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 March 31, 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)
March 31, 1998
Assets
Cash and cash equivalents $ 3,522
Receivables and deposits 441
Restricted escrows 226
Other assets 323
Investment properties:
Land $ 5,766
Buildings and related personal property 34,182
39,948
Accumulated depreciation (18,883) 21,065
$ 25,577
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 71
Tenant security deposit liabilities 87
Accrued property taxes 193
Other liabilities 255
Mortgage notes payable 18,993
Partners' Capital (Deficit):
Limited partners' (89,980 units issued and
outstanding) $ 7,094
General partners' (1,116) 5,978
$ 25,577
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
March 31,
1998 1997
Revenues:
Rental income $ 1,830 $ 2,055
Other income 94 114
Gain on sale of property -- 1
Total revenue 1,924 2,170
Expenses:
Operating 650 961
General and administrative 75 51
Depreciation 324 395
Interest 429 527
Property taxes 152 230
Total expenses 1,630 2,164
Income before extraordinary loss 294 6
Extraordinary loss on early extinguishment
of debt -- (233)
Net income (loss) $ 294 $ (227)
Net income (loss) allocated to general partners (2%) $ 6 $ (5)
Net income (loss) allocated to limited partners (98%) 288 (222)
$ 294 $ (227)
Net income (loss) per limited partnership
unit:
Income before extraordinary loss $ 3.20 $ .07
Extraordinary loss on early extinguishment
of debt -- (2.54)
Net income (loss) per limited partnership
unit $ 3.20 $ (2.47)
Distribution per limited partnership unit $ 16.34 $ --
See Accompanying Notes to Consolidated Financial Statements
c) CENTURY PROPERTIES FUND XV
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited Total
Units Partners Partners Capital
<S> <C> <C> <C> <C>
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 -- (30) (1,470) (1,500)
Net income for the three months
ended March 31, 1998 -- 6 288 294
Partners' (deficit) capital at
March 31, 1998 89,980 $(1,116) $ 7,094 $ 5,978
<FN>
See Accompanying Notes to Consolidated Financial Statements
</FN>
</TABLE>
d)
CENTURY PROPERTIES FUND XV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
1998 1997
Cash flows from operating activities:
Net income (loss) $ 294 $ (227)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation 324 395
Amortization of loan costs and leasing commissions (2) 22
Gain on disposal of property -- (1)
Extraordinary loss on early extinguishment of debt -- 233
Change in accounts:
Receivables and deposits 246 390
Other assets 36 41
Accounts payable (30) (203)
Tenant security deposit liabilities (5) (34)
Accrued property taxes (317) (322)
Other liabilities (1) (25)
Net cash provided by operating activities 545 269
Cash flows from investing activities:
Net deposits to restricted escrows (41) (4)
Property improvements and replacements (64) (214)
Net proceeds from the sale of property -- 5,203
Net cash (used in) provided by investing
activities (105) 4,985
Cash flows from financing activities:
Payments on mortgage notes principal (30) (62)
Repayment of mortgage note payable -- (2,578)
Debt extinguishment costs -- (211)
Loan costs paid -- (27)
Distributions to partners (1,500) --
Net cash used in financing activities (1,530) (2,878)
Net (decrease) increase in cash and cash equivalents (1,090) 2,376
Cash and cash equivalents at beginning of period 4,612 999
Cash and cash equivalents at end of period $ 3,522 $ 3,375
Supplemental information:
Cash paid for interest $ 431 $ 520
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 month period ended March 31,
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
three month periods ended March 31, 1998 and 1997 (in thousands):
1998 1997
Property management fees (included in operating
expenses) $ 95 $ 105
Reimbursement for services of affiliates, including
approximately $1,000 and $6,000 in construction
services reimbursements in 1998 and 1997,
respectively (included in operating
and general and administrative expenses) 38 35
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 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. 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
the third quarter 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.
