 1900 rather than the year
2000. This could have resulted in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.
Computer Hardware, Software and Operating Equipment
In 1999, the Managing Agent completed all phases of its Year 2000 program by
completing the replacement and repair of any hardware or software system or
operating equipment that was not yet Year 2000 compliant. The Managing Agent's
hardware and software systems and its operating equipment are now Year 2000
compliant. No material failure or erroneous results have occurred in the
Managing Agent's computer applications related to the failure to reference the
Year 2000 to date.
Third Parties
To date, the Managing Agent is not aware of any significant supplier or
subcontractor (external agent) or financial institution of the Partnership that
has a Year 2000 issue that would have a material impact on the Partnership's
results of operations, liquidity or capital resources. However, the Managing
Agent has no means of ensuring or determining the Year 2000 compliance of
external agents. At this time, the Managing Agent does not believe that a Year
2000 issue of any non-compliant external agent will have a material impact on
the Partnership's financial position or results of operations.
Costs
The total cost of the Managing Agent's Year 2000 project was approximately $3.2
million and was funded from operating cash flows.
Risks Associated with the Year 2000
The Managing Agent completed all necessary phases of its Year 2000 program in
1999, and did not experience system or equipment malfunctions related to a
failure to reference the Year 2000. The Managing Agent or Partnership have not
been materially adversely effected by disruptions in the economy generally
resulting from the Year 2000 issue.
At this time, the Managing Agent does not believe that the Partnership's
businesses, results of operations or financial condition will be materially
adversely effected by the Year 2000 issue.
Contingency Plans Associated with the Year 2000
The Managing Agent has not had to implement contingency plans such as manual
workarounds or selecting new relationships for its banking or elevator operation
activities in order to avoid the Year 2000 issue.
Item 7. Financial Statements
CENTURY PROPERTIES FUND XIV
LIST OF FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Auditors
Consolidated Balance Sheet - December 31, 1999
Consolidated Statements of Operations - Years ended December 31, 1999 and
1998
Consolidated Statements of Changes in Partners' Capital (Deficit) - Years
ended December 31, 1999 and 1998
Consolidated Statements of Cash Flows - Years ended December 31, 1999 and
1998
Notes to Consolidated Financial Statements
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
The Partners
Century Properties Fund XIV
We have audited the accompanying consolidated balance sheet of Century
Properties Fund XIV as of December 31, 1999, and the related consolidated
statements of operations, changes in partners' capital (deficit) and cash flows
for each of the two years in the period ended December 31, 1999. 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 auditing standards generally accepted
in the United States. 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 the Partnership's 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 consolidated financial position of Century Properties
Fund XIV at December 31, 1999, and the consolidated results of its operations
and its cash flows for each of the two years in the period ended December 31,
1999, in conformity with accounting principles generally accepted in the United
States.
/s/ERNST & YOUNG LLP
Greenville, South Carolina
February 25, 2000
<PAGE>
CENTURY PROPERTIES FUND XIV
CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)
December 31, 1999
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and cash equivalents $ 829
Receivables and deposits 437
Restricted escrows 205
Other assets 216
Investment properties (Notes D and F):
Land $ 2,288
Buildings and personal property 25,906
28,194
Less accumulated depreciation (15,894) 12,300
$ 13,987
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 144
Tenant security deposit liabilities 163
Accrued property taxes 77
Distribution payable 180
Other liabilities 343
Mortgage notes payable (Note D) 15,794
Partners' Deficit
General partners $ (55)
Limited partners (64,806 units
issued and outstanding) (2,659) (2,714)
$ 13,987
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
CENTURY PROPERTIES FUND XIV
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998
Revenues:
<S> <C> <C>
Rental income $ 5,474 $ 5,456
Other income 354 347
Total revenues 5,828 5,803
Expenses:
Operating 2,215 2,382
General and administrative 272 471
Depreciation 929 891
Interest 1,628 1,644
Property taxes 331 296
Total expenses 5,375 5,684
Net income (Note E) $ 453 $ 119
Net income allocated to general partners (2%) $ 9 $ 2
Net income allocated to limited partners (98%) 444 117
$ 453 $ 119
Net income per limited partnership unit $ 6.85 $ 1.80
Distributions per limited partnership unit $ 2.72 $ 52.97
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
CENTURY PROPERTIES FUND XIV
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 64,806 $ -- $64,806 $64,806
Partners' capital at
December 31, 1997 64,806 $ 8 $ 389 $ 397
Net income for the year
ended December 31, 1998 -- 2 117 119
Distributions to partners -- (70) (3,433) (3,503)
Partners' deficit at
December 31, 1998 64,806 (60) (2,927) (2,987)
Net income for the year
ended December 31, 1999 -- 9 444 453
Distributions to partners -- (4) (176) (180)
Partners' deficit at
December 31, 1999 64,806 $ (55) $(2,659) $(2,714)
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
CENTURY PROPERTIES FUND XIV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998
Cash flows from operating activities:
<S> <C> <C>
Net income $ 453 $ 119
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 929 891
Amortization of loan costs 63 63
Change in accounts:
Receivables and deposits 61 (176)
Other assets (93) 79
Accounts payable (37) 52
Tenant security deposit liabilities 15 9
Accrued property taxes (14) 42
Other liabilities 54 74
Net cash provided by operating activities 1,431 1,153
Cash flows from investing activities:
Property improvements and replacements (1,114) (421)
Net (deposits to) withdrawals from restricted escrows (61) 93
Net cash used in investing activities (1,175) (328)
Cash flows from financing activities:
Payments on mortgage notes payable (143) (130)
Distributions to partners -- (3,503)
Net cash used in financing activities (143) (3,633)
Net increase (decrease) in cash and cash equivalents 113 (2,808)
Cash and cash equivalents at beginning of year 716 3,524
Cash and cash equivalents at end of year $ 829 $ 716
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,568 $ 1,582
Supplemental disclosure of non-cash activity:
Distribution payable $ 180 $ --
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
CENTURY PROPERTIES FUND XIV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note A - Organization and Summary of Significant Accounting Policies
Organization: Century Properties Fund XIV (the "Partnership" or the
"Registrant") is a limited partnership organized under the laws of the State of
California to hold for investment and ultimately sell income-producing real
estate. The Partnership currently owns three residential apartment complexes,
two of which are located in Nevada and the other located in Arizona. The general
partners are Fox Realty Investors ("FRI"), a California general partnership, and
Fox Capital Management Corporation ("FCMC" or the "Managing General Partner"), a
California Corporation. The original capital contributions of $64,806,000
($1,000 per unit) were made by the limited partners, including 100 limited
partnership units purchased by FCMC. The Managing General Partner and the
managing general partner of FRI are subsidiaries of Apartment Investment and
Management Company ("AIMCO") (see "Note B - Transfer of Control"). The directors
and officers of the Managing General Partner also serve as executive officers of
AIMCO. The Partnership Agreement provides that the Partnership is to terminate
on December 31, 2012 unless terminated prior to such date.
Principles of Consolidation: The Partnership's financial statements include the
accounts of Century St. Charleston, LP, Century Sun River LP, and Century Torrey
Pines, LP. The Partnership owns a 99% interest in each of the partnerships and
has the ability to control the major operating and financial policies of these
partnerships. All interpartnership transactions have been eliminated.
Uses 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.
Allocation of Income, Loss, and Distribution: Net income, net loss, and
distributions of cash of the Partnership are allocated between general and
limited partners in accordance with the provisions of the Partnership Agreement.
The Net Income, Net Loss, and Distributions of Cash Available for Distribution
of the Partnership shall be allocated 98 percent to the Limited Partnership Unit
Holders and two percent to the general partners. However, realized gains from
the sale or other disposition of Partnership properties shall be allocated:
first, to the general partners to the extent of any deficit in their capital
accounts, next to the Limited Partnership Unit Holders, pro rata, to the extent
of any deficit in their capital accounts, next to the general partners and
Limited Partnership Unit Holders, pro rata, to the extent they receive
distributions of cash according to the Partnership Agreement from the sale or
disposition of Partnership properties, and lastly, to the general partners and
Limited Partnership Unit Holders in the ratio they are entitled to receive
distributions of cash, pursuant to the Partnership Agreement.
Fair Value of Financial Instruments: 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", requires disclosure of fair value
information about financial instruments, whether or not recognized in the
balance sheet, for which it is practicable to estimate fair value. Fair value is
defined in the SFAS as the amount at which the instrument could be exchanged in
a current transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes that the carrying amount of its
financial instruments (except for long term debt) approximates their fair value
due to the short term maturity of these instruments. The fair value of the
Partnership's long term debt, after discounting the scheduled loan payments to
maturity, approximates its carrying balance.
Cash and Cash Equivalents: Cash and cash equivalents include cash on hand, in
banks and money market accounts. At certain times, the amount of cash deposited
at a bank may exceed the limit on insured deposits.
Security Deposits: The Partnership requires security deposits from lessees for
the duration of the lease and such deposits are included in receivables and
deposits. Deposits are refunded when the tenant vacates, provided the tenant has
not damaged its space, and is current on its rental payments.
