SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-9680
Century Properties Fund XV
(Exact name of Registrant as specified in its charter)
California 94-2625577
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5665 Northside Drive N.W., Ste. 370, Atlanta, Georgia 30328
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (404) 916-9090
N/A
Former name, former address and fiscal year, if changed since last report.
Indicate by check mark whether Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 12, 13, or 15(d) of the Securities Exchange
Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes No
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date .
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CENTURY PROPERTIES FUND XV - FORM 10-Q - MARCH 31, 1995
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets
March 31, December 31,
1995 1994
(Unaudited) (Audited)
Assets
Cash and cash equivalents $ 1,619,000 $ 1,606,000
Other assets 1,675,000 1,378,000
Real Estate:
Real estate 75,252,000 74,737,000
Accumulated depreciation (29,699,000) (29,112,000)
-------------- --------------
Real estate, net 45,553,000 45,625,000
Deferred costs, net 662,000 682,000
-------------- --------------
Total assets $ 49,509,000 $ 49,291,000
============== ==============
Liabilities and Partners' Equity
Notes payable $ 34,159,000 $ 34,229,000
Accrued expenses and other liabilities 1,596,000 1,347,000
-------------- --------------
Total liabilities 35,755,000 35,576,000
-------------- --------------
Minority interest in joint venture 780,000 772,000
-------------- --------------
Commitments and Contingencies
Partners' Equity (Deficit):
General partners (1,274,000) (1,275,000)
Limited partners (89,980 units outstanding at
March 31, 1995 and December 31, 1994) 14,248,000 14,218,000
-------------- --------------
Total partners' equity 12,974,000 12,943,000
-------------- --------------
Total liabilities and partners' equity $ 49,509,000 $ 49,291,000
============== ==============
See notes to consolidated financial statements.
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CENTURY PROPERTIES FUND XV - FORM 10-Q - MARCH 31, 1995
Consolidated Statements of Operations (Unaudited)
For the Three Months Ended
March 31, 1995 March 31, 1994
Revenues:
Rental $ 3,293,000 $ 3,052,000
Interest income 18,000 14,000
-------------- --------------
Total revenues 3,311,000 3,066,000
-------------- --------------
Expenses:
Operating 1,601,000 1,578,000
Interest 994,000 1,014,000
Depreciation 587,000 587,000
General and administrative 60,000 133,000
-------------- --------------
Total expenses 3,242,000 3,312,000
-------------- --------------
Income (loss) before minority interest in joint
venture's operations 69,000 (246,000)
Minority interest in joint venture's operations (38,000) (26,000)
-------------- --------------
Net income (loss) $ 31,000 $ (272,000)
============== ==============
Net income (loss) per limited partnership unit $ - $ (3)
============== ==============
See notes to consolidated financial statements.
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CENTURY PROPERTIES FUND XV - FORM 10-Q - MARCH 31, 1995
Consolidated Statements of Cash Flows (Unaudited)
For the Three Months Ended
March 31, 1995 March 31, 1994
Operating Activities:
Net income (loss) $ 31,000 $ (272,000)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 727,000 720,000
Deferred costs paid (22,000) -
Minority interest in joint venture's operations 38,000 26,000
Changes in operating assets and liabilities:
Other assets (297,000) 88,000
Accrued expenses and other liabilities 249,000 (233,000)
-------------- --------------
Net cash provided by operating activities 726,000 329,000
-------------- --------------
Investing Activities:
Additions to real estate (515,000) (86,000)
-------------- --------------
Cash (used in) investing activities (515,000) (86,000)
-------------- --------------
Financing Activities:
Notes payable principal payments (168,000) (130,000)
Joint venture partner distributions (30,000) (32,000)
-------------- --------------
Cash (used in) financing activities (198,000) (162,000)
-------------- --------------
Increase in Cash and Cash Equivalents 13,000 81,000
Cash and Cash Equivalents at Beginning of Period 1,606,000 1,367,000
-------------- --------------
Cash and Cash Equivalents at End of Period $ 1,619,000 $ 1,448,000
============== ==============
Supplemental Disclosure of Cash Flow Information:
Interest paid in cash during the period $ 871,000 $ 895,000
============== ==============
See notes to consolidated financial statements.
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CENTURY PROPERTIES FUND XV - FORM 10-Q - MARCH 31, 1995
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. General
The accompanying consolidated financial statements, footnotes and discussions
should be read in conjunction with the consolidated financial statements,
related footnotes and discussions contained in the Partnership's Annual Report
for the year ended December 31, 1994. Certain accounts have been reclassified in
order to conform to the current period.
The financial information contained herein is unaudited. In the opinion of
management, all adjustments necessary for a fair presentation of such financial
information have been included. All adjustments are of a normal recurring
nature.
