SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
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 0-11137
Century Properties Fund XVII
(Exact name of Registrant as specified in its charter)
California 94-2782037
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5665 Northside Drive N.W., Ste. 370, Atlanta, Georgia 30328
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (770) 916-9090
N/A
Former name, former address and fiscal year, if changed since last report.
Indicate by check mark whether Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 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 _____
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 12, 13, or 15(d) of the Securities Exchange
Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes _____ No _____
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the
latest practicable date __________________.
1 of 14
CENTURY PROPERTIES FUND XVII - FORM 10-Q - SEPTEMBER 30, 1995
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets
September 30, December 31,
1995 1994
Assets
Cash and cash equivalents $ 2,165,000 $ 1,149,000
Reserve for capital improvements 860,000 1,596,000
Other assets 1,232,000 1,164,000
Real Estate:
Real Estate 65,549,000 64,917,000
Accumulated depreciation (25,449,000) (23,970,000)
Allowance for impairment of value (1,430,000) (1,430,000)
------------- -------------
Real estate, net 38,670,000 39,517,000
Deferred financing costs, net 516,000 615,000
------------- -------------
Total assets $ 43,443,000 $ 44,041,000
============= =============
Liabilities and Partners' Equity
Accrued expenses and other liabilities $ 968,000 $ 1,036,000
Notes payable 35,061,000 35,800,000
------------- -------------
Total liabilities 36,029,000 36,836,000
------------- -------------
Partners' Equity (Deficit):
General partners (6,856,000) (6,881,000)
Limited partners (75,000 units outstanding at
September 30, 1995 and December 31, 1994) 14,270,000 14,086,000
------------- -------------
Total partners' equity 7,414,000 7,205,000
------------- -------------
Total liabilities and partners' equity $ 43,443,000 $ 44,041,000
============= =============
See notes to consolidated financial statements.
2 of 14
CENTURY PROPERTIES FUND XVII - FORM 10-Q - SEPTEMBER 30, 1995
Consolidated Statements of Operations
For the Nine Months Ended
September 30, September 30,
1995 1994
Revenues:
Rental $ 8,890,000 $ 8,376,000
Interest income 112,000 68,000
------------- -------------
Total revenues 9,002,000 8,444,000
------------- -------------
Expenses:
Operating 4,868,000 4,954,000
Interest 2,409,000 2,448,000
Depreciation 1,479,000 1,449,000
General and administrative 166,000 344,000
------------- -------------
Total expenses 8,922,000 9,195,000
------------- -------------
Net income (loss) from operations
before extraordinary item 80,000 (751,000)
Extraordinary item:
Gain on extinguishment of debt 129,000 -
------------- -------------
Net income (loss) $ 209,000 $ (751,000)
============= =============
Net income (loss) per limited partnership
unit:
Net income (loss) before extraordinary
item $ 0.93 $ (8.83)
Extraordinary item 1.52 -
------------- -------------
Net income (loss) $ 2.45 $ (8.83)
============= =============
See notes to consolidated financial statements.
3 of 14
CENTURY PROPERTIES FUND XVII - FORM 10-Q - SEPTEMBER 30, 1995
Consolidated Statements of Operations
For the Three Months Ended
September 30, September 30,
1995 1994
Revenues:
Rental $ 2,999,000 $ 2,863,000
Interest income 40,000 40,000
------------- -------------
Total revenues 3,039,000 2,903,000
------------- -------------
Expenses:
Operating 1,760,000 1,845,000
Interest 792,000 821,000
Depreciation 493,000 483,000
General and administrative 47,000 52,000
------------- -------------
Total expenses 3,092,000 3,201,000
------------- -------------
Net loss from operations before extraordinary
item (53,000) (298,000)
Extraordinary item:
Gain on extinguishment of debt 129,000 -
------------- -------------
Net income (loss) $ 76,000 $ (298,000)
============= =============
Net income (loss) per limited partnership
unit:
Net income (loss) before extraordinary
item $ (0.63) $ (3.51)
Extraordinary item 1.52 -
------------- -------------
Net income (loss) $ 0.89 $ (3.51)
============= =============
See notes to consolidated financial statements.