Investment Properties: Investment properties, which consist of three apartment
complexes, are stated at cost. Acquisition fees are capitalized as a cost of
real estate. In accordance with SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of", the Partnership
records impairment losses on long-lived assets used in operations when events
and circumstances indicate that the assets might be impaired and the
undiscounted cash flows estimated to be generated by those assets are less than
the carrying amounts of these assets. No adjustments for impairment of value
were recorded in the years ended December 31, 1999 or 1998.
Depreciation: Depreciation is provided by the straight-line method over the
estimated lives of the investment properties and related personal property. For
Federal income tax purposes, the accelerated cost recovery method is used (1)
for real property over 18 years for additions after March 15, 1984, and before
May 9, 1985, and 19 years for additions after May 8, 1985 and before January 1,
1987, and (2) for personal property over 5 years for additions prior to January
1, 1987. As a result of the Tax Reform Act of 1986, for additions after December
31, 1986, the alternative depreciation system is used for depreciation of (1)
real property over 40 years and (2) personal property additions over 5-20 years.
Effective January 1, 1999 the Partnership changed its method of accounting to
capitalize the costs of exterior painting and major landscaping (Note J).
Leases: The Partnership generally leases apartment units for twelve-month terms
or less. The Partnership recognizes income as earned on its leases. In addition,
the Managing General Partner's policy is to offer rental concessions during
particularly slow months or in response to heavy competition from other similar
complexes in the area. Concessions are charged against rental income as
incurred.
Replacement Reserves - The Partnership maintains a replacement reserve with the
holder of the mortgage notes payable on all the Partnership properties. These
funds are available for the maintenance of the properties. The balance at
December 31, 1999 was approximately $205,000.
Advertising Costs: Advertising costs of approximately $131,000 in 1999 and
$86,000 in 1998 were charged to expense as incurred and are included in
operating expenses.
Loan Costs: Loan costs are amortized using the straight line method over the
lives of the related mortgage loans. At December 31, 1999, loan costs, net of
accumulated amortization, totaled approximately $94,000 and are included in
other assets. Amortization of loan costs is included in interest expense.
Segment Reporting: SFAS No. 131, Disclosure about Segments of an Enterprise and
Related Information established standards for the way that public business
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports. It also establishes standards
for related disclosures about products and services, geographic areas, and major
customers. See "Note H" for required disclosure.
Note B - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
("IPT") merged into AIMCO, a publicly traded real estate investment trust, with
AIMCO being the surviving corporation (the "Insignia Merger"). As a result,
AIMCO ultimately acquired 100% ownership interest in the Managing General
Partner. The Managing General Partner does not believe that this transaction has
had or will have a material effect on the affairs and operations of the
Partnership.
Note C - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the Managing General
Partners and its affiliates for the management and administration of all
partnership activities. The Partnership Agreement provides for certain 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
incurred during the years ended December 31, 1999 and 1998:
1999 1998
(in thousands)
Property management fees (included in operating
expenses) $305 $293
Reimbursement for services of affiliates
(included in operating, general and
administrative expenses, and investment
properties) 131 135
Partnership management fee (included in general
and administrative expense) 20 222
During the years ended December 31, 1999 and 1998, affiliates of the Managing
General Partner were entitled to receive 5% of gross receipts from all the
Partnership's properties as compensation for providing property management
services. The Partnership paid to such affiliates approximately $305,000 and
$293,000 for the years ended December 31, 1999 and 1998, respectively.
An affiliate of the Managing General Partner received reimbursement of
accountable administrative expenses amounting to approximately $131,000 and
$135,000 for the years ended December 31, 1999 and 1998, respectively.
Pursuant to the Partnership Agreement, for managing the affairs of the
Partnership, the Managing General Partner is entitled to receive a Partnership
management fee equal to 10% of the Partnership's adjusted cash from operations
as distributed. Approximately $20,000 and $222,000 in Partnership management
fees are included in general and administrative expense for the years ended
December 31, 1999 and 1998, respectively.
Several tender offers were made by various parties, including affiliates of the
Managing General Partner, during the years ended December 31, 1999 and 1998. As
a result of these and prior tender offers, AIMCO and its affiliates currently
own 39,393.84 limited partnership units in the Partnership representing
approximately 60.79% of the outstanding units. It is possible that AIMCO or its
affiliates will make one or more additional offers to acquire additional limited
partnership interests in the Partnership for cash or in exchange for units in
the operating partnership of AIMCO. Consequently, AIMCO is in a position to
influence all voting decisions with respect to the Registrant. Under the
Partnership Agreement, unitholders holding a majority of the Units are entitled
to take action with respect to a variety of matters. When voting on matters,
AIMCO would in all likelihood vote the Units it acquired in a manner favorable
to the interest of the Managing General Partner because of their affiliation
with the Managing General Partner.
An affiliate of the Managing General Partner has made available to the
Partnership a credit line of up to $150,000 per property owned by the
Partnership. The Partnership has no outstanding amounts due under this line of
credit. Based on present plans, the Managing General Partner does not anticipate
the need to borrow in the near future. Other than cash and cash equivalents, the
line of credit is the Partnership's only unused source of liquidity.
Note D - Mortgage Notes Payable
The principle terms of mortgage notes payable are as follows:
<TABLE>
<CAPTION>
Principal Monthly Principal
Balance At Payment Balance
December 31, Including Interest Maturity Due At
Property 1999 Interest Rate Date Maturity
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C> <C>
Torrey Pines (1) $ 3,607 $ 33 9.88% 7/1/01 $ 3,552
St. Charleston (1) 6,061 55 9.88% 7/1/01 5,967
Sun River 6,126 55 9.88% 7/1/01 6,032
$15,794 $ 143 $15,551
</TABLE>
(1) Loans were refinanced on February 2, 2000. See discussion below.
The mortgage notes payable are non-recourse and secured by pledge of the
Partnership's rental properties and by pledge of revenues from the respective
rental properties. All mortgage notes payable include prepayment penalties if
repaid prior to maturity. Further, the properties may not be sold subject to
existing indebtedness.
Scheduled principal payments of mortgage note payable subsequent to December 31,
1999 are as follows (in thousands):
2000 $ 158
2001 15,636
Total $15,794
On February 2, 2000, the Partnership refinanced the mortgages encumbering Torrey
Pines Apartments and St. Charleston Apartments. The refinancing replaced
indebtedness of approximately $3,604,000 and $6,056,000, respectively, with new
mortgages of $4,825,000 and $7,325,000, respectively. The mortgages were
refinanced at a rate equal to 8.34% compared to the prior rate of 9.88%, and
mature on March 1, 2020. Capitalized loan costs incurred for the refinancing
were approximately $110,000 and $117,000. The Partnership paid approximately
$72,000 and $121,000 in prepayment penalties and wrote off approximately $22,000
and $32,000, respectively, in unamortized loan costs, resulting in an
extraordinary loss on early extinguishment of debt in the amount of
approximately $247,000 during the first quarter of 2000.
Amortization of deferred loan costs totaled approximately $63,000 for both the
years ended December 31, 1999 and 1998.
Note E - Income Taxes
The Partnership is classified as a Partnership for Federal income tax purposes.
Accordingly, no provision for income taxes is made in the consolidated financial
statements of the Partnership. Taxable income or loss of the Partnership is
reported in the income tax returns of its partners.
The following is a reconciliation between net income as reported in the
consolidated financial statements and Federal taxable income allocated to the
partners in the Partnership's information return for the years ended December
31, 1999 and 1998 (in thousands, except per unit data):
1999 1998
Net income as reported $ 453 $ 119
Add:
Depreciation differences 386 267
Other 102 87
Federal taxable income $ 941 $ 473
Federal taxable income per limited
partnership unit $ 14.22 $ 7.15
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):
Net deficit as reported $ (2,714)
Differences resulted from:
Land and buildings (413)
Accumulated depreciation (4,013)
Syndication and distribution costs 6,749
Other 401
Net assets - Federal tax basis $ 10
<PAGE>
Note F - Investment Properties and Accumulated Depreciation
<TABLE>
<CAPTION>
Initial Cost
To Partnership
(in thousands)
Buildings Net Costs
and Related Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Torrey Pines $ 3,607 $ 460 $ 4,595 $ 1,445
St. Charleston 6,061 751 7,322 2,078
Sun River 6,126 1,102 8,770 1,671
Total $15,794 $ 2,313 $20,687 $ 5,194
</TABLE>
<TABLE>
<CAPTION>
Gross Amount At Which
Carried
At December 31, 1999
(in thousands)
Buildings
And Related
Personal Accumulated Date of Date Depreciable
Description Land Property Total Depreciation Construction Acquired Life-Years
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Torrey Pines $ 455 $ 6,045 $ 6,500 $ 3,663 1980 09/79 5-30 years
St. Charleston 743 9,408 10,151 5,927 1980 09/79 5-30 years
Sun River 1,090 10,453 11,543 6,304 1981 11/80 5-30 years
Total $ 2,288 $25,906 $28,194 $15,894
</TABLE>
<PAGE>
Reconciliation of Investment Properties and Accumulated Depreciation:
Years Ended December 31,
1999 1998
(in thousands)
Investment Properties
Balance at beginning of year $27,080 $26,659
Property improvements 1,114 421
Balance at end of year $28,194 $27,080
Accumulated Depreciation
Balance at beginning of year $14,965 $14,074
Additions charged to expense 929 891
Balance at end of year $15,894 $14,965
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1999 and 1998, is approximately $27,781,000 and $26,687,000,
respectively. The accumulated depreciation taken for Federal income tax purposes
at December 31, 1999 and 1998, is approximately $19,907,000 and $19,321,000,
respectively.
