FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT
UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY OR TRANSITIONAL REPORT
U.S. Securities And Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from.........to.........
Commission file number 0-9680
CENTURY PROPERTIES FUND XV
(Exact name of small business issuer as specified in its charter)
California 94-2625577
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
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 .
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
CENTURY PROPERTIES FUND XV
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, 1998
Assets
Cash and cash equivalents $ 2,507
Receivables and deposits 673
Restricted escrows 192
Other assets 285
Investment properties:
Land $ 5,766
Buildings and related personal property 34,340
40,106
Accumulated depreciation (19,212) 20,894
$ 24,551
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 116
Tenant security deposit liabilities 82
Accrued property taxes 385
Other liabilities 282
Mortgage notes payable 18,962
Partners' Capital (Deficit):
Limited partners' (89,980 units issued and
outstanding) $ 5,865
General partners' (1,141) 4,724
$ 24,551
See Accompanying Notes to Consolidated Financial Statements
b)
CENTURY PROPERTIES FUND XV
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
Revenues:
Rental income $ 1,882 $ 2,043 $ 3,712 $ 4,098
Other income 107 101 201 215
Gain on sale of property -- -- -- 1
Total revenues 1,989 2,144 3,913 4,314
Expenses:
Operating 711 1,051 1,361 2,012
General and administrative 65 95 140 146
Depreciation 329 386 653 781
Interest 449 518 878 1,045
Property taxes 193 224 345 454
Total expenses 1,747 2,274 3,377 4,438
Income (loss) before
extraordinary loss 242 (130) 536 (124)
Extraordinary loss on early
extinguishment of debt -- -- -- (233)
Net income (loss) $ 242 $ (130) $ 536 $ (357)
Net income (loss) allocated
to general partners $ 5 $ (2) $ 11 $ (7)
Net income (loss) allocated
to limited partners 237 (128) 525 (350)
$ 242 $ (130) $ 536 $ (357)
Net income (loss) per limited
partnership unit:
Income (loss) before
extraordinary loss $ 2.63 $ (1.42) $ 5.83 $ (1.35)
Extraordinary loss on early
extinguishment of debt -- -- -- (2.54)
Net income (loss) per limited
partnership unit $ 2.63 $ (1.42) $ 5.83 $ (3.89)
Distribution per limited
partnership unit $ 16.29 $ -- $ 32.63 $ --
See Accompanying Notes to Consolidated Financial Statements
c)
CENTURY PROPERTIES FUND XV
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 89,980 $ -- $89,980 $89,980
Partners' (deficit) capital
at December 31, 1997 89,980 $(1,092) $ 8,276 $ 7,184
Distributions to partners -- (60) (2,936) (2,996)
Net income for the six months
ended June 30, 1998 -- 11 525 536
Partners' (deficit) capital
at June 30, 1998 89,980 $(1,141) $ 5,865 $ 4,724
See Accompanying Notes to Consolidated Financial Statements
d)
CENTURY PROPERTIES FUND XV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
1998 1997
Cash flows from operating activities:
Net income (loss) $ 536 $ (357)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation 653 781
Amortization of loan costs and leasing commissions 17 42
Gain on sale of property -- (1)
Loss on disposal of property -- 18
Extraordinary loss on early extinguishment of debt -- 233
Change in accounts:
Receivables and deposits 14 417
Other assets 55 (74)
Accounts payable 15 (217)
Tenant security deposit liabilities (10) (37)
Accrued property taxes (125) (98)
Other liabilities 26 (15)
Net cash provided by operating activities 1,181 692
Cash flows from investing activities:
Net (deposits to) withdrawals from restricted escrows (7) 238
Property improvements and replacements (222) (433)
Net proceeds from the sale of property -- 5,203
Net cash (used in) provided by investing
activities (229) 5,008
Cash flows from financing activities:
Payments on mortgage notes payable (61) (125)
Repayment of mortgage note payable -- (2,578)
Debt extinguishment costs -- (211)
Loan costs paid -- (27)
Distributions to partners (2,996) --
Net cash used in financing activities (3,057) (2,941)
Net (decrease) increase in cash and cash equivalents (2,105) 2,759
Cash and cash equivalents at beginning of period 4,612 999
Cash and cash equivalents at end of period $ 2,507 $ 3,758
Supplemental disclosure of cash flow information:
Cash paid for interest $ 861 $ 1,018
See Accompanying Notes to Consolidated Financial Statements
e)
CENTURY PROPERTIES FUND XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Century
Properties Fund XV (the "Partnership") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of Fox Capital Management Corporation ("FCMC" or the "Managing
General Partner"), a California corporation, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and six month periods ended June
30, 1998, are not necessarily indicative of the results that may be expected for
the fiscal year ending December 31, 1998. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Partnership's annual report on Form 10-KSB for the year ended December 31, 1997.