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 three month periods ended March 31, 1998 and
1997:
Average
Occupancy
Property 1998 1997
Lakeside Place Apartments (1) 98% 92%
Houston, Texas
Preston Creek Apartments (2) 87% 95%
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 $294,000 for the three
month period ended March 31, 1998, versus a net loss of approximately $227,000
for the corresponding period in 1997. The increase in net income is due
partially to the recognition of an extraordinary loss on the early
extinguishment of debt of approximately $233,000 related to the sale of Phoenix
Business Park in January, 1997. Included in net income for the three months
ended March 31, 1997 was approximately $2,000 of net income exclusive of
extraordinary items for two properties which were sold in 1997; Phoenix Business
Park (noted below) and Summerhill Apartments, which was sold in September, 1997.
For the remaining properties, Lakeside Apartments and Preston Creek Apartments,
total revenues increased approximately $118,000 and total expenses decreased
approximately $186,000 for the three month period ended March 31, 1998, as
compared to the corresponding period in 1997. The increase in total revenue is
primarily due to increases in rental income. Rental income increased primarily
due to the increase in occupancy at Lakeside Apartments as well as an increase
in rental rates at both properties. The increase in rental revenue was
partially offset by the decrease in occupancy at Preston Creek Apartments. The
decrease in total expenses is primarily due to a decrease in operating expenses.
Operating expenses decreased primarily due to decreases in property and
maintenance expenses. The decrease in property expenses is primarily due to
decreases in maintenance salaries and administrative unit expenses at Lakeside
Apartments and decreases in administrative salaries and utilities at Preston
Creek Apartments. The decrease in maintenance expenses is primarily due to
exterior and interior painting and interior building improvements in 1997 at
Lakeside Apartments. These decreases in operating expenses were partially
offset by an increase in general and administrative expense primarily due to
increases in license fees and tax and accounting services.
The amount of major repairs and maintenance for the Partnership's remaining
properties included in operating expenses for the period ended March 31, 1998,
is not significant. Included in operating expenses for the period ended March
31, 1997, for the Partnership's remaining properties is approximately $47,000 in
major repairs and maintenance comprised primarily of the improvements at
Lakeside Apartments discussed above.
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.
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 March 31, 1998, the Partnership held cash and cash equivalents of
approximately $3,522,000, compared to approximately $3,375,000 at March 31,
1997. The decrease in cash and cash equivalents was approximately $1,090,000 for
the period ended March 31, 1998, versus an increase of approximately $2,376,000
for the corresponding period in 1997. Net cash provided by operations increased
primarily due to the increase in income before extraordinary loss on early
extinguishment of debt. Also contributing to the increase in net cash provided
by operations was the decrease in cash used for accounts payable, due to the
change in the timing of payments. Net cash used in investing activities
increased primarily as a result of the absence of net proceeds associated with
the sale of Phoenix Business Park during the first quarter of 1997 and an
increase in net deposits to restricted escrows. Partially offsetting the
increase in net cash used by investing activities was a decrease in property
improvements and replacements. Net cash used in financing activities decreased
due to the repayment of the mortgage note and the debt extinguishment costs
associated with the sale of Phoenix Business Park in 1997 partially offset by
the cash distribution paid to the partners during the first quarter of 1998.
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 $18,993,000 is amortized over varying
periods with maturity dates of July 2001 and November 2003. Future cash
distributions will depend on the levels of cash generated from operations,
property sales and the availability of cash reserves. 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. The Managing General Partner anticipates making
a distribution during the second quarter of 1998. No distribution was made in
the first quarter of 1997.
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 to acquire limited partnership units, the management of partnerships
by Insignia affiliates as well as a recently announced agreement between
Insignia and Apartment Investment and Management Company. The complaint seeks
monetary damages and equitable relief, including judicial dissolution of the
Partnership. The Managing General Partner was only recently served with the
complaint which it believes to be without merit, and intends to vigorously
defend 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 March 31, 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: May 12, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Century Properties Fund XV 1998 First Quarter 10-QSB and is qualified in
its entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000314690
<NAME> CENTURY PROPERTIES FUND XV
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 3,522
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 39,948
<DEPRECIATION> 18,883
<TOTAL-ASSETS> 25,577
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 18,993
0
0
<COMMON> 0
<OTHER-SE> 5,978
<TOTAL-LIABILITY-AND-EQUITY> 25,577
<SALES> 0
<TOTAL-REVENUES> 1,924
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,201
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 429
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 294
<EPS-PRIMARY> 3.20<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