Note G - Distributions
During the year ended December 31, 1999, the Partnership declared a distribution
of approximately $180,000 ($176,000 to the limited partners or $2.72 per limited
partnership unit) from operations. This distribution was accrued at December 31,
1999 and paid in January 2000. During the year ended December 31, 1998, the
Partnership distributed approximately $3,503,000 (approximately $3,433,000 to
the limited partners or $52.97 per limited partnership unit) to the partners,
consisting of approximately $1,500,000 of sale proceeds ($1,470,000 to the
limited partners or $22.68 per limited partnership unit) from the collection of
the Waverley Apartments note and approximately $2,003,000 ($1,963,000 to the
limited partners or $30.29 per limited partnership unit) from operations. When
the Partnership sold the Waverly Apartments in 1987 it received a note for
$1,500,000 with a July 1997 maturity date. The note was collected in September
1997 and the total proceeds were distributed in 1998.
Note H - Segment Reporting
Description of the types of products and services from which the reportable
segment derives its revenues:
The Partnership has one reportable segment: residential properties. The
Partnership's residential property segment consists of three apartment complexes
two of which are located in Nevada and the other in Arizona. The Partnership
rents apartment units to tenants for terms that are typically twelve months or
less.
Measurement of segment profit or loss:
The Partnership evaluates performance based on segment profit (loss) before
depreciation. The accounting policies of the reportable segment are the same as
those described in the summary of significant accounting policies.
Factors management used to identify the Partnership's reportable segment:
The Partnership's reportable segment consists of investment properties that
offer similar products and services. Although each of the investment properties
is managed separately, they have been aggregated into one segment as they
provide services with similar types of products and customers.
Segment information for the years 1999 and 1998 is shown in the tables below (in
thousands). The "Other" column includes partnership administration related items
and income and expense not allocated to the reportable segment.
1999 Residential Other Totals
Rental income $ 5,474 $ -- $ 5,474
Other income 352 2 354
Interest expense 1,628 -- 1,628
Depreciation 929 -- 929
General and administrative expense -- 272 272
Segment profit (loss) 723 (270) 453
Total assets 13,925 62 13,987
Capital expenditures for
investment property 1,114 -- 1,114
1998 Residential Other Totals
Rental income $ 5,456 $ -- $ 5,456
Other income 298 49 347
Interest expense 1,644 -- 1,644
Depreciation 891 -- 891
General and administrative expense -- 471 471
Segment profit (loss) 541 (422) 119
Total assets 13,528 131 13,659
Capital expenditures for
investment properties 421 -- 421
Note I - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the Managing General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Note B - Transfer of Control"). The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998, the Managing General Partner filed a motion seeking dismissal of the
action. In lieu of responding to the motion, the plaintiffs have filed an
amended complaint. The Managing General Partner filed demurrers to the amended
complaint which were heard February 1999. Pending the ruling on such demurrers,
settlement negotiations commenced. On November 2, 1999, the parties executed and
filed a Stipulation of Settlement settling claims, subject to final court
approval, on behalf of the Partnership and all limited partners who own units as
of November 3, 1999. Preliminary approval of the settlement was obtained on
November 3, 1999 from the Superior Court of the State of California, County of
San Mateo, at which time the Court set a final approval hearing for December 10,
1999. Prior to the December 10, 1999 hearing the Court received various
objections to the settlement, including a challenge to the Court's preliminary
approval based upon the alleged lack of authority of class plaintiffs' counsel
to enter the settlement. On December 14, 1999, the Managing General Partner and
its affiliates terminated the proposed settlement. Certain plaintiffs have filed
a motion to disqualify some of the plaintiffs' counsel in the action. The
Managing General Partner does not anticipate that costs associated with this
case will be material to the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
Note J - Change in Accounting Principle
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping on a prospective
basis. The Partnership believes that this accounting principle change is
preferable because it provides a better matching of expenses with the related
benefit of the expenditures and it is consistent with industry practice and the
policies of the Managing General Partner. The effect of the change in 1999 was
not material. The cumulative effect, had this change been applied to prior
periods, is not material. The accounting principle change will not have an
effect on cash flow, funds available for distribution or fees payable to the
Managing General Partner and affiliates.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act
Century Properties Fund XIV (the "Partnership" or the "Registrant") does not
have any officers or directors. The managing general partner of the Partnership,
Fox Capital Management Corporation ("FCMC" or the "Managing General Partner"),
manages and controls substantially all of the Partnership's affairs and has
general responsibility and ultimate authority in all matters affecting its
business.
The names of the directors and executive officers of the Managing General
Partner, their ages and the nature of all positions with FCMC presently held by
them are as follows:
Name Age Position
Patrick J. Foye 42 Executive Vice President and Director
Martha L. Long 40 Senior Vice President and Controller
Patrick J. Foye has been Executive Vice President and Director of the Managing
General Partner since October 1, 1998. Mr. Foye has served as Executive Vice
President of AIMCO since May 1998. Prior to joining AIMCO, Mr. Foye was a
partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to
1998 and was Managing Partner of the firm's Brussels, Budapest and Moscow
offices from 1992 through 1994. Mr. Foye is also Deputy Chairman of the Long
Island Power Authority and serves as a member of the New York State
Privatization Council. He received a B.A. from Fordham College and a J.D. from
Fordham University Law School.
Martha L. Long has been Senior Vice President and Controller of the Managing
General Partner and AIMCO since October 1998, as a result of the acquisition of
Insignia Financial Group, Inc. From June 1994 until January 1997, she was the
Controller for Insignia, and was promoted to Senior Vice President - Finance and
Controller in January 1997, retaining that title until October 1998. From 1988
to June 1994, Ms. Long was Senior Vice President and Controller for The First
Savings Bank, FSB in Greenville, South Carolina.
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to
the Registrant under Rule 16a-3(e) during the Registrant's most recent fiscal
year and Form 5 and amendments thereto furnished to the Registrant with respect
to its most recent fiscal year, the Registrant is not aware of any director,
officer, beneficial owner of more than ten percent of the units of limited
partnership interest in the Registrant that failed to file on a timely basis, as
disclosed in the above Forms, reports required by Section 16(a) of the Exchange
Act during the most recent fiscal year or prior fiscal years except as follows:
AIMCO Properties, L.P. and its joint filers failed to timely file a Form 3 with
respect to its acquisition of Units and AIMCO and its joint filers failed to
timely file a Form 4 with respect to its acquisition of Units.
Item 10. Executive Compensation
Neither the director nor the officers of the Managing General Partner received
renumeration from the Registrant.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding limited partnership
units of the Partnership owned by each person or entity which is known by the
Partnership to own beneficially or exercise voting of dispositive control over
more than 5% of the Partnership's limited partnership units, by each of the
Managing General Partner's directors and by all directors and executive officers
of the Managing General Partner as a group as of December 31, 1999.
Number Percentage
Beneficial Owner of Units of Class
Riverside Drive LLC (1) 26,610.06 41.06%
(an affiliate of AIMCO)
Insignia Properties LP (1) 31.00 .05%
(an affiliate of AIMCO)
Madison River Properties LLC (1) 2,925.57 4.52%
(an affiliate of AIMCO)
AIMCO Properties LP (2) 9,827.21 15.16%
(an affiliate of AIMCO)
(1) Entity is indirectly ultimately owned by AIMCO. Its business address is 55
Beattie Place, Greenville, South Carolina 29602.
(2) AIMCO Properties LP is ultimately controlled by AIMCO. Its business address
is 2000 South Colorado Boulevard, Denver, Colorado 80222.
As a result of its ownership of approximately 39,393.84 (60.79%) limited
partnership units through its affiliates, AIMCO could be in a position to
significantly influence all voting decisions with respect to the Partnership.
Under the Partnership Agreement, unit holders holding a majority of the Units
are entitled to take action with respect to a variety of matters. When voting on
matters, AIMCO would in all likelihood vote the Units it acquired in a manner
favorable to the interest of the Managing General Partner because of its
affiliation with the Managing General Partner. However, Riverside is required to
vote its Units: (i) against any proposal to increase the fees and other
compensation payable by the Partnership to the Managing General Partner and any
of its affiliates; and (ii) with respect to any proposal made by the Managing
General Partner or any of its affiliates, in proportion to votes cast by other
unit holders. Except for the foregoing, no other limitations are imposed on
Riverside's right to vote each Unit acquired.
Item 12. 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.
<PAGE>
The following transactions with affiliates of the Managing General Partner were
incurred during the years ended December 31, 1999 and 1998:
1999 1998
(in thousands)
Property management fees $305 $293
Reimbursement for services of affiliates 131 135
Partnership management fee 20 222
During the years ended December 31, 1999 and 1998, affiliates of the Managing
General Partner were entitled to receive 5% of gross receipts from all of the
Partnership's properties as compensation for providing property management
services. The Partnership paid to such affiliates approximately $305,000 and
$293,000 for the years ended December 31, 1999 and 1998, respectively.
An affiliate of the Managing General Partner received reimbursement of
accountable administrative expenses amounting to approximately $131,000 and
$135,000 for the years ended December 31, 1999 and 1998, respectively.
