FORM 10-QSB--Quarterly or Transitional Report Under Section 13 or
15(d) of the Securities Exchange Act of 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 2000
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _________to _________
Commission file number 0-10435
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.)
55 Beattie Place, P.O. Box 1089
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)
June 30, 2000
Assets
Cash and cash equivalents $ 165
Receivables and deposits 229
Restricted escrows 121
Other assets 219
Investment properties:
Land $ 1,409
Buildings and related personal property 15,020
16,429
Less accumulated depreciation (8,646) 7,783
$ 8,517
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 88
Accrued property taxes 130
Tenant security deposit liabilities 41
Other liabilities 126
Mortgage notes payable 7,222
Partners' (Deficit) Capital
General partners $ (3,842)
Limited partners (130,000 units issued and
outstanding) 4,752 910
$ 8,517
See Accompanying Notes to Consolidated Financial Statements
b)
CENTURY PROPERTIES FUND XVI
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
Revenues:
<S> <C> <C> <C> <C>
Rental income $ 753 $ 735 $ 1,486 $ 1,472
Other income 46 28 79 54
Total revenues 799 763 1,565 1,526
Expenses:
Operating 304 262 611 558
General and administrative 50 68 97 120
Depreciation 155 125 304 255
Interest 151 152 301 305
Property tax 66 65 118 129
Total expenses 726 672 1,431 1,367
Net income $ 73 $ 91 $ 134 $ 159
Net income allocated to
general partners (6.9%) $ 5 $ 6 $ 9 $ 11
Net income allocated to
limited partners (93.1%) 68 85 125 148
$ 73 $ 91 $ 134 $ 159
Net income per limited
partnership unit $ .52 $ .65 $ .96 $ 1.14
Distributions per limited
partnership unit $ 1.98 $ -- $ 1.98 $ --
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
c)
CENTURY PROPERTIES FUND XVI
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 130,000 $ -- $65,000 $65,000
Partners' (deficit) capital
at December 31, 1999 130,000 $ (3,832) $ 4,884 $ 1,052
Distributions to partners (19) (257) (276)
Net income for the six months
ended June 30, 2000 -- 9 125 134
Partners' (deficit) capital
at June 30, 2000 130,000 $ (3,842) $ 4,752 $ 910
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d)
CENTURY PROPERTIES FUND XVI
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
2000 1999
Cash flows from operating activities:
<S> <C> <C>
Net income $ 134 $ 159
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 304 255
Amortization of loan costs 16 16
Change in accounts:
Receivables and deposits 95 106
Other assets (4) 2
Accounts payable (26) (24)
Accrued property taxes (50) (119)
Tenant security deposit liabilities (1) --
Other liabilities (66) 12
Net cash provided by operating activities 402 407
Cash flows from investing activities:
Property improvements and replacements (375) (120)
Net (deposits to) withdrawals from restricted escrows (11) 48
Net cash used in investing activities (386) (72)
Cash flows from financing activities:
Distributions to partners (276) --
Payments on mortgage notes payable (43) (40)
Net cash used in financing activities (319) (40)
Net (decrease) increase in cash and cash equivalents (303) 295
Cash and cash equivalents at beginning of period 468 366
Cash and cash equivalents at end of period $ 165 $ 661
Supplemental disclosure of cash flow information:
Cash paid for interest $ 285 $ 289
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
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" or the "Registrant") 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"). The Managing General Partner and the managing general partner
of FRI are subsidiaries of Apartment Investment and Management Company
("AIMCO"), a publicly traded real estate investment trust. 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 and six month periods ended June 30, 2000 are
not necessarily indicative of the results that may be expected for the fiscal
year ending December 31, 2000. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Partnership's Annual Report on Form 10-KSB for the fiscal year ended December
31, 1999.
Principles of Consolidation
The Partnership's financial statements include the accounts of the Partnership
and its wholly owned subsidiaries.
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
merged into AIMCO, a publicly traded real estate investment trust, with AIMCO
being the surviving corporation (the "Insignia Merger"). As a result, AIMCO
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 - 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 (i) payments to
affiliates for services and (ii) reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership. The following transactions with
affiliates of the Managing General Partner were paid during the six months ended
June 30, 2000 and 1999:
2000 1999
(in thousands)
Property management fees (included in operating expenses) $ 78 $ 76
Reimbursement for services of affiliates (included in
investment properties, general and administrative
and operating expenses) 59 49
During the six months ended June 30, 2000 and 1999, 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 $78,000 and $76,000 for the six
months ended June 30, 2000 and 1999, respectively.
An affiliate of the Managing General Partner received reimbursement of
accountable administrative expenses amounting to approximately $59,000 and
$49,000 for the six months ended June 30, 2000 and 1999, respectively.