4 of 14
CENTURY PROPERTIES FUND XVII - FORM 10-Q - SEPTEMBER 30, 1995
Consolidated Statements of Cash Flows
For the Nine Months Ended
September 30, September 30,
1995 1994
Operating Activities:
Net income (loss) $ 209,000 $ (751,000)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 2,174,000 2,163,000
Gain on extinguishment of debt (129,000) -
Changes in operating assets and liabilities:
Other assets (68,000) (371,000)
Accrued expenses and other liabilities (68,000) 231,000
------------- -------------
Net cash provided by operating activities 2,118,000 1,272,000
------------- -------------
Investing Activities:
Decrease in reserve for capital improvements 736,000 4,000
Additions to real estate (632,000) (936,000)
------------- -------------
Net cash provided by (used in) investing
activities 104,000 (932,000)
------------- -------------
Financing Activities:
Satisfaction of mortgages payable at a
discount (910,000) -
Notes payable principal payments (296,000) (278,000)
------------- -------------
Cash (used in) financing activities (1,206,000) (278,000)
------------- -------------
Increase in Cash and Cash Equivalents 1,016,000 62,000
Cash and Cash Equivalents at Beginning of
Period 1,149,000 1,511,000
------------- -------------
Cash and Cash Equivalents at End of Period $ 2,165,000 $ 1,573,000
============= =============
Supplemental Disclosure of Cash Flow
Information:
Interest paid in cash during the period $ 1,718,000 $ 1,734,000
============= =============
Supplemental Disclosure of Non-Cash Investing
and Financing Activities:
Amortization of Note Payable Discount $ 596,000 $ 596,000
============= =============
See notes to consolidated financial statements.
5 of 14
CENTURY PROPERTIES FUND XVII - FORM 10-Q - SEPTEMBER 30, 1995
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. General
The accompanying consolidated financial statements, footnotes and
discussions should be read in conjunction with the consolidated
financial statements, related footnotes and discussions contained
in the Partnership's Annual Report for the year ended December 31,
1994. Certain accounts have been reclassified in order to conform
to the current period.
The financial information contained herein is unaudited. In the
opinion of management, all adjustments necessary for a fair
presentation of such financial information have been included. All
adjustments are of a normal recurring nature, except as disclosed
in Note 3.
The results of operations for the nine and three months ended
September 30, 1995 and 1994 are not necessarily indicative of the
results to be expected for the full year.
On August 17, 1995, the stockholders of National Property
Investors, Inc. ("NPI, Inc."), the sole shareholder of NPI Equity
Investments II, Inc. ("NPI Equity"), the entity which controls Fox
Capital Management Corporation, the managing general partner of the
Partnership's general partner, entered into an agreement to sell to
IFGP Corporation, an affiliate of Insignia Financial Group, Inc.
("Insignia"), all of the issued and outstanding stock of NPI, Inc.
The sale of the stock is subject to the satisfaction of certain
conditions and is scheduled to close in January 1996.
2. Transactions with Related Parties
(a) An affiliate of NPI, Inc. received reimbursement of
administrative expenses amounting to $108,000 and $139,000 for
the nine months ended September 30, 1995 and 1994,
respectively. These reimbursements are included in general and
administrative expenses.
(b) An affiliate of NPI, Inc. is entitled to receive a management
fee equal to 5% of the annual gross receipts from certain
properties it manages. For the periods ended September 30,
1995 and 1994, affiliates of NPI, Inc. received $443,000 and
$323,000, respectively, which are included in operating
expenses.
3. Notes Payable
On August 3, 1995, the Partnership paid $910,000 to satisfy in full
the $1,039,000 second mortgage encumbering the Village in the Woods
Apartments at a discount. The Partnership recognized an
extraordinary gain on extinguishment of debt of $129,000 during the
third quarter of 1995.
6 of 14
CENTURY PROPERTIES FUND XVII - FORM 10-Q - SEPTEMBER 30, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
This item should be read in conjunction with the Consolidated Financial
Statements and other Items contained elsewhere in this Report.
Liquidity and Capital Resources
Registrant holds investments in and operates residential real estate
properties, with apartments leased to tenants subject to leases of up to
one year. Registrant receives rental income from its properties and is
responsible for operating expenses, administrative expenses, capital
improvements and debt service payments. As of November 1, 1995, seven of
the twelve properties originally purchased by Registrant were sold or
otherwise disposed.
Registrant uses working capital reserves provided from any undistributed
cash flow from operations, sales and refinancing proceeds as its primary
source of liquidity. For the long term, cash from operations will remain
Registrant's primary source of liquidity. There have been no distributions
since 1985. All of Registrant's properties (except for Cooper's Pond)
experienced positive cash flow during the nine months ended September 30,
1995. The Managing General Partner is currently evaluating the cash needs
of Registrant in order to determine whether any cash distributions from
operations can be made in the near future.