Certain reclassifications have been made to the 1997 information to conform to
the 1998 presentation.
NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES
FCMC and Fox Realty Investors ("FRI"), a California general partnership, are the
co-general partners of the Partnership. NPI Equity Investments II, Inc., a
Florida corporation ("NPI Equity"), is the managing general partner of FRI.
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 Managing General Partner and NPI Equity are wholly-
owned by Insignia Properties Trust ("IPT"), which is an affiliate of Insignia
Financial Group, Inc. ("Insignia"). 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 Insignia were incurred during the
six month periods ended June 30, 1998 and 1997 (in thousands):
1998 1997
Property management fees (included in operating
expenses) $ 192 $ 212
Reimbursement for services of affiliates
(included in general and administrative expenses) 68 78
In addition, approximately $9,000 and $17,000 of construction oversight
reimbursements were paid to an affiliate of the Managing General Partner during
the six months ended June 30, 1998 and 1997, respectively. These amounts are
included in investment properties and operating expenses.
For the period from January 1, 1997 to August 31, 1997, the Partnership insured
its properties under a master policy through an agency affiliated with the
Managing General Partner but with an insurer unaffiliated with the Managing
General Partner. An affiliate of the Managing General Partner acquired, in the
acquisition of a business, certain financial obligations from an insurance
agency which was later acquired by the agent who placed the master policy. The
agent assumed the financial obligations to the affiliate of the Managing General
Partner which received payments on these obligations from the agent. The amount
of the Partnership's insurance premiums that accrued to the benefit of the
affiliate of the Managing General Partner by virtue of the agent's obligations
was not significant.
In December 1997, Insignia affiliates (the "Purchaser") commenced tender offers
for limited partnership interests in ten real estate limited partnerships
(including the Partnership) in which various Insignia affiliates act as general
partner. The Purchaser offered to purchase up to 36,000 of the outstanding
units of limited partnership interest in the Partnership, at $120.00 per Unit,
net to the seller in cash, upon the terms and subject to the conditions set
forth in the Offer to Purchase dated December 17, 1997 (the "Offer to Purchase")
and the related Assignment of Partnership Interest attached as Exhibits (a)(1)
and (a)(2), respectively, to the Tender Offer Statement on Schedule 14D-1
originally filed with the Securities and Exchange Commission on December 17,
1997. Because of the existing and potential future conflicts of interest
(described in the Partnership's Statements on Schedule 14D-9 filed with the
Securities and Exchange Commission), neither the Partnership nor the Managing
General Partner expressed any opinion as to the Offer to Purchase and made no
recommendation as to whether unit holders should tender their units in response
to the Offer to Purchase. In addition, because of these conflicts of interest,
the manner in which the Purchaser votes its limited partner interests in the
Partnership may not always be consistent with the best interests of the other
limited partners. As a result of the tender offer, the Purchaser acquired 4,222
of the outstanding limited partnership units of the Partnership as of January
30, 1998.
On March 17, 1998, Insignia entered into an agreement to merge its national
residential property management operations, and its controlling interest in IPT,
with Apartment Investment and Management Company ("AIMCO"), a publicly traded
real estate investment trust. The closing, which is anticipated to happen in
September or October of 1998, is subject to customary conditions, including
government approvals and the approval of Insignia's shareholders. If the
closing occurs, AIMCO will then control the Managing General Partner of the
Partnership.
NOTE C - DISPOSITION OF RENTAL PROPERTIES
On January 15, 1997, the Partnership sold Phoenix Business Park, located in
Atlanta, Georgia, to an unaffiliated third party for a contract price of
$5,600,000. After payment of the mortgage note payable, closing costs and
related expenses, the Partnership received proceeds of approximately $2,414,000.
