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 13 or 15(d) of The Securities Exchange Act of
1934
For the quarterly period ended March 31, 1998
[ ] Transition Report Pursuant to 13 or 15(d) of the Securities Exchange Act of
1934
For the transition period.........to.........
Commission file number 0-10435
CENTURY PROPERTIES FUND XVI
(Exact name of small business issuer as specified in its charter)
California 94-2704651
(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 XVI
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 1998
Assets
Cash and cash equivalents $ 515
Receivables and deposits 151
Other assets 259
Restricted escrows 147
Investment properties:
Land $ 1,409
Buildings and related
personal property 13,558
14,967
Less accumulated depreciation (7,424) 7,543
$ 8,615
Liabilities and Partners' Capital
Liabilities
Accounts payable $ 47
Accrued taxes 58
Tenant security deposit liabilities 51
Other liabilities 94
Mortgage notes payable 7,404
Partners' (Deficit) Capital
General partners $(3,838)
Limited partners (130,000 units issued
and outstanding) 4,799 961
$ 8,615
See Accompanying Notes to Consolidated Financial Statements
b)
CENTURY PROPERTIES FUND XVI
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
1998 1997
Revenues:
Rental income $ 707 $ 638
Other income 30 31
Total revenues 737 669
Expenses:
Operating 299 292
General and administrative 53 35
Depreciation 121 117
Interest 154 156
Property tax 43 45
Total expenses 670 645
Net income $ 67 $ 24
Net income allocated to general partners (6.9%) $ 5 $ 2
Net income allocated to limited partners (93.1%) 62 22
Net income $ 67 $ 24
Net income per limited partnership unit $ .48 $ .17
See Accompanying Notes to Consolidated Financial Statements
c)
CENTURY PROPERTIES FUND XVI
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 130,000 $ -- $65,000 $65,000
Partners' (deficit) capital at
December 31, 1997 130,000 $(3,843) $ 4,737 $ 894
Net income for the three
months ended March 31, 1998 -- 5 62 67
Partners' (deficit) capital at
March 31, 1998 130,000 $(3,838) $ 4,799 $ 961
See Accompanying Notes to Consolidated Financial Statements
d)
CENTURY PROPERTIES FUND XVI
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
1998 1997
Cash flows from operating activities:
Net income $ 67 $ 24
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 129 124
Change in accounts:
Receivables and deposits 156 110
Other assets 1 --
Accounts payable (41) (17)
Accrued taxes (179) (127)
Tenant security deposit liabilities 1 --
Other liabilities (2) 19
Net cash provided by operating activities 132 133
Cash flows from investing activities:
Property improvements and replacements (20) (75)
Net deposits to restricted escrows (38) (40)
Net cash used in investing activities (58) (115)
Cash flows used in financing activities:
Payments on mortgage notes payable (18) (12)
Net increase in cash and cash equivalents 56 6
Cash and cash equivalents at beginning of period 459 535
Cash and cash equivalents at end of period $ 515 $ 541
Supplemental disclosure of cash flow information
Cash paid for interest $ 146 $ 113
See Accompanying Notes to Consolidated Financial Statements
e)
CENTURY PROPERTIES FUND XVI
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Century
Properties Fund XVI (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.
The Partnership's general partners are Fox Capital Management Corporation (the
"Managing General Partner" or "FCMC") and Fox Realty Investors ("FRI"), both of
which are affiliates of Insignia Financial Group, Inc. ("Insignia"). In the
opinion of the Managing General Partner, 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 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
The Partnership has no employees and is dependent upon the Managing General
Partner and its affiliates for the management and administration of all
partnership activities. The Managing General Partner is a wholly-owned
subsidiary of Insignia Properties Trust ("IPT"), an affiliate of Insignia.
The Partnership Agreement provides for payments to affiliates for services
and as reimbursement of certain expenses incurred by affiliates on behalf of
the Partnership.
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.
On March 29, 1996, an affiliate of Insignia acquired all of the issued and
outstanding shares of stock of the general partners of the subsidiary
partnerships which hold title to The Landings Apartments and Woods of Inverness
Apartments. These general partners held a 1% interest in profits, losses and
distributions of such subsidiary partnerships. Effective December 31, 1997, the
Partnership acquired these 1% interests and therefore the subsidiary
partnerships are wholly-owned by the Partnership.