Pursuant to the Partnership Agreement, for managing the affairs of the
Partnership, the Managing General Partner is entitled to receive a partnership
management fee equal to 10% of the Partnership's adjusted cash from operations
as distributed. Approximately $20,000 and $222,000 in partnership management
fees are included in general and administrative expense for the years ended
December 31, 1999 and 1998, respectively.
Several tender offers were made by various parties, including affiliates of the
Managing General Partner, during the years ended December 31, 1999 and 1998. As
a result of these and prior tender offers, AIMCO and its affiliates currently
own 39,393.84 limited partnership units in the Partnership representing
approximately 60.79% of the outstanding units. It is possible that AIMCO or its
affiliates will make one or more additional offers to acquire additional limited
partnership interests in the Partnership for cash or in exchange for units in
the operating partnership of AIMCO. Consequently, AIMCO is in a position to
influence all voting decisions with respect to the Registrant. Under the
Partnership Agreement, unitholders holding a majority of the Units are entitled
to take action with respect to a variety of matters. When voting on matters,
AIMCO would in all likelihood vote the Units it acquired in a manner favorable
to the interest of the Managing General Partner because of their affiliation
with the Managing General Partner.
An affiliate of the Managing General Partner has made available to the
Partnership a credit line of up to $150,000 per property owned by the
Partnership. The Partnership has no outstanding amounts due under this line of
credit. Based on present plans, the Managing General Partner does not anticipate
the need to borrow in the near future. Other than cash and cash equivalents, the
line of credit is the Partnership's only unused source of liquidity.
<PAGE>
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 18, Independent Accountants' Preferability Letter for Change
in Accounting Principle, is filed as an exhibit to this report.
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
(b) Reports on Form 8-K filed during the fourth quarter of calendar year
1999:
None.
<PAGE>
SIGNATURES
In accordance with section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CENTURY PROPERTIES FUND XIV
By: Fox Capital Management Corporation
Its Managing General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
and Controller
Date:
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf by the registrant and in the capacities and on the
date indicated.
/s/Patrick J. Foye Executive Vice President Date:
Patrick J. Foye and Director
/s/Martha L. Long Senior Vice President Date:
Martha L. Long and Controller
<PAGE>
CENTURY PROPERTIES FUND XIV
EXHIBIT INDEX
Exhibit Number Description of Exhibit
2.1 NPI, Inc. Stock Purchase Agreement, dated as of August 17, 1995,
incorporated by reference to the Partnership's Current Report on Form 8-K
dated August 17, 1995.
2.2 Partnership Units Purchase Agreement dated as of August 17, 1995,
incorporated by reference to Exhibit 2.1 to Form 8-K filed by Insignia
Financial Group, Inc. ("Insignia") with the Securities and Exchange
Commission on September 1, 1995.
2.3 Management Purchase Agreement dated as of August 17, 1995, incorporated by
reference to Exhibit 2.2 to Form 8-K filed by Insignia with the Securities
and Exchange Commission on September 1, 1995.
2.4 Limited Liability Company Agreement of Riverside Drive L.L.C., dated as of
August 17, 1995 incorporated by reference to Exhibit 2.4 to Form 8-K filed
by Insignia with the Securities and Exchange Commission on September 1,
1995.
2.5 Master Indemnity Agreement dated as of August 17, 1995, incorporated by
reference to Exhibit 2.5 to Form 8-K filed by Insignia with the Securities
and Exchange Commission on September 1, 1995.
2.6 Agreement and Plan of Merger, dated as of October 1, 1998, by and between
AIMCO and IPT; incorporated by reference to Registrant's Current Report on
Form 8-K dated October 1, 1998 (filed as Exhibit 2.1).
3.4 Agreement of Limited Partnership, incorporated by reference to Exhibit A to
the Prospectus of the Partnership dated September 11, 1978, and thereafter
supplemented, included in the Partnership's Registration Statement on Form
S-11 (Reg. No. 2-61526).
10.1 Purchase and Sale Agreement between Registrant and St. Michael Investments
dated August 13, 1997, incorporated by reference to Exhibit 10.1 to Form
8-K filed with the Securities and Exchange Commission on August 27, 1997.
10.2 Multifamily Note dated February 2, 2000 between Century St. Charleston,
L.P., a Nevada limited partnership and ARCS Commercial Mortgage Co., L.P.,
a California limited partnership.
10.3 Multifamily Note dated February 2, 2000 between Century Torrey Pines, Inc.,
a Nevada limited partnership and ARCS Commercial Mortgage Co., L.P., a
California limited partnership.
16 Letter dated November 11, 1998 from the Registrant's former independent
accountants regarding its concurrence with the statements made by the
Registrant; incorporated by reference to the Registrant's Current Report on
Form 8-K dated November 10, 1998.
18 Independent Accountants' Preferability Letter for Change in Accounting
Principle.
27 Financial Data Schedule.
<PAGE>
Exhibit 18
February 7, 2000
Mr. Patrick J. Foye
Executive Vice President
Fox Capital Management Corporation
Managing General Partner of Century Properties Fund XIV
55 Beattie Place
P.O. Box 1089
Greenville, South Carolina 29602
Dear Mr. Foye:
Note J of Notes to the Consolidated Financial Statements of Century Properties
Fund XIV included in its Form 10-KSB for the year ended December 31, 1999
describes a change in the method of accounting to capitalize exterior painting
and major landscaping, which would have been expensed under the old policy. You
have advised us that you believe that the change is to a preferable method in
your circumstances because it provides a better matching of expenses with the
related benefit of the expenditures and is consistent with policies currently
being used by your industry and conforms to the policies of the Managing General
Partner.
There are no authoritative criteria for determining a preferable method based on
the particular circumstances; however, we conclude that the change in the method
of accounting for exterior painting and major landscaping is to an acceptable
alternative method which, based on your business judgment to make this change
for the reasons cited above, is preferable in your circumstances.
Very truly yours,
/s/Ernst & Young LLP
<PAGE>
Exhibit 10.2
MULTIFAMILY NOTE
(MULTISTATE)
FHLMC # 002643006
US $7,325,000.00 February 2, 2000
FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally (if
more than one) promises to pay to the order of ARCS Commercial Mortgage Co.,
L.P., a California limited partnership, the principal sum of Seven Million Three
Hundred Twenty Five Thousand Dollars and no/100's (US $7,325,000.00), with
interest on the unpaid principal balance at the annual rate of Eight and
34/100's percent (8.34%).
1. Defined Terms. As used in this Note, (i) the term "Lender" means the
holder of this Note, and (ii) the term "Indebtedness" means the principal of,
interest on, or any other amounts due at any time under, this Note, the Security
Instrument or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances to protect the security of the Security
Instrument under Section 12 of the Security Instrument. "Event of Default" and
other capitalized terms used but not defined in this Note shall have the
meanings given to such terms in the Security Instrument.
2. Address for Payment. All payments due under this Note shall be payable
at 26901 Agoura Road, Suite 200, Calabasas Hills, California 91301, or such
other place as may be designated by written notice to Borrower from or on behalf
of Lender.
3. Payment of Principal and Interest. Principal and interest shall
be paid as follows:
(a) Unless disbursement of principal is made by Lender to Borrower on the
first day of the month, interest for the period beginning on the date of
disbursement and ending on and including the last day of the month in which such
disbursement is made shall be payable simultaneously with the execution of this
Note. Interest under this Note shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
(b) Consecutive monthly installments of principal and interest, each in
the amount of Sixty Two Thousand Eight Hundred Twenty Eight Dollars and 23/100's
(US $62,828.23), shall be payable on the first day of each month beginning on
April 1, 2000, until the entire unpaid principal balance evidenced by this Note
is fully paid. Any accrued interest remaining past due for 30 days or more shall
be added to and become part of the unpaid principal balance and shall bear
interest at the rate or rates specified in this Note, and any reference below to
"accrued interest" shall refer to accrued interest which has not become part of
the unpaid principal balance. Any remaining principal and interest shall be due
and payable on March 1, 2020 or on any earlier date on which the unpaid
principal balance of this Note becomes due and payable, by acceleration or
otherwise (the "Maturity Date"). The unpaid principal balance shall continue to
bear interest after the Maturity Date at the Default Rate set forth in this Note
until and including the date on which it is paid in full.
(c) Any regularly scheduled monthly installment of principal and interest
that is received by Lender before the date it is due shall be deemed to have
been received on the due date solely for the purpose of calculating interest
due.
4. Application of Payments. If at any time Lender receives, from Borrower
or otherwise, any amount applicable to the Indebtedness which is less than all
amounts due and payable at such time, Lender may apply that payment to amounts
then due and payable in any manner and in any order determined by Lender, in
Lender's discretion. Borrower agrees that neither Lender's acceptance of a
payment from Borrower in an amount that is less than all amounts then due and
payable nor Lender's application of such payment shall constitute or be deemed
to constitute either a waiver of the unpaid amounts or an accord and
satisfaction.
5. Security. The Indebtedness is secured, among other things, by a
multifamily mortgage, deed to secure debt or deed of trust dated as of the date
of this Note (the "Security Instrument"), and reference is made to the Security
Instrument for other rights of Lender as to collateral for the Indebtedness.