The carrying value of the investment property at the time of the sale was
approximately $5,031,000. For financial statement purposes, the sale resulted
in a gain of approximately $1,000. For financial statement purposes, the payment
of the mortgage note payable resulted in an extraordinary loss on early
extinguishment of debt of approximately $233,000.
NOTE D - DISTRIBUTIONS
During the three month period ended March 31, 1998, the Partnership distributed
approximately $1,470,000 ($16.34 per limited partnership unit) to the limited
partners and $30,000 to the general partners from the proceeds from the sale of
Summerhill Apartments in September 1997. During the three month period ended
June 30, 1998, the Partnership distributed approximately $1,466,000 ($16.29 per
limited partnership unit) to the limited partners and approximately $30,000 to
the general partners from the remaining proceeds from the sale of Summerhill
Apartments.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's remaining investment properties consist of two residential
apartment complexes. The following table sets forth the average occupancy of
the properties for each of the six month periods ended June 30, 1998 and 1997:
Average
Occupancy
Property 1998 1997
Lakeside Place Apartments (1) 98% 94%
Houston, Texas
Preston Creek Apartments (2) 90% 94%
Dallas, Texas
(1)The Managing General Partner attributes the increase in occupancy at
Lakeside Place Apartments to an overall growth in the Houston, Texas,
market.
(2)The Managing General Partner attributes the decrease in occupancy at Preston
Creek Apartments to construction of new apartment complexes in the Dallas
sub-market resulting in an increased supply of available rental units.
The Partnership reported net income of approximately $242,000 and $536,000 for
the three and six month periods ended June 30, 1998, versus net loss of
approximately $130,000 and $357,000 for the corresponding periods in 1997. The
decreases in rental income and operating, depreciation, interest, and property
tax expenses are primarily due to the sales of two investment properties in
1997. Phoenix Business Park was sold in January 1997 and Summerhill Apartments
was sold in September 1997 (see discussion below). General and administrative
expenses decreased as a result of fewer expense reimbursements being paid to the
Managing General Partner.
For the remaining properties, Lakeside Apartments and Preston Creek Apartments,
rental income increased approximately $260,000 while operating expenses
decreased approximately $300,000 for the six months ended June 30, 1998, as
compared to the same period in 1997. Rental revenue increased due to an
increase in occupancy and average rental rates at Lakeside Apartments.
Operating expenses decreased primarily from decreases in maintenance and
property expenses. The decrease in maintenance expenses can be attributed to the
completion of property improvement projects and upgrades to Lakeside Apartments
in 1997. Property expenses decreased primarily due to decreases in on-site
employee expenses at Lakeside Apartments including salaries and related
benefits.
Included in operating expenses of the remaining properties for the six months
ended June 30, 1998, was approximately $37,000 of major repairs and maintenance
comprised primarily of parking lot repairs, major landscaping and exterior
building improvements. For the six months ended June 30, 1997, operating
expenses of the remaining properties included approximately $86,000 of major
repairs and maintenance including exterior painting, major landscaping and
parking lot repairs.
On January 15, 1997, the Partnership sold Phoenix Business Park, located in
Atlanta, Georgia, to an unrelated third party for a contract price of
$5,600,000. After payment of the mortgage note payable, closing costs and
related expenses, the Partnership received proceeds of approximately $2,414,000.
The carrying value of the investment property at the time of the sale was
approximately $5,031,000. For financial statement purposes, the sale resulted
in a gain of approximately $1,000. For financial statement purposes, the payment
of the mortgage note payable resulted in an extraordinary loss on early
extinguishment of debt of approximately $233,000.
On September 24, 1997, the Partnership sold Summerhill Apartments, located in
Dallas, Texas, to an unrelated third party for a contract price of $6,150,000.
After payment of the mortgage note payable, closing costs and related expenses,
the Partnership received proceeds of approximately $2,996,000. The carrying
value of the investment property at the time of the sale was approximately
$4,148,000. For financial statement purposes, the sale resulted in a gain of
approximately $1,843,000, and the payment of the mortgage note payable resulted
in an extraordinary loss on early extinguishment of debt of approximately
$260,000.