AIMCO and its affiliates currently own 71,628.02 limited partnership units in
the Partnership representing approximately 55.10% of the outstanding units. A
number of these units were acquired pursuant to tender offers made by AIMCO, its
affiliates or affiliates of the Managing General Partner. 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. Under the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters. As a result of its ownership of
approximately 55.10% of the outstanding units, AIMCO is in a position to
influence all voting decisions with respect to the Registrant. 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. However, with respect to
47,326.68 units, Insignia Properties, L.P., an affiliate of the Managing General
Partner, is required to vote such Units: (i) against any increase in
compensation payable to the Managing General Partner or to affiliates; and (ii)
on all other matters submitted by it or its affiliates, in proportion to the
votes cast by non-tendering unitholders. Except for the foregoing, no other
limitations are imposed on Insignia Properties, L.P.'s ability to influence
voting decisions with respect to the Partnership.
Note D - 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, consisting
of two apartment complexes, one of which is located in Tampa, Florida and the
other in Houston, 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 of the Partnership as described in the summary of significant accounting
policies in the Partnership's Annual Report on Form 10-KSB for the year ended
December 31, 1999.
Factors management used to identify the enterprise's reportable segment:
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 three and six month periods ended June 30, 2000 and
1999 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.
Three Months Ended June 30, 2000 Residential Other Totals
Rental income $ 753 $ -- $ 753
Other income 46 -- 46
Interest expense 151 -- 151
Depreciation 155 -- 155
General and administrative expense -- 50 50
Segment profit (loss) 123 (50) 73
Six Months Ended June 30, 2000 Residential Other Totals
Rental income $ 1,486 $ -- $ 1,486
Other income 78 1 79
Interest expense 301 -- 301
Depreciation 304 -- 304
General and administrative expense -- 97 97
Segment profit (loss) 230 (96) 134
Total assets 8,507 10 8,517
Capital expenditures for investment
properties 375 -- 375
Three Months Ended June 30, 1999 Residential Other Totals
Rental income $ 735 $ -- $ 735
Other income 25 3 28
Interest expense 152 -- 152
Depreciation 125 -- 125
General and administrative expense -- 68 68
Segment profit (loss) 156 (65) 91
Six Months Ended June 30, 1999 Residential Other Totals
Rental income $ 1,472 $ -- $ 1,472
Other income 48 6 54
Interest expense 305 -- 305
Depreciation 255 -- 255
General and administrative expense -- 120 120
Segment profit (loss) 273 (114) 159
Total assets 8,496 321 8,817
Capital expenditures 120 -- 120
Note E - 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, its 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 of interests in certain general partner
entities by Insignia Financial Group, Inc. and entities which were, at one time,
affiliates of Insignia; past tender offers by the Insignia affiliates to acquire
limited partnership units; the management of partnerships by the Insignia
affiliates; and the Insignia Merger. 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 owned units as of November 3, 1999. Preliminary
approval of the settlement was obtained on November 3, 1999 from the Court, 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 prior lead counsel to enter the settlement. On
December 14, 1999, the Managing General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case. The Court will entertain applications for lead
counsel which must be filed by August 4, 2000. The Court has scheduled a hearing
on August 21, 2000 to address the issue of appointing lead counsel. 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 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB 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.
The Partnership's investment properties consist of two apartment complexes. The
following table sets forth the average occupancy of the properties for the six
months ended June 30, 2000 and 1999:
Average Occupancy
Property 2000 1999
Ralston Place 96% 96%
(formerly The Landings Apartments)
Tampa, Florida
Woods of Inverness Apartments 94% 98%
Houston, Texas
The Managing General Partner attributes the decrease in occupancy at Woods of
Inverness Apartments to an increase in tenants purchasing homes and employee
transfers out of the Houston market.
Results of Operations
The Registrant's net income for the six months ended June 30, 2000 was
approximately $134,000 as compared to approximately $159,000 for the
corresponding period in 1999. The Registrant's net income for the three months
ended June 30, 2000 was approximately $73,000 as compared to net income of
approximately $91,000 for the three months ended June 30, 1999. Net income
decreased slightly for both the three and six months ended June 30, 2000 as
compared to the same periods in 1999 as a result of an increase in total
expenses which more than offset an increase in total revenues. The increase in
total expenses is primarily attributable to an increase in operating and
depreciation expenses which were partially offset by reductions in property tax
and general and administrative expenses. Operating expense increased due to an
increase in advertising expense at both investment properties. The increase in
depreciation expense is primarily attributable to the increase in depreciable
assets put into service in the last twelve months. Property tax expense
decreased at the Woods of Inverness Apartments resulting from the timing of the
receipt of tax bills for 1999 which affected the accruals recorded at June 30,
2000 and 1999. The decrease in general and administrative expenses is primarily
due to decreased legal costs as a result of the settlement of a legal proceeding
in the first quarter of 1999.