At March 31, 1995, the Partnership had approximately $1,440,000 invested in
overnight repurchase agreements earning approximately 6% per annum.
The results of operations for the three months ended March 31, 1995 and 1994 are
not necessarily indicative of the results to be expected for the full year.
2. Transactions with Related Parties
(a) An affiliate of NPI, Inc. received reimbursement of administrative
expenses amounting to $36,000 during each of the three month periods ended March
31, 1995 and 1994, respectively. These reimbursements are included in general
and administrative expenses.
(b) An affiliate of NPI, Inc., is entitled to receive 5% of the annual
gross receipts from certain properties it manages. For the three months ended
March 31, 1995 and 1994, affiliates of NPI, Inc. received $98,000 and $30,000,
respectively. These fees are included in operating expenses.
3. Subsequent Event
On April 12, 1995, the Partnership's joint venture partner in Plumtree
Apartments acquired, pursuant to a right of first refusal, Plumtree Apartments
for $12,500,000. After repayment of existing loans and deferred interest of
$4,600,000 and closing expenses and adjustments, net proceeds received by the
joint venture were $7,600,000. The Partnership will retain approximately
$6,100,000 of the $7,600,000 proceeds in accordance with the joint venture
agreement. For financial statement purposes, the sale will result in a gain
of approximately $7,000,000 to be recorded during the six months ended June
30, 1995.
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CENTURY PROPERTIES FUND XV - FORM 10-Q - MARCH 31, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
This item should be read in conjunction with the Consolidated Financial
Statements and other Items contained elsewhere in this Report.
Liquidity and Capital Resources
Registrant's real estate properties consist of three commercial buildings and
four residential apartment complexes. The properties are located in Texas,
California, Georgia, Oregon and Utah. The properties are leased to tenants
subject to leases with original lease terms ranging from six months to one
year for the residential properties and with remaining lease terms currently
ranging up to sixteen years for the commercial properties. Registrant
receives rental income from its properties and is responsible for operating
expenses, administrative expenses, capital improvements and debt service
payments. As of May 1, 1995, eleven of the seventeen properties originally
purchased by Registrant were sold or otherwise disposed. All of Registrant's
properties, except for Summerhill Apartments, Preston Creek Apartments and
Phoenix Business Park, generated positive cash flow during the three months
ended March 31, 1995. Preston Creek Apartments and Phoenix Business Park
experienced negative cash flow due to large fixed asset additions in
connection with renovation projects.
Registrant uses working capital reserves provided from any undistributed cash
flow from operations, sales and refinancing proceeds as its primary source of
liquidity. In order to preserve working capital reserves required for
necessary capital improvements to properties, primarily at Preston Creek
Apartments, and provide resources for potential refinancing of properties with
balloon payments (with maturity dates beginning in September 1995), cash
distributions from operations remained suspended for the first quarter of 1995
and will remain suspended in the foreseeable future. It is anticipated,
however, that Registrant will distribute all or a substantial portion of the
proceeds from the sale of Plumtree Apartments to the partners.
The level of liquidity based upon cash and cash equivalents experienced a
$13,000 increase at March 31, 1995, as compared to December 31, 1994.
Registrant's $726,000 of net cash provided by operating activities was
substantially offset by $515,000 of cash used for improvements to real estate
(investing activities) and $198,000 of cash used in financing activities.
Cash used in financing activities consisted of $168,000 of cash used for
mortgage principal payments and $30,000 of cash distributed to the joint
venture partner. Registrant is performing major renovation projects at Preston
Creek Apartments and Phoenix Business Park to enhance the properties value.
The cash required to complete these renovations is being provided by working
capital reserves. All other increases (decreases) in certain assets and
liabilities are the result of the timing of receipt and payment of various
operating activities.
Working capital reserves are invested in a money market account, United States
Treasury bills or in repurchase agreements secured by United States Treasury
obligations. The Managing General Partner believes that, if market conditions
remain relatively stable, cash flow from operations, when combined with
working capital reserves, will be sufficient to fund required capital
improvements and regular debt service payments (excluding balloon payments)
during the remainder of 1995 and the foreseeable future.
On April 12, 1995, Registrant's joint venture partner in Plumtree Apartments
acquired, pursuant to a right of first refusal, Plumtree Apartments for
$12,500,000. After repayment of existing loans and deferred interest of
$4,600,000 and closing expenses and adjustments, net proceeds received by the
joint venture were $7,600,000. Registrant will retain approximately
$6,100,000 of the $7,600,000 proceeds
6 of 11
CENTURY PROPERTIES FUND XV - FORM 10-Q - MARCH 31, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Liquidity and Capital Resources (Continued)
in accordance with the joint venture agreement. For financial statement
purposes, the sale will result in a gain of approximately $7,000,000 to be
recorded during the six months ended June 30, 1995 (see Item 1, Note 3).
