March , 2000
United States
Securities and Exchange Commission
Washington, D.C. 20549
RE: Century Properties Fund XV
Form 10-KSB
File No. 0-9680
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 0-9680
CENTURY PROPERTIES FUND XV
(Name of small business issuer in its charter)
California 94-2625577
(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. $8,017,000
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 XV (the "Partnership" or the "Registrant") was organized
in May 1980 as a California limited partnership under the Uniform Limited
Partnership Act of the California Corporation Code. The general partners are Fox
Capital Management Corporation ("FCMC" or the "Managing General Partner"), a
California corporation, and Fox Realty Investors ("FRI"), a California general
partnership. The Managing General Partner is a subsidiary of Apartment
Investment and Management Company ("AIMCO"). The partnership agreement provides
that the Partnership is to terminate on December 31, 2020 unless terminated
prior to such date.
The Partnership's Registration Statement, filed pursuant to the Securities Act
of 1933 (No. 2-66459), was declared effective by the Securities and Exchange
Commission on May 1, 1980. The Partnership marketed its securities pursuant to
its Prospectus dated May 1, 1980, as revised on May 29, 1980, and thereafter
supplemented (hereinafter the "Prospectus"). This Prospectus was filed with the
Securities and Exchange Commission pursuant to Rule 424 (b) of the Securities
Act of 1933. Beginning in July 1980 through April 1981, the Partnership offered
$90,000,000 in Limited Partnership units and sold units having an initial cost
of $89,980,000. The Managing General Partner purchased 100 limited partnership
units for a 4% interest in the Partnership. Since its initial offering, the
Partnership has not received, nor are limited partners required to make,
additional capital contributions.
The net proceeds of this offering were used to acquire seventeen
income-producing real estate properties. The Partnership's original property
portfolio was geographically diversified with properties acquired in eight
states. The Partnership's acquisition activities were completed in June 1982,
and since then the principal activity of the Partnership has been holding for
investment and ultimately selling its income-producing real estate properties.
In the period from 1986 through January 1992, six office buildings, three
apartment buildings, and one shopping center were sold or otherwise disposed.
The Partnership sold two of its properties in 1995 and an office building in the
first quarter of 1996. The remaining commercial property was sold in January
1997 and an apartment building was sold in the third quarter of 1997. As a
result of these sales, the Partnership currently retains an ownership in two
properties which are located in Houston and Dallas, Texas. See "Item 2.
Description of Properties" for a description of the Partnership's remaining
properties.
The Partnership has no employees. The Managing General Partner is vested with
full authority as to the general management and supervision of the business and
affairs of the Partnership. The limited partners have no right to participate in
the management or conduct of such business and affairs. An affiliate of the
Managing General Partner, provided day-to-day management services to the
Partnership's investment properties for the years ended December 31, 1999 and
1998.
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.
<PAGE>
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.
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.
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.
A further description of the Partnership's business is included in "Management's
Discussion and Analysis or Plan of Operations" 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 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 investment properties:
Date of
Property Purchase Type of Ownership Use
Lakeside Place Apartments 12/80 Fee ownership subject Apartment
Houston, Texas to first mortgage (1) 734 units
Preston Creek Apartments 08/81 Fee ownership subject Apartment
Dallas, Texas to first mortgage. 228 units
(1) 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 Registrant's properties is the gross carrying
value, accumulated depreciation, depreciable life, method of depreciation and
Federal tax basis.
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
(in thousands) (in thousands)
Lakeside Place $31,776 $16,952 5-30 yrs SL $15,564
Preston Creek 9,612 4,292 5-30 yrs SL 2,818
$41,388 $21,244 $18,382
See "Note A" of 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 Registrant's properties.
Principal Principal
Balance At Balance
December 31, Interest Period Maturity Due At
Property 1999 Rate Amortized Date Maturity (2)
(in thousands) (in thousands)
Lakeside Place (3) $14,249 9.60% 30 years 07/01/01 $14,029
Preston Creek 4,500 7.33% (1) 11/01/03 4,500
$18,749 $18,529
(1) Monthly payments of interest only.