6. Acceleration. If an Event of Default has occurred and is continuing,
the entire unpaid principal balance, any accrued interest, the prepayment
premium payable under Paragraph 10, if any, and all other amounts payable under
this Note and any other Loan Document shall at once become due and payable, at
the option of Lender, without any prior notice to Borrower. Lender may exercise
this option to accelerate regardless of any prior forbearance.
7. Late Charge. If any monthly amount payable under this Note or under the
Security Instrument or any other Loan Document is not received by Lender within
Ten (10) days after the amount is due, Borrower shall pay to Lender, immediately
and without demand by Lender, a late charge equal to Five (5) percent of such
amount. Borrower acknowledges that its failure to make timely payments will
cause Lender to incur additional expenses in servicing and processing the loan
evidenced by this Note (the "Loan"), and that it is extremely difficult and
impractical to determine those additional expenses. Borrower agrees that the
late charge payable pursuant to this Paragraph represents a fair and reasonable
estimate, taking into account all circumstances existing on the date of this
Note, of the additional expenses Lender will incur by reason of such late
payment. The late charge is payable in addition to, and not in lieu of, any
interest payable at the Default Rate pursuant to Paragraph 8.
8. Default Rate. So long as (a) any monthly installment under this Note
remains past due for 30 days or more, or (b) any other Event of Default has
occurred and is continuing, interest under this Note shall accrue on the unpaid
principal balance from the earlier of the due date of the first unpaid monthly
installment or the occurrence of such other Event of Default, as applicable, at
a rate (the "Default Rate") equal to the lesser of 4 percentage points above the
rate stated in the first paragraph of this Note or the maximum interest rate
which may be collected from Borrower under applicable law. If the unpaid
principal balance and all accrued interest are not paid in full on the Maturity
Date, the unpaid principal balance and all accrued interest shall bear interest
from the Maturity Date at the Default Rate. Borrower also acknowledges that its
failure to make timely payments will cause Lender to incur additional expenses
in servicing and processing the Loan, that, during the time that any monthly
installment under this Note is delinquent for more than 30 days, Lender will
incur additional costs and expenses arising from its loss of the use of the
money due and from the adverse impact on Lender's ability to meet its other
obligations and to take advantage of other investment opportunities, and that it
is extremely difficult and impractical to determine those additional costs and
expenses. Borrower also acknowledges that, during the time that any monthly
installment under this Note is delinquent for more than 30 days or any other
Event of Default has occurred and is continuing, Lender's risk of nonpayment of
this Note will be materially increased and Lender is entitled to be compensated
for such increased risk. Borrower agrees that the increase in the rate of
interest payable under this Note to the Default Rate represents a fair and
reasonable estimate, taking into account all circumstances existing on the date
of this Note, of the additional costs and expenses Lender will incur by reason
of the Borrower's delinquent payment and the additional compensation Lender is
entitled to receive for the increased risks of nonpayment associated with a
delinquent loan.
9. Limits on Personal Liability.
(a) Except as otherwise provided in this Paragraph 9, Borrower shall have
no personal liability under this Note, the Security Instrument or any other Loan
Document for the repayment of the Indebtedness or for the performance of any
other obligations of Borrower under the Loan Documents, and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such
obligations shall be Lender's exercise of its rights and remedies with respect
to the Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit or
impair Lender's enforcement of its rights against any guarantor of the
Indebtedness or any guarantor of any obligations of Borrower.
(b) Borrower shall be personally liable to Lender for the repayment of a
portion of the Indebtedness equal to Zero percent (0%) of the unpaid principal
balance of this Note, plus any other amounts for which Borrower has personal
liability under this Paragraph 9.
(c) In addition to Borrower's personal liability under Paragraph 9(b),
Borrower shall be personally liable to Lender for the repayment of a further
portion of the Indebtedness equal to any loss or damage suffered by Lender as a
result of (1) failure of Borrower to pay to Lender upon demand after an Event of
Default all Rents to which Lender is entitled under Section 3(a) of the Security
Instrument and the amount of all security deposits collected by Borrower from
tenants then in residence; (2) failure of Borrower to apply all insurance
proceeds and condemnation proceeds as required by the Security Instrument; or
(3) failure of Borrower to comply with Section 14(d) or (e) of the Security
Instrument relating to the delivery of books and records, statements, schedules
and reports.
(d) For purposes of determining Borrower's personal liability under
Paragraph 9(b) and Paragraph 9(c), all payments made by Borrower or any
guarantor of this Note with respect to the Indebtedness and all amounts received
by Lender from the enforcement of its rights under the Security Instrument shall
be applied first to the portion of the Indebtedness for which Borrower has no
personal liability.
(e) Borrower shall become personally liable to Lender for the repayment of
all of the Indebtedness upon the occurrence of any of the following Events of
Default: (1) Borrower's acquisition of any property or operation of any business
not permitted by Section 33 of the Security Instrument; (2) a Transfer
(including, but not limited to, a lien or encumbrance) that is an Event of
Default under Section 21 of the Security Instrument, other than a Transfer
consisting solely of the involuntary removal or involuntary withdrawal of a
general partner in a limited partnership or a manager in a limited liability
company; or (3) fraud or written material misrepresentation by Borrower or any
officer, director, partner, member or employee of Borrower in connection with
the application for or creation of the Indebtedness or any request for any
action or consent by Lender.
(f) In addition to any personal liability for the Indebtedness, Borrower
shall be personally liable to Lender for (1) the performance of all of
Borrower's obligations under Section 18 of the Security Instrument (relating to
environmental matters); (2) the costs of any audit under Section 14(d) of the
Security Instrument; and (3) any costs and expenses incurred by Lender in
connection with the collection of any amount for which Borrower is personally
liable under this Paragraph 9, including fees and out of pocket expenses of
attorneys and expert witnesses and the costs of conducting any independent audit
of Borrower's books and records to determine the amount for which Borrower has
personal liability.
(g) To the extent that Borrower has personal liability under this
Paragraph 9, Lender may exercise its rights against Borrower personally without
regard to whether Lender has exercised any rights against the Mortgaged Property
or any other security, or pursued any rights against any guarantor, or pursued
any other rights available to Lender under this Note, the Security Instrument,
any other Loan Document or applicable law. For purposes of this Paragraph 9, the
term "Mortgaged Property" shall not include any funds that (1) have been applied
by Borrower as required or permitted by the Security Instrument prior to the
occurrence of an Event of Default or (2) Borrower was unable to apply as
required or permitted by the Security Instrument because of a bankruptcy,
receivership, or similar judicial proceeding.
10. Voluntary and Involuntary Prepayments.
(a) A prepayment premium shall be payable in connection with any
prepayment made under this Note as provided below:
(1) Borrower may voluntarily prepay all of the unpaid principal
balance of this Note on the last Business Day of a calendar month if Borrower
has given Lender at least 30 days prior notice of its intention to make such
prepayment. Such prepayment shall be made by paying (A) the amount of principal
being prepaid, (B) all accrued interest, (C) all other sums due Lender at the
time of such prepayment, and (D) the prepayment premium calculated pursuant to
Schedule A. For all purposes including the accrual of interest, any prepayment
received by Lender on any day other than the last calendar day of the month
shall be deemed to have been received on the last calendar day of such month.
For purposes of this Note, a "Business Day" means any day other than a Saturday,
Sunday or any other day on which Lender is not open for business. Borrower shall
not have the option to voluntarily prepay less than all of the unpaid principal
balance.
(2) Upon Lender's exercise of any right of acceleration under this
Note, Borrower shall pay to Lender, in addition to the entire unpaid principal
balance of this Note outstanding at the time of the acceleration, (A) all
accrued interest and all other sums due Lender, and (B) the prepayment premium
calculated pursuant to Schedule A.
(3) Any application by Lender of any collateral or other security to
the repayment of any portion of the unpaid principal balance of this Note prior
to the Maturity Date and in the absence of acceleration shall be deemed to be a
partial prepayment by Borrower, requiring the payment to Lender by Borrower of a
prepayment premium. The amount of any such partial prepayment shall be computed
so as to provide to Lender a prepayment premium computed pursuant to Schedule A
without Borrower having to pay out-of-pocket any additional amounts.
(b) Notwithstanding the provisions of Paragraph 10(a), no prepayment
premium shall be payable with respect to (A) any prepayment made no more than
180 days before the Maturity Date, or (B) any prepayment occurring as a result
of the application of any insurance proceeds or condemnation award under the
Security Instrument.
(c) Schedule A is hereby incorporated by reference into this Note.
(d) Any permitted or required prepayment of less than the unpaid principal
balance of this Note shall not extend or postpone the due date of any subsequent
monthly installments or change the amount of such installments, unless Lender
agrees otherwise in writing.
(e) Borrower recognizes that any prepayment of the unpaid principal
balance of this Note, whether voluntary or involuntary or resulting from a
default by Borrower, will result in Lender's incurring loss, including
reinvestment loss, additional expense and frustration or impairment of Lender's
ability to meet its commitments to third parties. Borrower agrees to pay to
Lender upon demand damages for the detriment caused by any prepayment, and
agrees that it is extremely difficult and impractical to ascertain the extent of
such damages. Borrower therefore acknowledges and agrees that the formula for
calculating prepayment premiums set forth on Schedule A represents a reasonable
estimate of the damages Lender will incur because of a prepayment.