Registrant will distribute all or a substantial portion of the proceeds from
the sale of Plumtree Apartments to the partners.
Registrant has a balloon payment of $2,082,000 on Northbank Complex due in
September 1995. Registrant will attempt to extend the due date of this loan
or find replacement financing. Registrant believes that based on the
operations of this property, refinancing can be secured in an amount adequate
to replace the maturing debt. Although management is confident that the loan
can be replaced, if the loan is not refinanced or extended and the property
is not sold, Registrant could lose this property through foreclosure. In that
case, Registrant would record a loss for financial statement purposes of
approximately $1,400,000.
Pursuant to the terms of a Settlement Agreement entered into in connection
with the Ruben and Andrews actions, DeForest Ventures I L.P. will make a
tender offer for an aggregate number of units of Registrant (including the
units purchased in the initial tender) constituting up to 49% of the total
number of units of Registrant at a price equal to the initial tender price
plus 15% less attorney's fees and expenses. In addition, pursuant to the
terms of the proposed settlement, the Managing General Partner will agree to
provide Registrant a credit line of $150,000 per property, borrowings under
which would bear interest at the lesser of prime plus 1% or the rate permitted
by the Partnership Agreement of Registrant. A hearing for final approval of
the settlement is scheduled for May 19, 1995. See Part II - Other
Information, "Item 1 - Legal Proceedings". If the settlement receives final
Court approval, it is expected that the tender offer will commence on or about
June 19, 1995. The Managing General Partner believes that the settlement will
not have an adverse effect on Registrant.
At this time, it appears that the investment objective of capital growth will
not be attained and that investors will not receive a return of all of their
invested capital. The extent to which invested capital is returned to
investors is dependent upon the performance of Registrant's properties and the
markets in which such properties are located and on the sales price of the
remaining properties. In this regard, it is anticipated at this time that
remaining properties will be held longer than originally expected. The ability
to hold and operate these properties is dependent on Registrant's ability to
obtain refinancing or debt modification as required.
Real Estate Market
The national real estate market has suffered from the effects of the real
estate recession including, but not limited to, a downward trend in market
values of existing properties. In addition, the bailout of the savings and
loan associations and sales of foreclosed properties by auction reduced market
values and caused a further restriction on the ability to obtain credit. As a
result, Registrant's ability to refinance or sell its properties may be
restricted. These factors caused a decline in market property values and
serve to reduce market rental rates and/or sales prices. Compounding these
difficulties for residential properties have been relatively low interest
rates, which encourage existing and potential residential tenants to purchase
homes. In addition, there has been a significant decline nationally in new
household
7 of 11
CENTURY PROPERTIES FUND XV - FORM 10-Q - MARCH 31, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Real Estate Market (Continued)
formation. Despite the above, management anticipates that increases in
revenue will generally exceed increases in expenses during the remainder of
1995. Furthermore, management believes that the emergence of new
institutional purchasers, including real estate investment trusts and
insurance companies, should create a more favorable market value for
Registrant's properties in the future.
Results of Operations
Three Months Ended March 31, 1995 vs. March 31, 1994
Operating results, before minority interest in joint venture's operations,
improved by $315,000 for the three months ended March 31, 1995, as compared to
1994, due to an increase in revenues of $245,000 and a decrease in expenses of
$70,000.
Revenues increased by $245,000 due to increases in rental revenues of $241,000
and interest income of $4,000. Rental revenues increased primarily due to
increased rental rates at Registrant's properties. Occupancy increased at
Summerhill, decreased at Phoenix Business Park and remained relatively
constant at all of the remaining properties. Interest income increased
primarily due to the effect of higher interest rates.
Expenses decreased by $70,000 for the three months ended March 31, 1995, as
compared to 1994, due to decreases in general and administrative expenses of
$73,000 and interest expense of $20,000, which were only partially offset by
an increase in operating expenses of $23,000. General and administrative
expenses decreased due to a reduction in asset management costs. Interest
expense decreased due to the modification obtained in September 1994 on the
mortgage encumbering the Phoenix Business Park property along with the
amortization of mortgage principal balances. Operating expenses increased due
to increased repairs and maintenance, primarily at Preston Creek, Summerhill
and Plumtree Apartments. Depreciation expense remained constant.