(2) See "Item 7. Financial Statements - Note C" for information with respect
to the Partnership's ability to prepay these loans and other specific
details about these loans.
(3) On February 4, 2000, the Partnership refinanced the mortgage encumbering
Lakeside Place Apartments. The interest rate on the new mortgage is 8.34%
as compared to 9.60% on the old mortgage. The refinancing replaced
indebtedness of approximately $14,249,000 with a new mortgage in the
amount of $23,700,000. Payments of approximately $203,000 are due on the
first day of each month until the loan matures on March 1, 2020. The prior
note was scheduled to mature on July 1, 2001. The lender also required a
repair escrow of approximately $264,000 to be established. The Partnership
recognized a loss on the early extinguishment of debt of approximately
$348,000 consisting of the write-off of unamortized loan costs and a
prepayment penalty during the first quarter of 2000.
Rental Rates and Occupancy
Average annual rental rate and occupancy for 1999 and 1998 for each property:
Average Annual Average Annual
Rental Rates Occupancy
(per unit)
Property 1999 1998 1999 1998
Lakeside Place (1) $8,653 $8,248 94% 98%
Preston Creek (2) 8,444 8,153 95% 92%
(1) The Managing General Partner attributes the decrease in occupancy to an
overbuilt local market.
(2) The Managing General Partner attributes the increase to an improved local
economy.
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. Both of the properties of the Partnership are subject to
competition from other apartment complexes in the area. The Managing General
Partner believes that both of the properties are adequately insured. Each
property is an apartment complex which leases units for lease terms of one year
or less. No residential tenant leases 10% or more of the available rental space.
Both of the properties are in good physical condition, subject to normal
depreciation and deterioration as is typical for assets of this type and age.
Real Estate Taxes and Rates
Real estate taxes and rates in 1999 for each property were:
1999 1999
Billing Rate
(in thousands)
Lakeside Place $ 614 2.84%
Preston Creek 204 2.58%
Capital Improvements
Lakeside Place Apartments
The Partnership completed approximately $695,000 in capital expenditures at
Lakeside Place Apartments as of December 31, 1999, consisting primarily of
flooring replacements, roof replacements, parking lot enhancements, structural
improvements, and electrical replacements. These improvements were funded from
operations and replacement 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 $220,200. 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.
Preston Creek Apartments
The Partnership completed approximately $227,000 in capital expenditures at
Preston Creek Apartments as of December 31, 1999, consisting primarily of
structural improvements, major landscaping, interior decoration, and flooring
replacements. These improvements were funded from operations and replacement
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 $68,400. 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.
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.
PART II
Item 5. Market for the Partnership's Equity and Related Partner Matters
The Partnership, a publicly-held limited partnership, originally sold 89,980
Limited Partnership Units aggregating $89,980,000. As of December 31, 1999, the
Partnership had 89,980 units outstanding held by 3,646 limited partners of
record. Affiliates of the Managing General Partner owned 54,383.34 units or
60.44% at December 31, 1999. No public trading market has developed for the
Units, and it is not anticipated that such a market will develop in the future.
The following table sets forth the distributions made by the Partnership for the
years ended December 31, 1998 and 1999:
Distributions
Per Limited
Aggregate Partnership Unit
(in thousands)
01/01/98 - 12/31/98 $4,886 (1) $53.21
01/01/99 - 12/31/99 $1,881 (2) $20.48
(1) Consists of $1,890,000 of cash from operations and $2,996,000 of cash from
proceeds of property sale (see "Item 6" for further details).
(2) Consists of $1,350,000 of cash from operations paid in 1999 and cash from
operations of $531,000 declared at December 31, 1999 and paid January 2000
(see "Item 6" for further details).
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 $150,000 was paid during the year ended December
31, 1999, and an additional $59,000 accrued as of December 31, 1999.
Approximately $210,000 was paid during the year ended December 31, 1998. 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,
refinancing, and 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 further distributions to its partners in 2000 or
subsequent periods.