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.
At June 30, 1998, the Partnership held cash and cash equivalents of
approximately $2,507,000, compared to approximately $3,758,000 at June 30, 1997.
The decrease in cash and cash equivalents was approximately $2,105,000 for the
six month period ended June 30, 1998, versus an increase of approximately
$2,759,000 for the corresponding period in 1997. Net cash provided by operating
activities increased primarily due to the increase in rental income and the
decrease in operating expense at the remaining properties as discussed above.
Also contributing to the increase in net cash provided by operating activities
was the decrease in cash used for accounts payable, due to the timing of
payments. Partially offsetting these changes was a decrease in cash provided by
receivables and deposits primarily due to the timings of withdrawals from tax
escrows. Net cash used in investing activities increased primarily as a result
of net proceeds from the sale of Phoenix Business Park being included in 1997
investing activities. Net cash used in financing activities increased due to
the cash distributions paid to the partners during the first half of 1998.
During the six months ended June 30, 1997, cash used in financing activities
included the repayment of the mortgage note payable and debt extinguishment
costs associated with the sale of Phoenix Business Park.
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. Such assets are currently
thought to be sufficient for any near-term needs of the Partnership. The
mortgage indebtedness of approximately $18,962,000 is amortized over varying
periods with maturity dates of July 2001 and November 2003. The Partnership
distributed approximately $2,936,000 ($32.63 per limited partnership unit) to
the limited partners and approximately $60,000 to the general partners during
the six months ended June 30, 1998. This amount represents the net proceeds
from the sale of Summerhill Apartments in 1997. No distributions were made
during the six months ended June 30, 1997. Future cash distributions will depend
on the levels of cash generated from operations, property sales and the
availability of cash reserves.
Year 2000
The Partnership is dependent upon the Managing General Partner and Insignia for
management and administrative services. Insignia has completed an assessment
and will have to modify or replace portions of its software so that its computer
systems will function properly with respect to dates in the year 2000 and
thereafter (the "Year 2000 Issue"). The project is estimated to be completed
not later than December 31, 1998, which is prior to any anticipated impact on
its operating systems. The Managing General Partner believes that with
modifications to existing software and conversions to new software, the Year
2000 Issue will not pose significant operational problems for its computer
systems. However, if such modifications and conversions are not made, or are not
completed timely, the Year 2000 Issue could have a material impact on the
operations of the Partnership.
Other
Certain items discussed in this quarterly report may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (the "Reform Act") and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Partnership to be materially different from any future
results, performance or achievements expressed or implied by such forward-
looking statements. Such forward-looking statements speak only as of the date
of this quarterly report. The Partnership expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in the Partnership's
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
PART II - OTHER INFORMATION
ITEM 1. 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 complaint 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 and its affiliates of
interests in certain general partner entities, past tender offers by Insignia
affiliates as well as a recently announced agreement between Insignia and AIMCO.
The complaint seeks monetary damages and equitable relief, including judicial
dissolution of the Partnership. The Managing General Partner believes the
action to be without merit, and intends to vigorously defend it. On June 24,
1998, the Managing General Partner filed a motion seeking dismissal of the
action.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature. The Managing General Partner believes that all such
pending or outstanding litigation will be resolved without a material adverse
effect upon the business, financial condition or operations of the Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report.
b) Reports on Form 8-K: None filed during the quarter ended June 30, 1998.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CENTURY PROPERTIES FUND XV
By: FOX CAPITAL MANAGEMENT CORPORATION
Its Managing General Partner
By: /s/William H. Jarrard, Jr.
William H. Jarrard, Jr.
President and Director
By: /s/Ronald Uretta
Ronald Uretta
Vice President and Treasurer
Date: August 5, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Century Properties Fund XV 1998 Second Quarter 10-QSB and is qualified in
its entirety by reference to such 10-QSB filing.
</LEGEND>
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<NAME> CENTURY PROPERTIES FUND XV
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
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<RECEIVABLES> 0
<ALLOWANCES> 0
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<PP&E> 40,106
<DEPRECIATION> 19,212
<TOTAL-ASSETS> 24,551
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 18,962
0
0
<COMMON> 0
<OTHER-SE> 4,724
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