Properties
A description of the properties in which Registrant has an ownership interest
during the period covered by this Report, along with the occupancy data,
follows:
CENTURY PROPERTIES FUND XV
OCCUPANCY SUMMARY
For the Quarters Ended March 31, 1995 and 1994
Average
Date of Occupancy Rate (%)
Name and Location Size Type Purchase 1995 1994
- ----------------- ---- ---- -------- ------------------
Lakeside Place Apartments 734 Apartment 12/80 94 93
Houston, Texas units Building
8 of 11
CENTURY PROPERTIES FUND XV - FORM 10-Q - MARCH 31, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Properties (Continued)
Average
Date of Occupancy Rate (%)
Name and Location Size Type Purchase 1995 1994
- ----------------- ---- ---- -------- ------------------
Plumtree Apartments (1) 336 Apartment 03/81 97 97
Midvale, Utah units Building
Summerhill Apartments 240 Apartment 08/81 96 90
Dallas, Texas units Building
Preston Creek Apartments 228 Apartment 08/81 96 96
Dallas, Texas units Building
Farmer's Lane Plaza 94,000 Shopping 09/81 96 96
Santa Rosa, California sq.ft. Center
Northbank Complex 56,000 Office 12/81 94 94
Eugene, Oregon sq.ft. Building &
Restaurant
Phoenix Business Park 111,000 Business 05/82 85 89
Atlanta, Georgia sq.ft. Park
(1) Registrant has an 80% interest in a general partnership which owns
Plumtree Apartments. This property was sold on April 12, 1995.
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CENTURY PROPERTIES FUND XV - FORM 10-Q - MARCH 31, 1995
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Lawrence M. Whiteside, on behalf of himself and all other similarly situated, v.
Fox Capital Management Corporation, et al., Superior Court of the State of
California, San Mateo County, Case No. 390018 ("Whiteside").
Bonnie L. Ruben and Sidney Finkel, on behalf of themselves and all others
similarly situated, v. DeForest Ventures I L.P., et al., United States District
Court, Northern District of Georgia, Atlanta Division, Case No. 1-94-CV-2983-JEC
("Ruben").
Roger L. Vernon, individually and on behalf of all similarly situated persons v.
DeForest Ventures I L.P., et al., Circuit Court of Cook County, County
Departments, Chancery Division, State of Illinois, Case No. 94CH0100592
("Vernon").
James Andrews, et al., on behalf of themselves and all other similarly situated
v. Fox Capital Management Corporation, et al., United States District Court,
Northern District of Georgia, Atlanta Division, Case No. 1-94-CV-3351-JEC
("Andrews").
On March 16, 1995 the United States District Court for the Northern
District of Georgia, Atlanta Division, entered an order which granted
preliminary approval to a settlement agreement in the Ruben and Andrews
actions, conditionally certified two classes for purpose of settlement, and
authorized the parties to give notice to the classes of the terms of the
proposed settlement. Plaintiffs counsel in the Vernon and Whiteside action
have joined in the Settlement Agreement as well. The two certified classes
constitute all limited partners of Registrant and the eighteen other
affiliated partnerships who either tendered their units in connection with the
October tender offers or continue to hold their units in Registrant and the
other affiliated partnerships. Pursuant to the terms of the proposed
settlement, which are described in the notice sent to the class members in
March 1995, (and more fully described in the Amended Stipulation of Settlement
submitted to the court on March 14, 1995) all claims which either were made or
could have been asserted in any of the class actions would be dismissed with
prejudice and/or released. In consideration for the dismissal and/or release
of such claims, among other things, DeForest I would pay to each unit holder
who tendered their units in Registrant an amount equal to 15% of the original
tender offer price less attorney's fees and expenses. In addition, DeForest I
will commence a second tender offer for an aggregate number of units of
Registrant (including the units purchased in the initial tender) constituting
up to 49% of the total number of units of Registrant at a price equal to the
initial tender price plus 15% less attorney's fees and expenses. Furthermore,
under the terms of the proposed settlement, the Managing General Partner would
agree, among other things, to provide Registrant a credit line of $150,000 per
property which would bear interest at the lesser of prime rate plus 1% and the
rate permitted under the partnership agreement of Registrant. A hearing on
the final approval of the settlement is scheduled for May 19, 1995.
Item 6. Exhibits and Reports on Form 8-K
(a) Reports on Form 8-K:
No reports on Form 8-K were required to be filed during the period; however, on
April 15, 1995, a Current Report on Form 8-K was filed with the Securities and
Exchange Commission to disclose the sale of Plumtree Apartments.
10 of 11
CENTURY PROPERTIES FUND XV - FORM 10-Q - MARCH 31, 1995
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CENTURY PROPERTIES FUND XV
By: FOX CAPITAL MANAGEMENT CORPORATION,
A General Partner
/S/ARTHUR N. QUELER
---------------------------------------
ARTHUR N. QUELER
Secretary/Treasurer and Director
(Principal Financial Officer)
11 of 11
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The schedule contains summary financial information extracted from Century
Properties Fund XV and is qualified in its entirety by reference to such
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,619,000
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<OTHER-SE> 12,974,000
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<TOTAL-COSTS> 2,188,000
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