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 54,383.34 limited partnership units in the Partnership representing 60.44%
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.
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 $1,077,000 as compared to $905,000 for the year ended December 31,
1998. The increase in net income for the year ended December 31, 1999 is due to
an increase in total revenues and a decrease in total expenses. Total revenues
increased due to an increase in rental income which was partially offset by a
decrease in other income. The increase in rental income is primarily due to an
increase in average rental rates at both investment properties as well as an
increase in occupancy at Preston Creek Apartments which more than offset the
decrease in occupancy at Lakeside Place. The decrease in other income is
primarily due to a decrease in interest income as a result of lower cash
balances held in interest bearing accounts.
Total expenses decreased for the year ended December 31, 1999 due to a decrease
in operating expenses partially offset by an increase in general and
administrative, depreciation, and property tax expenses. The decrease in
operating expense is primarily due to a decrease in maintenance and property
expenses. The decrease in maintenance expense is primarily due to the completion
of parking lot repairs, roof repairs, and interior building improvements at
Lakeside Place Apartments in 1998. The increase in depreciation expense is
primarily due to the addition of depreciable assets placed into service during
the past twelve months. The increase in property tax expense is due to an
increase in the assessment value of Lakeside Place.
In addition, general and administrative expenses increased for the period ended
December 31, 1999, compared to the same period in 1998, as a result of an
increase in Partnership management fees collected on the distribution of cash
flows from operations during 1999 as compared to 1998. Also contributed to the
increase is an increase in legal costs associated with a litigation settlement
previously disclosed in the Partnership's Form 10-KSB for the year ended
December 31, 1998. Included in general and administrative expenses at both
December 31, 1999 and 1998 are reimbursements to the Managing 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.
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
to increase net income by approximately $44,000 ($0.48 per limited partnership
unit). 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 Registrant, 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 Registrant 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 $1,727,000 compared to approximately $1,143,000 at December 31,
1998. Cash and cash equivalents increased approximately $584,000 from the
Partnership's previous year ended December 31, 1998. The increase is due to
approximately $2,978,000 of cash provided by operating activities which was
partially offset by approximately $895,000 of cash used in investing activities
and approximately $1,499,000 of cash used in financing activities. Cash used in
investing activities consisted of capital improvements partially offset by net
withdrawals from escrow accounts maintained by the mortgage lender. Cash used in
financing activities consisted of payments of principal made on mortgages
encumbering the Registrant's properties and distributions to partners. The
Registrant invests its working capital reserves in a money market account.
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 Registrant 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 upcoming year. The
minimum amount to be budgeted is expected to be approximately $300 per unit or a
total of $288,600 in capital improvements for all of the Partnership's
properties in 2000. 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 properties.
The Registrant's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Registrant. The mortgage
indebtedness of approximately $18,749,000 is amortized over varying periods with
maturity dates of July 2001 and November 2003. The Managing General Partner will
attempt to refinance such indebtedness and/or sell the properties prior to such
maturity dates. If the properties cannot be refinanced or sold for a sufficient
amount, the Registrant will risk losing such properties through foreclosure. On
February 4, 2000, the Partnership refinanced the mortgage encumbering Lakeside
Place Apartments. Interest on the new mortgage is 8.34% as compared to 9.60% on
the old mortgage. The refinancing replaced indebtedness of approximately
$14,249,000 with a new mortgage in the amount of $23,700,000. Payments of
approximately $203,000 are due on the first day of each month until the loan
matures on March 1, 2020. The prior note was scheduled to mature on July 1,
2001. The lender also required a repair escrow of approximately $264,000 to be
established. During the first quarter of 2000 the Partnership recognized a loss
on the early extinguishment of debt of approximately $348,000 consisting of the
write-off of unamortized loan costs and a prepayment penalty.