(f) Borrower further acknowledges that the prepayment premium provisions
of this Note are a material part of the consideration for the Loan, and
acknowledges that the terms of this Note are in other respects more favorable to
Borrower as a result of the Borrower's voluntary agreement to the prepayment
premium provisions.
11. Costs and Expenses. Borrower shall pay all expenses and costs,
including fees and out-of-pocket expenses of attorneys and expert witnesses and
costs of investigation, incurred by Lender as a result of any default under this
Note or in connection with efforts to collect any amount due under this Note, or
to enforce the provisions of any of the other Loan Documents, including those
incurred in post-judgment collection efforts and in any bankruptcy proceeding
(including any action for relief from the automatic stay of any bankruptcy
proceeding) or judicial or non-judicial foreclosure proceeding.
12. Forbearance. Any forbearance by Lender in exercising any right or
remedy under this Note, the Security Instrument, or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of that or any other right or remedy. The acceptance by Lender of any
payment after the due date of such payment, or in an amount which is less than
the required payment, shall not be a waiver of Lender's right to require prompt
payment when due of all other payments or to exercise any right or remedy with
respect to any failure to make prompt payment. Enforcement by Lender of any
security for Borrower's obligations under this Note shall not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.
13. Waivers. Presentment, demand, notice of dishonor, protest, notice of
acceleration, notice of intent to demand or accelerate payment or maturity,
presentment for payment, notice of nonpayment, grace, and diligence in
collecting the Indebtedness are waived by Borrower and all endorsers and
guarantors of this Note and all other third party obligors.
14. Loan Charges. If any applicable law limiting the amount of interest or
other charges permitted to be collected from Borrower in connection with the
Loan is interpreted so that any interest or other charge provided for in any
Loan Document, whether considered separately or together with other charges
provided for in any other Loan Document, violates that law, and Borrower is
entitled to the benefit of that law, that interest or charge is hereby reduced
to the extent necessary to eliminate that violation. The amounts, if any,
previously paid to Lender in excess of the permitted amounts shall be applied by
Lender to reduce the unpaid principal balance of this Note. For the purpose of
determining whether any applicable law limiting the amount of interest or other
charges permitted to be collected from Borrower has been violated, all
Indebtedness that constitutes interest, as well as all other charges made in
connection with the Indebtedness that constitute interest, shall be deemed to be
allocated and spread ratably over the stated term of the Note. Unless otherwise
required by applicable law, such allocation and spreading shall be effected in
such a manner that the rate of interest so computed is uniform throughout the
stated term of the Note.
15. Commercial Purpose. Borrower represents that the Indebtedness is
being incurred by Borrower solely for the purpose of carrying on a business
or commercial enterprise, and not for personal, family or household purposes.
16. Counting of Days. Except where otherwise specifically provided,
any reference in this Note to a period of "days" means calendar days, not
Business Days.
17. Governing Law. This Note shall be governed by the law of the
jurisdiction in which the Land is located.
18. Captions. The captions of the paragraphs of this Note are for
convenience only and shall be disregarded in construing this Note.
19. Notices. All notices, demands and other communications required
or permitted to be given by Lender to Borrower pursuant to this Note shall be
given in accordance with Section 31 of the Security Instrument.
20. Consent to Jurisdiction and Venue. Borrower agrees that any
controversy arising under or in relation to this Note shall be litigated
exclusively in the jurisdiction in which the Land is located (the "Property
Jurisdiction"). The state and federal courts and authorities with jurisdiction
in the Property Jurisdiction shall have exclusive jurisdiction over all
controversies which shall arise under or in relation to this Note. Borrower
irrevocably consents to service, jurisdiction, and venue of such courts for any
such litigation and waives any other venue to which it might be entitled by
virtue of domicile, habitual residence or otherwise.
21. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) AGREES NOT TO
ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE
RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT
BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE
TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
ATTACHED SCHEDULES. The following Schedules are attached to this Note:
|X| Schedule A Prepayment Premium (required)
|X| Schedule B Modifications to Multifamily Note
<PAGE>
IN WITNESS WHEREOF, Borrower has signed and delivered this Note or has
caused this Note to be signed and delivered by its duly authorized
representative.
[SIGNATURES]
Century St. Charleston Limited Partnership,
a Nevada limited partnership
By: CPF XIV/St. Charleston, Inc.,
a Nevada corporation
Its: Managing General Partner
By: ___________________
Patti K. Fielding
Vice President
Borrower's Social Security/Employer ID Number
PAY TO THE ORDER OF
WITHOUT RECOURSE
ARCS Commercial Mortgage Co., L. P.,
a California limited partnership
By: ACMC Realty, Inc.,
a California corporation
Its: General Partner
By: _________________________
Kevin Kleen
Its: Senior Vice President
<PAGE>
SCHEDULE A
PREPAYMENT PREMIUM
Any prepayment premium payable under Paragraph 10 of this Note shall be computed
as follows:
(a) If the prepayment is made between the date of this Note and the date
that is 180 months after the first day of the first calendar month following the
date of this Note (the "Yield Maintenance Period"), the prepayment premium shall
be the greater of:
(i) 1.0% of the unpaid principal balance of this Note; or
(ii) the product obtained by multiplying:
(A) the amount of principal being prepaid,
by
(B) the excess (if any) of the Monthly Note Rate over the
Assumed Reinvestment Rate,
by
(C) the Present Value Factor.
For purposes of subparagraph (ii), the following definitions shall
apply:
Monthly Note Rate: one-twelfth (1/12) of the annual interest rate
of the Note, expressed as a decimal calculated to five digits.
Prepayment Date: in the case of a voluntary prepayment, the date
on which the prepayment is made; in any other case, the date on
which Lender accelerates the unpaid principal balance of the Note.
Assumed Reinvestment Rate: one-twelfth (1/12) of the yield rate as
of the date 5 Business Days before the Prepayment Date, on the 9.25%
U.S. Treasury Security due February, 2016, as reported in The Wall
Street Journal, expressed as a decimal calculated to five digits. In
the event that no yield is published on the applicable date for the
Treasury Security used to determine the Assumed Reinvestment Rate,
Lender, in its discretion, shall select the non-callable Treasury
Security maturing in the same year as the Treasury Security
specified above with the lowest yield published in The Wall Street
Journal as of the applicable date. If the publication of such yield
rates in The Wall Street Journal is discontinued for any reason,
Lender shall select a security with a comparable rate and term to
the Treasury Security used to determine the Assumed Reinvestment
Rate. The selection of an alternate security pursuant to this
Paragraph shall be made in Lender's discretion.
Present Value Factor: the factor that discounts to present value the
costs resulting to Lender from the difference in interest rates
during the months remaining in the Yield Maintenance Period, using
the Assumed Reinvestment Rate as the discount rate, with monthly
compounding, expressed numerically as follows:
[OBJECT OMITTED]
n = number of months remaining in Yield Maintenance Period
ARR = Assumed Reinvestment Rate
(b) If the prepayment is made after the expiration of the Yield
Maintenance Period but more than 180 days before the Maturity Date, the
prepayment premium shall be 1.0% of the unpaid principal balance of this Note.
SCHEDULE B
MODIFICATIONS TO MULTIFAMILY NOTE
<PAGE>
Exhibit 10.3
MULTIFAMILY NOTE
(MULTISTATE)
FHLMC # 002643014
US $4,825,000.00 February 2, 2000
FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally (if
more than one) promises to pay to the order of ARCS Commercial Mortgage Co.,
L.P., a California limited partnership, the principal sum of Four Million Eight
Hundred Twenty Five Thousand Dollars and no/100's (US $4,825,000.00), with
interest on the unpaid principal balance at the annual rate of Eight and
34/100's percent (8.34%).
1. Defined Terms. As used in this Note, (i) the term "Lender" means the
holder of this Note, and (ii) the term "Indebtedness" means the principal of,
interest on, or any other amounts due at any time under, this Note, the Security
Instrument or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances to protect the security of the Security
Instrument under Section 12 of the Security Instrument. "Event of Default" and
other capitalized terms used but not defined in this Note shall have the
meanings given to such terms in the Security Instrument.
2. Address for Payment. All payments due under this Note shall be payable
at 26901 Agoura Road, Suite 200, Calabasas Hills, California 91301, or such
other place as may be designated by written notice to Borrower from or on behalf
of Lender.
3. Payment of Principal and Interest. Principal and interest shall
be paid as follows:
(a) Unless disbursement of principal is made by Lender to Borrower on the
first day of the month, interest for the period beginning on the date of
disbursement and ending on and including the last day of the month in which such
disbursement is made shall be payable simultaneously with the execution of this
Note. Interest under this Note shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
(b) Consecutive monthly installments of principal and interest, each in
the amount of Forty One Thousand Three Hundred Eighty Five Thousand Dollars and
15/100's (US $41,385.15), shall be payable on the first day of each month
beginning on April 1, 2000, until the entire unpaid principal balance evidenced
by this Note is fully paid. Any accrued interest remaining past due for 30 days
or more shall be added to and become part of the unpaid principal balance and
shall bear interest at the rate or rates specified in this Note, and any
reference below to "accrued interest" shall refer to accrued interest which has
not become part of the unpaid principal balance. Any remaining principal and
interest shall be due and payable on March 1, 2020 or on any earlier date on
which the unpaid principal balance of this Note becomes due and payable, by
acceleration or otherwise (the "Maturity Date"). The unpaid principal balance
shall continue to bear interest after the Maturity Date at the Default Rate set
forth in this Note until and including the date on which it is paid in full.