Included in general and administrative expense for both of the six month periods
ended June 30, 2000 and 1999 are management reimbursements to the Managing
General Partner allowed under the Partnership Agreement. 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.
Total revenues increased for both the three and six months ended June 30, 2000,
as compared to the same periods in 1999. The increase in total revenues was the
result of increased rental and other income at both properties. Rental income
increased due to an increase in average rental rates at both properties offset
by a slight decrease in occupancy at Woods of Inverness Apartments. Other income
increased at Ralston Place as a result of the receipt of incentive income from
the water company for installing water saving devices.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expenses. As part of
this plan, the Managing General Partner attempts to protect the Partnership from
the burden of inflation-related increases in expenses by increasing rents and
maintaining a high overall occupancy level. However, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions, there is no guarantee that the
Managing General Partner will be able to sustain such a plan.
Liquidity and Capital Resources
At June 30, 2000, the Registrant had cash and cash equivalents of approximately
$165,000 as compared to approximately $661,000 at June 30, 1999. Cash and cash
equivalents decreased approximately $303,000 for the period ended June 30, 2000
from the Registrant's fiscal year end. The decrease in cash and cash equivalents
is due to approximately $386,000 of cash used in investing activities and
approximately $319,000 of cash used in financing activities, partially offset by
approximately $402,000 of cash provided by operating activities. Cash used in
investing activities consisted of capital improvements and replacements and, to
a lesser extent, net deposits to restricted escrow accounts maintained by the
mortgage lender. Cash used in financing activities consisted primarily of
distributions to the partners and, to a lesser extent, payments of principal
made on the mortgages encumbering the Registrant's properties. The Registrant
invests its working capital reserves in money market accounts.
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. Capital improvements planned
for the Partnership's properties are detailed below.
Woods of Inverness: For 2000 the Partnership has budgeted approximately $210,000
for capital improvements at Woods of Inverness consisting primarily of appliance
and flooring replacements, parking lot and structural improvements. As of June
30, 2000 the property has spent approximately $216,000 in capital expenditures
consisting primarily of appliances, floor covering replacements, air
conditioning replacements, major landscaping, parking lot resurfacing, and
structural improvements. These improvements were funded primarily from
replacement reserves and operations. 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.
Ralston Place: For 2000 the Partnership has budgeted approximately $283,000 for
capital improvements at Ralston Place consisting primarily of appliances,
plumbing, air conditioning and flooring replacements, fencing, major
landscaping, recreational facility, pool and structural improvements. As of June
30, 2000 the property has spent approximately $159,000 in capital expenditures
consisting primarily of plumbing fixture replacements, appliances, structural
improvements, and floor covering replacements. These improvements were funded
primarily from operations. 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.
The additional capital expenditures will be incurred only if cash is available
from operations or from Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Registrant's distributable cash flow, if
any, may be adversely affected at least in the short term.
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 $7,222,000 is amortized over 360 months with a
balloon payment of approximately $6,618,000 due January 1, 2006. The Managing
General Partner will attempt to refinance such indebtedness and/or sell the
properties prior to such maturity date. If the properties cannot be refinanced
or sold for a sufficient amount, the Registrant will risk losing such properties
through foreclosure.
Cash distributions from operations of approximately $276,000 were paid during
the six months ended June 30, 2000, of which approximately $257,000 was paid to
limited partners ($1.98 per limited partnership unit). No cash distributions
were made during the six months ended June 30, 1999. 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, refinancings,
and/or 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 planned capital expenditures,
to permit distributions to its partners during the remainder of 2000 or
subsequent periods.
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, its 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 of interests in certain general partner
entities by Insignia Financial Group, Inc. and entities which were, at one time,
affiliates of Insignia; past tender offers by the Insignia affiliates to acquire
limited partnership units; the management of partnerships by the Insignia
affiliates; and the Insignia Merger. 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 owned units as of November 3, 1999. Preliminary
approval of the settlement was obtained on November 3, 1999 from the Court, 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 prior lead counsel to enter the settlement. On
December 14, 1999, the Managing General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case. The Court will entertain applications for lead
counsel which must be filed by August 4, 2000. The Court has scheduled a hearing
on August 21, 2000 to address the issue of appointing lead counsel. The Managing
General Partner does not anticipate that costs associated with this case will be
material to the Partnership's overall operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 27, Financial Data Schedule, is filed as an exhibit
to this report.
b) Reports on Form 8-K:
None filed during the quarter ended June 30, 2000.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Partnership 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
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: August , 2000