During the year ended December 31, 1999, the Partnership paid distributions of
approximately $1,350,000 (approximately $1,323,000 to the limited partners or
$14.70 per limited partnership unit) from operations. As of December 31, 1999,
the Partnership declared a distribution of approximately $531,000 (approximately
$520,000 to the limited partners or $5.78 per limited partnership unit) from
operations. This distribution was paid in January 2000. During the year ended
December 31, 1998, the Partnership paid distributions of approximately
$1,890,000 (approximately $1,852,000 to the limited partners or $20.58 per
limited partnership unit) from operations and approximately $2,996,000
(approximately $2,936,000 to the limited partners or $32.63 per limited
partnership unit) from the sale of Summerhill Apartments in 1997. 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,
refinancing, and property sales. The Registrant's distribution policy is
reviewed on a semi-annual basis. There can be no assurance, however, that the
Registrant will generate sufficient funds from operations after required capital
expenditures to permit further distributions to its partners in 2000 or
subsequent periods.
Several tender offers were made by various parties, including affiliates of the
Managing General Partner, during the fiscal years ended December 31, 1999 and
1998. As a result of these and prior tender offers, AIMCO and its affiliates
currently own 54,383.34 limited partnership units in the Partnership
representing 60.44% 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 affected 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 affected 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 XV
LIST OF CONSOLIDATED 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' (Deficit) Capital -
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 XV
We have audited the accompanying consolidated balance sheet of Century
Properties Fund XV as of December 31, 1999, and the related consolidated
statements of operations, changes in partners' (deficit) capital 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 XV 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.
As discussed in Note J to the consolidated financial statements, the Partnership
changed its method of accounting to capitalize the cost of exterior painting and
major landscaping effective January 1, 1999.
/s/ERNST & YOUNG LLP
Greenville, South Carolina
February 25, 2000
<PAGE>
CENTURY PROPERTIES FUND XV
CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)
December 31, 1999
Assets
Cash and cash equivalents $ 1,727
Receivables and deposits 666
Restricted escrows 125
Other assets 227
Investment properties (Notes C and F):
Land $ 5,766
Buildings and personal property 35,622
41,388
Less accumulated depreciation (21,244) 20,144
$ 22,889
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 38
Tenant security deposits payable 65
Accrued property taxes 794
Other liabilities 313
Distribution payable 531
Mortgage notes payable (Note C) 18,749
Partners' (Deficit) Capital
General partners $ (1,188)
Limited partners (89,980 units
issued and outstanding) 3,587 2,399
$ 22,889
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
CENTURY PROPERTIES FUND XV
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended December 31,
1999 1998
Revenues:
Rental income $ 7,709 $ 7,555
Other income 308 379
Total revenues 8,017 7,934
Expenses:
Operating 2,459 2,728
General and administrative 532 460
Depreciation 1,386 1,336
Interest 1,782 1,775
Property taxes 781 730
Total expenses 6,940 7,029
Net income (Note D) $ 1,077 $ 905
Net income allocated to general partners (2%) $ 22 $ 18
Net income allocated to limited partners (98%) 1,055 887
Net income $ 1,077 $ 905
Net income per limited partnership unit $ 11.72 $ 9.86
Distribution per limited partnership unit $ 20.48 $ 53.21
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
CENTURY PROPERTIES FUND XV
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(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 -- (98) (4,788) (4,886)
Net income for the year
ended December 31, 1998 -- 18 887 905
Partners' (deficit) capital at
December 31, 1998 89,980 (1,172) 4,375 3,203
Distributions to partners -- (38) (1,843) (1,881)
Net income for the year
ended December 31, 1999 -- 22 1,055 1,077
Partners' (deficit) capital
at December 31, 1999 89,980 $(1,188) $ 3,587 $ 2,399
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
CENTURY PROPERTIES FUND XV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1999 1998
Cash flows from operating activities:
Net income $ 1,077 $ 905
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 1,386 1,336
Amortization of loan costs 78 56
Loss on disposal of property -- 26
Change in accounts:
Receivables and deposits 407 (386)
Other assets (64) 60
Accounts payable 16 (79)
Tenant security deposit payable (7) (20)
Accrued property taxes 23 261
Other liabilities 62 (5)
Net cash provided by operating activities 2,978 2,154
Cash flows from investing activities:
Property improvements and replacements (922) (645)
Net withdrawals from restricted escrows 27 33