(c) Any regularly scheduled monthly installment of principal and interest
that is received by Lender before the date it is due shall be deemed to have
been received on the due date solely for the purpose of calculating interest
due.
4. Application of Payments. If at any time Lender receives, from Borrower
or otherwise, any amount applicable to the Indebtedness which is less than all
amounts due and payable at such time, Lender may apply that payment to amounts
then due and payable in any manner and in any order determined by Lender, in
Lender's discretion. Borrower agrees that neither Lender's acceptance of a
payment from Borrower in an amount that is less than all amounts then due and
payable nor Lender's application of such payment shall constitute or be deemed
to constitute either a waiver of the unpaid amounts or an accord and
satisfaction.
5. Security. The Indebtedness is secured, among other things, by a
multifamily mortgage, deed to secure debt or deed of trust dated as of the date
of this Note (the "Security Instrument"), and reference is made to the Security
Instrument for other rights of Lender as to collateral for the Indebtedness.
6. Acceleration. If an Event of Default has occurred and is continuing,
the entire unpaid principal balance, any accrued interest, the prepayment
premium payable under Paragraph 10, if any, and all other amounts payable under
this Note and any other Loan Document shall at once become due and payable, at
the option of Lender, without any prior notice to Borrower. Lender may exercise
this option to accelerate regardless of any prior forbearance.
7. Late Charge. If any monthly amount payable under this Note or under the
Security Instrument or any other Loan Document is not received by Lender within
Ten (10) days after the amount is due, Borrower shall pay to Lender, immediately
and without demand by Lender, a late charge equal to Five (5) percent of such
amount. Borrower acknowledges that its failure to make timely payments will
cause Lender to incur additional expenses in servicing and processing the loan
evidenced by this Note (the "Loan"), and that it is extremely difficult and
impractical to determine those additional expenses. Borrower agrees that the
late charge payable pursuant to this Paragraph represents a fair and reasonable
estimate, taking into account all circumstances existing on the date of this
Note, of the additional expenses Lender will incur by reason of such late
payment. The late charge is payable in addition to, and not in lieu of, any
interest payable at the Default Rate pursuant to Paragraph 8.
8. Default Rate. So long as (a) any monthly installment under this Note
remains past due for 30 days or more, or (b) any other Event of Default has
occurred and is continuing, interest under this Note shall accrue on the unpaid
principal balance from the earlier of the due date of the first unpaid monthly
installment or the occurrence of such other Event of Default, as applicable, at
a rate (the "Default Rate") equal to the lesser of 4 percentage points above the
rate stated in the first paragraph of this Note or the maximum interest rate
which may be collected from Borrower under applicable law. If the unpaid
principal balance and all accrued interest are not paid in full on the Maturity
Date, the unpaid principal balance and all accrued interest shall bear interest
from the Maturity Date at the Default Rate. Borrower also acknowledges that its
failure to make timely payments will cause Lender to incur additional expenses
in servicing and processing the Loan, that, during the time that any monthly
installment under this Note is delinquent for more than 30 days, Lender will
incur additional costs and expenses arising from its loss of the use of the
money due and from the adverse impact on Lender's ability to meet its other
obligations and to take advantage of other investment opportunities, and that it
is extremely difficult and impractical to determine those additional costs and
expenses. Borrower also acknowledges that, during the time that any monthly
installment under this Note is delinquent for more than 30 days or any other
Event of Default has occurred and is continuing, Lender's risk of nonpayment of
this Note will be materially increased and Lender is entitled to be compensated
for such increased risk. Borrower agrees that the increase in the rate of
interest payable under this Note to the Default Rate represents a fair and
reasonable estimate, taking into account all circumstances existing on the date
of this Note, of the additional costs and expenses Lender will incur by reason
of the Borrower's delinquent payment and the additional compensation Lender is
entitled to receive for the increased risks of nonpayment associated with a
delinquent loan.
9. Limits on Personal Liability.
(a) Except as otherwise provided in this Paragraph 9, Borrower shall have
no personal liability under this Note, the Security Instrument or any other Loan
Document for the repayment of the Indebtedness or for the performance of any
other obligations of Borrower under the Loan Documents, and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such
obligations shall be Lender's exercise of its rights and remedies with respect
to the Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit or
impair Lender's enforcement of its rights against any guarantor of the
Indebtedness or any guarantor of any obligations of Borrower.
(b) Borrower shall be personally liable to Lender for the repayment of a
portion of the Indebtedness equal to Zero percent (0%) of the unpaid principal
balance of this Note, plus any other amounts for which Borrower has personal
liability under this Paragraph 9.
(c) In addition to Borrower's personal liability under Paragraph 9(b),
Borrower shall be personally liable to Lender for the repayment of a further
portion of the Indebtedness equal to any loss or damage suffered by Lender as a
result of (1) failure of Borrower to pay to Lender upon demand after an Event of
Default all Rents to which Lender is entitled under Section 3(a) of the Security
Instrument and the amount of all security deposits collected by Borrower from
tenants then in residence; (2) failure of Borrower to apply all insurance
proceeds and condemnation proceeds as required by the Security Instrument; or
(3) failure of Borrower to comply with Section 14(d) or (e) of the Security
Instrument relating to the delivery of books and records, statements, schedules
and reports.
(d) For purposes of determining Borrower's personal liability under
Paragraph 9(b) and Paragraph 9(c), all payments made by Borrower or any
guarantor of this Note with respect to the Indebtedness and all amounts received
by Lender from the enforcement of its rights under the Security Instrument shall
be applied first to the portion of the Indebtedness for which Borrower has no
personal liability.
(e) Borrower shall become personally liable to Lender for the repayment of
all of the Indebtedness upon the occurrence of any of the following Events of
Default: (1) Borrower's acquisition of any property or operation of any business
not permitted by Section 33 of the Security Instrument; (2) a Transfer
(including, but not limited to, a lien or encumbrance) that is an Event of
Default under Section 21 of the Security Instrument, other than a Transfer
consisting solely of the involuntary removal or involuntary withdrawal of a
general partner in a limited partnership or a manager in a limited liability
company; or (3) fraud or written material misrepresentation by Borrower or any
officer, director, partner, member or employee of Borrower in connection with
the application for or creation of the Indebtedness or any request for any
action or consent by Lender.
(f) In addition to any personal liability for the Indebtedness, Borrower
shall be personally liable to Lender for (1) the performance of all of
Borrower's obligations under Section 18 of the Security Instrument (relating to
environmental matters); (2) the costs of any audit under Section 14(d) of the
Security Instrument; and (3) any costs and expenses incurred by Lender in
connection with the collection of any amount for which Borrower is personally
liable under this Paragraph 9, including fees and out of pocket expenses of
attorneys and expert witnesses and the costs of conducting any independent audit
of Borrower's books and records to determine the amount for which Borrower has
personal liability.
(g) To the extent that Borrower has personal liability under this
Paragraph 9, Lender may exercise its rights against Borrower personally without
regard to whether Lender has exercised any rights against the Mortgaged Property
or any other security, or pursued any rights against any guarantor, or pursued
any other rights available to Lender under this Note, the Security Instrument,
any other Loan Document or applicable law. For purposes of this Paragraph 9, the
term "Mortgaged Property" shall not include any funds that (1) have been applied
by Borrower as required or permitted by the Security Instrument prior to the
occurrence of an Event of Default or (2) Borrower was unable to apply as
required or permitted by the Security Instrument because of a bankruptcy,
receivership, or similar judicial proceeding.
10. Voluntary and Involuntary Prepayments.
(a) A prepayment premium shall be payable in connection with any
prepayment made under this Note as provided below:
(1) Borrower may voluntarily prepay all of the unpaid principal
balance of this Note on the last Business Day of a calendar month if Borrower
has given Lender at least 30 days prior notice of its intention to make such
prepayment. Such prepayment shall be made by paying (A) the amount of principal
being prepaid, (B) all accrued interest, (C) all other sums due Lender at the
time of such prepayment, and (D) the prepayment premium calculated pursuant to
Schedule A. For all purposes including the accrual of interest, any prepayment
received by Lender on any day other than the last calendar day of the month
shall be deemed to have been received on the last calendar day of such month.
For purposes of this Note, a "Business Day" means any day other than a Saturday,
Sunday or any other day on which Lender is not open for business. Borrower shall
not have the option to voluntarily prepay less than all of the unpaid principal
balance.
(2) Upon Lender's exercise of any right of acceleration under this
Note, Borrower shall pay to Lender, in addition to the entire unpaid principal
balance of this Note outstanding at the time of the acceleration, (A) all
accrued interest and all other sums due Lender, and (B) the prepayment premium
calculated pursuant to Schedule A.
(3) Any application by Lender of any collateral or other security to
the repayment of any portion of the unpaid principal balance of this Note prior
to the Maturity Date and in the absence of acceleration shall be deemed to be a
partial prepayment by Borrower, requiring the payment to Lender by Borrower of a
prepayment premium. The amount of any such partial prepayment shall be computed
so as to provide to Lender a prepayment premium computed pursuant to Schedule A
without Borrower having to pay out-of-pocket any additional amounts.