The following transactions with affiliates of Insignia were charged to expense
in 1998 and 1997:
For the Three Months Ended
March 31,
(in thousands)
1998 1997
Property management fees (included in operating
expenses) $ 37 $ 34
Reimbursement for services of affiliates (included
in general and administrative and operating expenses) 28 23
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 receives payment 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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment properties consist of two apartment complexes. The
following table sets forth the average occupancy of the properties for the three
months ended March 31, 1998 and 1997:
Average
Occupancy
Property 1998 1997
The Landings Apartments
Tampa, Florida 95% 93%
Woods of Inverness Apartments
Houston, Texas 97% 95%
The increase in average occupancy from March 31, 1997, to March 31, 1998, at
both The Landings Apartments and Woods of Inverness Apartments is due to quality
customer service and increased marketing efforts, combined with the availability
of attractive, well maintained units.
The Partnership's net income for the three months ended March 31, 1998, was
approximately $67,000, versus net income of approximately $24,000 for the same
period in 1997. The increase in net income is attributable to an increase in
rental income, partially offset by an increase in total expenses. The increase
in rental income is due to increases in occupancy and average annual rental
rates at both The Landings Apartments and Woods of Inverness Apartments. The
increase in expenses is primarily attributable to an increase in general and
administrative expenses due to increases in both professional expenses and
expense reimbursements.
Included in operating expense for the three months ended March 31, 1998, is
approximately $18,000 of major repairs and maintenance mainly comprised of
parking lot and gutter repairs. Included in operating expense for the three
months ended March 31, 1997, is approximately $18,000 of major repairs and
maintenance mainly comprised of exterior painting and building improvements.
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 conditions, there is no guarantee that the
Managing General Partner will be able to sustain such a plan.
At March 31, 1998, the Partnership had cash and cash equivalents of
approximately $515,000, versus approximately $541,000 at March 31, 1997. Cash
and cash equivalents increased approximately $56,000 for the period ended March
31, 1998. Net cash provided by operating activities at March 31, 1998, remained
relatively consistent with the corresponding period of the prior year, despite a
larger decrease in receivables and deposits and an increase in accrued taxes.
These changes are due to the timing of the payment of property taxes from the
escrow account. The Partnership experienced a decrease in cash used in
investing activities due to a decrease in property improvements and
replacements. There was an interior building improvement project ongoing at The
Landings Apartments during the three months ended March 31, 1997. Cash used in
financing activities results from payments on mortgage notes payable.
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 $7,404,000 is based on a fixed interest
rate, amortized over a thirty-year period, with a balloon payment due January 1,
2006. No cash distributions were paid in 1997 or during the first quarter of
1998. Future cash distributions will depend on the levels of cash generated
from operations, property sales, and the availability of cash reserves.
Year 2000
The Partnership is dependent upon the Managing General Partner and Insignia for
management and administrative services. Insignia has completed an assessment
and will have to modify or replace portions of its software so that its computer
systems will function properly with respect to dates in the year 2000 and
thereafter (the "Year 2000 Issue"). The project is estimated to be completed
not later than December 31, 1998, which is prior to any anticipated impact on
its operating systems. The Managing General Partner believes that with
modifications to existing software and conversions to new software, the Year
2000 Issue will not pose significant operational problems for its computer
systems. However, if such modifications and conversions are not made, or are not
completed timely, the Year 2000 Issue could have a material impact on the
operations of the Partnership.
Other
Certain items discussed in this quarterly report may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "Reform Act") and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Partnership to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such forward-looking statements speak only as of
the date of this quarterly report. The Partnership expressly disclaims any
obligation or undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change in the
Partnership's expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is based.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled ROSALIE NUANES, ET AL. V. INSIGNIA
FINANCIAL GROUP, INC., ET AL. in the Superior Court of the State of California
for the County of San Mateo. The Plaintiffs named as defendants, among others,
the Partnership, the Managing General Partner and several of their affiliated
partnerships and corporate entities. The complaint purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia and its affiliates of
interests in certain general partner entities, past tender offers by Insignia
affiliates to acquire limited partnership units, the management of partnerships
by Insignia affiliates, as well as a recently announced agreement between
Insignia and AIMCO. The complaint seeks monetary damages and equitable relief,
including judicial dissolution of the Partnership. The Managing General Partner
was only recently served with the complaint which it believes to be without
merit, and intends to vigorously defend the action.
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.
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 XVI
By: Fox Capital Management Corporation,
Managing General Partner
/s/William H. Jarrard, Jr.
President and Director
/s/Ronald Uretta
Vice President and Treasurer
Date: May 4, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Century Properties Fund XVI 1998 First Quarter 10-QSB and is qualified in
its entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000351931
<NAME> CENTURY PROPERTIES FUND XVI
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 515
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<RECEIVABLES> 151
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 14,967
<DEPRECIATION> (7,424)
<TOTAL-ASSETS> 8,615
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 7,404
0
0
<COMMON> 0
<OTHER-SE> 961
<TOTAL-LIABILITY-AND-EQUITY> 8,615
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<OTHER-EXPENSES> 670
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