Net cash used in investing activities (895) (612)
Cash flows from financing activities:
Mortgage principal payments (149) (125)
Distributions to partners (1,350) (4,886)
Net cash used in financing activities (1,499) (5,011)
Net increase (decrease) in cash and cash equivalents 584 (3,469)
Cash and cash equivalents at beginning of year 1,143 4,612
Cash and cash equivalents at end of year $ 1,727 $ 1,143
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,820 $ 1,719
Supplemental disclosure of non-cash activity:
Distribution payable $ 531 $ --
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
CENTURY PROPERTIES FUND XV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note A - Organization and Significant Accounting Policies
Organization: Century Properties Fund XV (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
general partners are Fox Capital Management Corporation ("FCMC" or the "Managing
General Partner") and Fox Realty Investors ("FRI"), a California general
partnership. The Managing General Partner is a subsidiary 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, 2020 unless terminated prior to such
date. The Partnership operates two apartment properties located in Texas. The
Partnership was organized in May 1980. Capital contributions of $89,980,000
($1,000 per limited partnership unit) were made by the limited partners.
Principles of Consolidation: The Partnership's financial statements include the
accounts of Century Lakeside Place, LP in which the Partnership owns a 99%
interest. The Partnership has the ability to control the major operating and
financial policies of the partnership. All interpartnership transactions have
been eliminated.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Allocation of Profits, Gains and Losses: Profits, gains and losses of the
Partnership are allocated between general and limited partners in accordance
with the provisions of 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 disclosures 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 instruments 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 amount.
Cash and Cash Equivalents: Includes cash on hand and in banks and money market
accounts. At certain times, the amount of cash deposited at a bank may exceed
the limit on insured deposits.
Depreciation: Depreciation is provided by the straight-line method over the
estimated lives of the apartment properties and related personal property. For
Federal income tax purposes, the accelerated cost recovery method is used (1)
for real property over 15 years for additions prior to March 16, 1984, 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 modified
accelerated cost recovery method is used for depreciation of (1) real property
over 27 1/2 years and (2) personal property additions over 5 years.
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the costs of exterior painting and major landscaping (Note J).
Loan Costs: Loan costs of approximately $550,000, less accumulated amortization
of approximately $385,000, are included in other assets and are being amortized
on a straight-line basis over the life of the loans.
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.
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.
Investment Properties: Investment properties consist of two apartment complexes
and 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. Costs of apartment properties that have
been permanently impaired have been written down to appraised value. No
adjustments for impairment of value were recorded in the years ended December
31, 1999 or 1998.
Replacement Reserve Escrow: The Partnership maintains replacement reserve
escrows at each of its properties to fund replacement, refurbishment or repair
of improvements to the properties pursuant to the mortgage note documents. As of
December 31, 1999, the balance in these accounts is approximately $125,000.
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.
Advertising: The Partnership expenses the costs of advertising as incurred.
Advertising costs of approximately $170,000 and $200,000 for the years ended
December 31, 1999 and 1998, respectively, were charged to operating expense as
incurred.
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 - Mortgage Notes Payable
The principle terms of mortgage notes payable are as follows:
Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Including Interest Maturity Due At
Property 1999 Interest Rate Date Maturity
(in thousands) (in thousands)
Lakeside Place $14,249 $ 126 9.60% 07/01/01 $14,029
Preston Creek 4,500 27 7.33% 11/01/03 4,500
Total $18,749 $ 153 $18,529
The mortgage notes payable are non-recourse and are secured by pledge of the
Partnership's rental properties and by pledge of revenues from the respective
apartment properties. The 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 notes payable subsequent to December
31, 1999 are as follows (in thousands):
2000 $ 141
2001 14,108
2002 --
2003 4,500
$18,749
Amortization of loan costs totaled approximately $78,000 and $56,000 for 1999
and 1998, respectively.