(b) Notwithstanding the provisions of Paragraph 10(a), no prepayment
premium shall be payable with respect to (A) any prepayment made no more than
180 days before the Maturity Date, or (B) any prepayment occurring as a result
of the application of any insurance proceeds or condemnation award under the
Security Instrument.
(c) Schedule A is hereby incorporated by reference into this Note.
(d) Any permitted or required prepayment of less than the unpaid principal
balance of this Note shall not extend or postpone the due date of any subsequent
monthly installments or change the amount of such installments, unless Lender
agrees otherwise in writing.
(e) Borrower recognizes that any prepayment of the unpaid principal
balance of this Note, whether voluntary or involuntary or resulting from a
default by Borrower, will result in Lender's incurring loss, including
reinvestment loss, additional expense and frustration or impairment of Lender's
ability to meet its commitments to third parties. Borrower agrees to pay to
Lender upon demand damages for the detriment caused by any prepayment, and
agrees that it is extremely difficult and impractical to ascertain the extent of
such damages. Borrower therefore acknowledges and agrees that the formula for
calculating prepayment premiums set forth on Schedule A represents a reasonable
estimate of the damages Lender will incur because of a prepayment.
(f) Borrower further acknowledges that the prepayment premium provisions
of this Note are a material part of the consideration for the Loan, and
acknowledges that the terms of this Note are in other respects more favorable to
Borrower as a result of the Borrower's voluntary agreement to the prepayment
premium provisions.
11. Costs and Expenses. Borrower shall pay all expenses and costs,
including fees and out-of-pocket expenses of attorneys and expert witnesses and
costs of investigation, incurred by Lender as a result of any default under this
Note or in connection with efforts to collect any amount due under this Note, or
to enforce the provisions of any of the other Loan Documents, including those
incurred in post-judgment collection efforts and in any bankruptcy proceeding
(including any action for relief from the automatic stay of any bankruptcy
proceeding) or judicial or non-judicial foreclosure proceeding.
12. Forbearance. Any forbearance by Lender in exercising any right or
remedy under this Note, the Security Instrument, or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of that or any other right or remedy. The acceptance by Lender of any
payment after the due date of such payment, or in an amount which is less than
the required payment, shall not be a waiver of Lender's right to require prompt
payment when due of all other payments or to exercise any right or remedy with
respect to any failure to make prompt payment. Enforcement by Lender of any
security for Borrower's obligations under this Note shall not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.
13. Waivers. Presentment, demand, notice of dishonor, protest, notice of
acceleration, notice of intent to demand or accelerate payment or maturity,
presentment for payment, notice of nonpayment, grace, and diligence in
collecting the Indebtedness are waived by Borrower and all endorsers and
guarantors of this Note and all other third party obligors.
14. Loan Charges. If any applicable law limiting the amount of interest or
other charges permitted to be collected from Borrower in connection with the
Loan is interpreted so that any interest or other charge provided for in any
Loan Document, whether considered separately or together with other charges
provided for in any other Loan Document, violates that law, and Borrower is
entitled to the benefit of that law, that interest or charge is hereby reduced
to the extent necessary to eliminate that violation. The amounts, if any,
previously paid to Lender in excess of the permitted amounts shall be applied by
Lender to reduce the unpaid principal balance of this Note. For the purpose of
determining whether any applicable law limiting the amount of interest or other
charges permitted to be collected from Borrower has been violated, all
Indebtedness that constitutes interest, as well as all other charges made in
connection with the Indebtedness that constitute interest, shall be deemed to be
allocated and spread ratably over the stated term of the Note. Unless otherwise
required by applicable law, such allocation and spreading shall be effected in
such a manner that the rate of interest so computed is uniform throughout the
stated term of the Note.
15. Commercial Purpose. Borrower represents that the Indebtedness is
being incurred by Borrower solely for the purpose of carrying on a business
or commercial enterprise, and not for personal, family or household purposes.
16. Counting of Days. Except where otherwise specifically provided,
any reference in this Note to a period of "days" means calendar days, not
Business Days.
17. Governing Law. This Note shall be governed by the law of the
jurisdiction in which the Land is located.
18. Captions. The captions of the paragraphs of this Note are for
convenience only and shall be disregarded in construing this Note.
19. Notices. All notices, demands and other communications required
or permitted to be given by Lender to Borrower pursuant to this Note shall be
given in accordance with Section 31 of the Security Instrument.
20. Consent to Jurisdiction and Venue. Borrower agrees that any
controversy arising under or in relation to this Note shall be litigated
exclusively in the jurisdiction in which the Land is located (the "Property
Jurisdiction"). The state and federal courts and authorities with jurisdiction
in the Property Jurisdiction shall have exclusive jurisdiction over all
controversies which shall arise under or in relation to this Note. Borrower
irrevocably consents to service, jurisdiction, and venue of such courts for any
such litigation and waives any other venue to which it might be entitled by
virtue of domicile, habitual residence or otherwise.
21. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) AGREES NOT TO
ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE
RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT
BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE
TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
ATTACHED SCHEDULES. The following Schedules are attached to this Note:
|X| Schedule A Prepayment Premium (required)
|X| Schedule B Modifications to Multifamily Note
<PAGE>
IN WITNESS WHEREOF, Borrower has signed and delivered this Note or has
caused this Note to be signed and delivered by its duly authorized
representative.
[SIGNATURES]
Century Torrey Pines Limited Partnership,
a Nevada limited partnership
By: CPF XIV/Torrey Pines, Inc.,
a Nevada corporation
Its: Managing General Partner
By: ___________________
Patti K. Fielding
Vice President
Borrower's Social Security/Employer ID Number
PAY TO THE ORDER OF
WITHOUT RECOURSE
ARCS Commercial Mortgage Co., L. P.,
a California limited partnership
By: ACMC Realty, Inc.,
a California corporation
Its: General Partner
By: _________________________
Kevin Kleen
Its: Senior Vice President
<PAGE>
SCHEDULE A
PREPAYMENT PREMIUM
Any prepayment premium payable under Paragraph 10 of this Note shall be computed
as follows:
(a) If the prepayment is made between the date of this Note and the date
that is 180 months after the first day of the first calendar month following the
date of this Note (the "Yield Maintenance Period"), the prepayment premium shall
be the greater of:
(i) 1.0% of the unpaid principal balance of this Note; or
(ii) the product obtained by multiplying:
(A) the amount of principal being prepaid,
by
(B) the excess (if any) of the Monthly Note Rate over the
Assumed Reinvestment Rate,
by
(C) the Present Value Factor.
For purposes of subparagraph (ii), the following definitions shall
apply:
Monthly Note Rate: one-twelfth (1/12) of the annual interest rate
of the Note, expressed as a decimal calculated to five digits.
Prepayment Date: in the case of a voluntary prepayment, the date
on which the prepayment is made; in any other case, the date on
which Lender accelerates the unpaid principal balance of the Note.
Assumed Reinvestment Rate: one-twelfth (1/12) of the yield rate as
of the date 5 Business Days before the Prepayment Date, on the 9.25%
U.S. Treasury Security due February, 2016, as reported in The Wall
Street Journal, expressed as a decimal calculated to five digits. In
the event that no yield is published on the applicable date for the
Treasury Security used to determine the Assumed Reinvestment Rate,
Lender, in its discretion, shall select the non-callable Treasury
Security maturing in the same year as the Treasury Security
specified above with the lowest yield published in The Wall Street
Journal as of the applicable date. If the publication of such yield
rates in The Wall Street Journal is discontinued for any reason,
Lender shall select a security with a comparable rate and term to
the Treasury Security used to determine the Assumed Reinvestment
Rate. The selection of an alternate security pursuant to this
Paragraph shall be made in Lender's discretion.
Present Value Factor: the factor that discounts to present value the
costs resulting to Lender from the difference in interest rates
during the months remaining in the Yield Maintenance Period, using
the Assumed Reinvestment Rate as the discount rate, with monthly
compounding, expressed numerically as follows:
[OBJECT OMITTED]
n = number of months remaining in Yield Maintenance Period
ARR = Assumed Reinvestment Rate
(b) If the prepayment is made after the expiration of the Yield
Maintenance Period but more than 180 days before the Maturity Date, the
prepayment premium shall be 1.0% of the unpaid principal balance of this Note.
SCHEDULE B
MODIFICATIONS TO MULTIFAMILY NOTE
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Century
Properties Fund XIV 1999 Fourth Quarter 10-KSB and is qualified in its entirety
by reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000278128
<NAME> Century Properties Fund XIV
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 829
<SECURITIES> 0
<RECEIVABLES> 437
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 28,194
<DEPRECIATION> 15,894
<TOTAL-ASSETS> 13,987
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 15,794
0
0
<COMMON> 0
<OTHER-SE> (2,714)
<TOTAL-LIABILITY-AND-EQUITY> 13,987
<SALES> 0
<TOTAL-REVENUES> 5,828
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,375
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,628
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 453
<EPS-BASIC> 6.85 <F2>
<EPS-DILUTED> 0
<FN>
<F1> Registrant has an unclassified balance sheet. <F2> Multiplier is 1.
</FN>
</TABLE>