On February 4, 2000, the Partnership refinanced the mortgage encumbering
Lakeside Place Apartments. The interest rate on the new mortgage is 8.34% as
compared to 9.60% on the old mortgage. The refinancing replaced indebtedness of
approximately $14,249,000 with a new mortgage in the amount of $23,700,000.
Payments of approximately $203,000 are due on the first day of each month until
the loan matures on March 1, 2020. The prior note was scheduled to mature on
July 1, 2001. The lender also required a repair escrow of approximately $264,000
to be established. The Partnership recognized a loss on the early extinguishment
of debt of approximately $348,000 consisting of the write-off of unamortized
loan costs and a prepayment penalty during the first quarter of 2000.
Note D - Income Taxes
The Partnership has received a ruling from the Internal Revenue Service that it
will be 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 of reported net income and Federal taxable
income (in thousands, except per unit data):
For the years ended
December 31,
1999 1998
Net income as reported $ 1,077 $ 905
Add (deduct):
Depreciation differences 46 12
Unearned revenue (76) 170
Other 9 40
Federal taxable income $1,056 $ 1,127
Federal taxable income per limited
partnership unit $ 11.50 $ 12.27
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):
1999
Net assets as reported: $ 2,399
Land and buildings 6,254
Accumulated depreciation (8,016)
Deferred sales commission 8,008
Syndication and distribution costs 2,314
Other 161
Net assets - income tax method $11,120
Note E - Transactions with Affiliated Parties
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.
The following payments were made to the Managing General Partner and affiliates
during the twelve month periods ended December 31, 1999 and 1998.
1999 1998
(in thousands)
Property management fees (included in operating
expenses) $403 $391
Reimbursement for services of affiliates (included in
investment properties, operating expenses, and
general and administrative expenses) 178 147
Partnership management fee (included in other liabilities
and general and administrative expenses) 209 210
During the years ended December 31, 1999 and 1998, affiliates of the Managing
General Partner were entitled to receive 5% of gross receipts from both of the
Registrant's properties for providing property management services. The
Registrant paid to such affiliates approximately $403,000 and $391,000 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 $178,000 and
$147,000 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 $209,000 in Partnership management fees were paid
during the year ended December 31, 1999. Approximately $59,000 in a Partnership
management fee was accrued as of December 31, 1999 related to the distribution
of operating cash declared at that time. Approximately $210,000 in a Partnership
management fee was paid during the year ended December 31, 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.
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 54,383.34 limited partnership units in the Partnership representing 60.44%
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.
Note F - Real Estate and Accumulated Depreciation
Initial Cost
To Partnership
(in thousands)
Buildings Net Costs
and Related Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
(in thousands) (in thousands)
Lakeside Place $14,249 $ 3,659 $21,481 $ 6,636
Preston Creek 4,500 2,118 5,793 1,701
Total $18,749 $ 5,777 $27,274 $ 8,337
<TABLE>
<CAPTION>
Gross Amount At Which Carried
At December 31, 1999
(in thousands)
Buildings
and
Personal Accumulated Year of Date Depreciable
Description Land Property Total Depreciation Construction Acquired Life Years
<S> <C> <C> <C> <C> <C> <C> <C>
Lakeside Place $ 3,659 $28,117 $31,776 $16,952 10/76 12/80 5-30 yrs
Preston Creek 2,107 7,505 9,612 4,292 10/79 08/81 5-30 yrs
Total $ 5,766 $35,622 $41,388 $21,244
</TABLE>
Reconciliation of Real Estate and Accumulated Depreciation:
December 31,
1999 1998
(in thousands)
Investment Properties
Balance at beginning of year $40,466 $39,884
Property improvements 922 645
Dispositions of property -- (63)
Balance at end of year $41,388 $40,466
====== ======
Accumulated Depreciation
Balance at beginning of year $19,858 $18,559
Additions charged to expense 1,386 1,336
Dispositions of property -- (37)
Balance at end of year $21,244 $19,858
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1999 and 1998, is $47,642,000 and $46,720,000, respectively. The
accumulated depreciation taken for Federal income tax purposes at December 31,
1999 and 1998, is $29,260,000 and $27,921,000, respectively.
Note G - Distributions
During the year ended December 31, 1999, the Partnership paid distributions of
approximately $1,350,000 (approximately $1,323,000 to the limited partners or
$14.70 per limited partnership unit) from operations. As of December 31, 1999,
the Partnership declared a distribution of approximately $531,000 (approximately
$520,000 to the limited partners or $5.78 per limited partnership unit) from
operations. This distribution was paid in January 2000. During the year ended
December 31, 1998, the Partnership paid distributions of approximately
$1,890,000 (approximately $1,852,000 to the limited partners or $20.58 per
limited partnership unit) from operations and approximately $2,996,000
(approximately $2,936,000 to the limited partners or $32.63 per limited
partnership unit) from the sale of Summerhill Apartments in 1997.
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 two apartment complexes
in Texas. 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 enterprise's reportable segments:
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.
<TABLE>
<CAPTION>
1999 Residential Other Totals
<S> <C> <C> <C>
Rental income $ 7,709 $ -- $ 7,709
Other income 287 21 308
Interest expense 1,782 -- 1,782
Depreciation 1,386 -- 1,386
General and administrative expense -- 532 532
Segment profit (loss) 1,588 (511) 1,077
Total assets 22,768 121 22,889
Capital expenditures for investment
properties 922 -- 922
</TABLE>
<TABLE>
<CAPTION>
1998 Residential Other Totals
<S> <C> <C> <C>
Rental income $ 7,555 $ -- $ 7,555
Other income 255 124 379
Interest expense 1,775 -- 1,775
Depreciation 1,336 -- 1,336
General and administrative expense -- 460 460
Segment profit (loss) 1,241 (336) 905
Total assets 22,665 552 23,217
Capital expenditures for investment
properties 645 -- 645
</TABLE>
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 ("Stipulation"), 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
to increase net income approximately $44,000 ($0.48 per limited partnership
unit). 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 Accountant on Accounting and Financial
Disclosures
None.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act
Century Properties Fund XV (the "Partnership" or the "Registrant") has no
officers or directors. Fox Capital Management Corporation ("FCMC" or the
"Managing General Partner") manages and controls substantially all of the
Partnership's affairs and has general responsibility in all matters affecting
its business.
The names and ages of, as well as the positions and offices held by, the present
executive officers and director of the Managing General Partner are set forth
below. There are no family relationships between or among any officers or
directors.
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 directors nor officers of the Managing General Partner received any
remuneration from the Registrant.
Item 11. Security Ownership of Certain Beneficial Owners and Management
Except as noted below, no person or entity was known by the Registrant to be the
beneficial owner of more than 5% of the Limited Partnership Units of the
Registrant as of December 31, 1999.
Name and Address of Amount and nature of Percentage
Beneficial Owner Beneficial Ownership of Class
Insignia Properties, LP
(an affiliate of AIMCO) 107.00 .12%
Riverside Drive, LLC
(an affiliate of AIMCO) 35,473.17 39.42%
Madison River Properties, LLC
(an affiliate of AIMCO) 4,222.00 4.69%
AIMCO Properties LP
(an affiliate of AIMCO) 14,581.17 16.21%
Insignia Properties LP, Riverside Drive, LLC and Madison River Properties, LLC
are indirectly ultimately owned by AIMCO. Their business address is 55 Beattie
Place, Greenville, South Carolina 29602.
AIMCO Properties LP is indirectly ultimately controlled by AIMCO. Its business
address is 2000 South Colorado Boulevard, Denver, Colorado 80222.
No director or officer of the Managing General Partner owns any Units. The
Managing General Partner owns 100 Units as required by the terms of the
Partnership Agreement governing the Partnership.
As a result of its ownership of approximately 54,383.34 (60.44%) 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 upon its 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. The following payments were made to the
Managing General Partner and affiliates during the twelve month periods ended
December 31, 1999 and 1998:
1999 1998
(in thousands)
Property management fees $403 $391
Reimbursement for services of affiliates 178 147
Partnership management fee 209 210
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
Registrant's properties for providing property management services. The
Registrant paid to such affiliates approximately $403,000 and $391,000 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 $178,000 and
$147,000 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 $209,000 in Partnership management fees were paid
during the year ended December 31, 1999. Approximately $59,000 in a Partnership
management fee was accrued as of December 31, 1999 related to the distribution
of operating cash declared at that time. Approximately $210,000 in a Partnership
management fee was paid during the year ended December 31, 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.
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 54,383.34 limited partnership units in the Partnership representing 60.44%
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 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 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 XV
By: Fox Capital Management Corporation
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 XV
EXHIBIT INDEX
Exhibit Number Description of Exhibit
2.1 NPI, Inc. Stock Purchase Agreement, dated as of August 17,
1996, incorporated by reference to the Partnership's Current
Report on Form 8-K dated August 17, 1996.
2.2 Partnership Units Purchase Agreement dated as of August 17,
1996, 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, 1996.
2.3 Management Purchase Agreement dated as of August 17, 1996,
incorporated by reference to Exhibit 2.2 to Form 8-K filed by
Insignia with the Securities and Exchange Commission on
September 1, 1996.
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, 1996,
incorporated by reference to Exhibit 2.5 to Form 8-K filed by
Insignia with the Securities and Exchange Commission on
September 1, 1996.
2.6 Agreement and Plan of Merger, dated as of October 1, 1998, by
and between AIMCO and IPT; incorporated by reference to
Exhibit 2.1 of IPT's Current Report on Form 8-K dated October
1, 1998.
3.4 Agreement of Limited Partnership, incorporated by reference
to Exhibit A to the Prospectus of the Partnership dated September
20, 1983, as amended on June 13, 1989, and is thereafter
supplemented contained in the Partnership's Registration
Statement on Form S-11 (Reg. No. 2-79007).
10.1 Deed of Trust Note dated June 1, 1994, made by Century
Lakeside Place, L.P. in favor of Value Line Mortgage
Corporation, incorporated by reference to the Partnership's
Form 10-Q for the quarter ended June 30, 1994.
10.2 Deed of Trust, Security Agreement and Assignment of Leases and
Rents dated June 1, 1994, from Lakeside Place, L.P. to Jeffrey
H. Gelman for the benefit of Value Line Mortgage Corporation,
incorporated by reference to the Partnership's Form 10-Q for
the quarter ended September 30, 1994.
<PAGE>
10.3 Multifamily Note dated November 1, 1997, by and between the
Partnership and Lehman Brothers Holdings, Inc. for Preston
Creek Apartments incorporated by reference to Exhibit 10.6 to
the Partnership's Form 10-KSB for the fiscal year ended
December 31, 1996.
10.7 Contract of Sale of Summerhill Apartments between Registrant
and McNeil Capital L.L.C. dated July 31, 1997 incorporated by
reference to Current Report on Form 8-K dated September 24,
1997.
16 Letter dated November 11, 1998 from the Registrant's former
independent accountants regarding its concurrence with the
statements made by the Registrant in 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 XV
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 XV 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
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Century
Properties Fund XV 1999 Fourth Quarter 10-KSB and is qualified in its entirety
by reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000314690
<NAME> Century Properties Fund XV
<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> 1,727
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 41,388
<DEPRECIATION> 21,244
<TOTAL-ASSETS> 22,889
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 18,749
0
0
<COMMON> 0
<OTHER-SE> 2,399
<TOTAL-LIABILITY-AND-EQUITY> 22,889
<SALES> 0
<TOTAL-REVENUES> 8,017
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,940
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,782
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,077
<EPS-BASIC> 11.72 <F2>
<EPS-DILUTED> 0
<FN>
<F1> Registrant has an unclassified balance sheet. <F2> Multiplier is 1.
</FN>
</TABLE>