The level of liquidity based upon cash and cash equivalents experienced a
$1,016,000 increase at September 30, 1995, as compared to December 31,
1994. Registrant's $2,118,000 of net cash from operating activities and
$104,000 of net cash provided by investing activities was partially offset
by $1,206,000 of cash used in financing activities. Cash provided by
operations improved at September 30, 1995, as compared to September 30,
1994, primarily due improved operations at all of Registrant's properties
except for Cooper's Pond. Cash provided by investing activities consisted
of $736,000 received from a reserve for capital improvements as
reimbursement for Registrant's prior year real estate improvements.
Registrant also spent $632,000 for real estate improvements during the nine
months ended September 30, 1995. Cash used in financing activities
consisted of $296,000 of notes payable principal payments and $910,000 in
satisfaction of a mortgage payable at a discount. Other than the $860,000
that Registrant has in reserve for capital improvements, Registrant has no
plans for significant capital expenditures. All other increases
(decreases) in certain assets and liabilities are the result of the timing
of receipt and payment of various operating activities, none of which were
significant.
On August 3, 1995, Registrant paid $910,000 to satisfy in full the
$1,039,000 second mortgage encumbering the Village in the Woods Apartments
at a discount. Registrant recognized an extraordinary gain on
extinguishment of debt of $129,000 during the third quarter of 1995.
Working capital reserves are primarily invested in repurchase agreements
secured by United States Treasury obligations. The Managing General
Partner believes that, if market conditions remain relatively stable, cash
flow from operations, when combined with working capital reserves, will be
sufficient to fund required capital improvements and regular debt service
payments for the next twelve months and the foreseeable future. Registrant
has balloon payments due in 1999 totaling $10,768,000. Although the
Managing General Partner is confident that all mortgages can be refinanced
or extended in an orderly fashion, if the mortgages are not extended, or
refinanced, or the properties not sold, the properties could be lost
through foreclosure.
7 of 14
CENTURY PROPERTIES FUND XVII - FORM 10-Q - SEPTEMBER 30, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Liquidity and Capital Resources (Continued)
As required by the terms of the settlement of the actions brought against,
among others, DeForest Ventures I L.P. ("DeForest") relating to the tender
offer made by DeForest in October 1994 (the "First Tender Offer") for units
of limited partnership interest in Registrant and certain affiliated
partnerships, DeForest commenced a second tender offer (the "Second Tender
Offer") on June 2, 1995 for units of limited partnership interest in
Registrant. Pursuant to the Second Tender Offer, DeForest acquired an
additional 3,861 units of Registrant which, when added to the units
acquired during the First Tender Offer, represents approximately 34.1% of
the total number of outstanding units of Registrant. The Managing General
Partner believes that the tender will not have a significant impact on
future operations or liquidity of Registrant. Also in connection with the
settlement, an affiliate of the Managing General Partner has made available
to Registrant a credit line of up to $150,000 per property owned by
Registrant. Registrant has no outstanding amounts due under this line of
credit. Based on present plans, management does not anticipate the need to
borrow in the near future. Other than cash and cash equivalents, the line
of credit is Registrant's only unused source of liquidity.
On August 17, 1995, Insignia Financial Group, Inc. and certain of its
affiliates (collectively, "Insignia") entered into agreements pursuant to
which (i) the stockholders of NPI, Inc., the sole shareholder of NPI
Equity, agreed to sell to Insignia all of the issued and outstanding stock
of NPI, Inc., (ii) DeForest agreed to sell its units of Registrant to
Insignia and (iii) Insignia would acquire all of the interests in NPI-AP
Management, L.P., the property manager at Registrant's properties. The
consummation of these transactions is subject to the satisfaction of
certain conditions (including, third party consents and other conditions
not within the control of the parties to the agreement) and is scheduled to
close in January 1996. Upon closing, it is expected that Insignia will
elect new officers and directors of NPI Equity.
Insignia is a fully integrated real estate service company specializing in
the ownership and operation of securitized real estate assets. According
to Commercial Property News and the National Multi-Housing Council, since
1992 Insignia has been the largest property manager in the United States.
The Managing General Partner does not believe these transactions will have
a significant effect on Registrant's liquidity or results of operation.
At this time, it appears that the investment objective of capital growth
will not be attained and that investors will not receive a return of all of
their invested capital. The extent to which invested capital is returned
to investors is dependent upon the performance of Registrant's properties
and the markets in which such properties are located and on the sales price
of the remaining properties. In this regard, all of the remaining
properties have been held longer than originally expected. The ability to
hold and operate these properties is dependent on Registrant's ability to
obtain refinancing or debt modification as required.
Real Estate Market
The national real estate market has suffered from the effects of the real
estate recession including, but not limited to a downward trend in market
values of existing residential properties. In addition, the bail out of
the savings and loan associations and sales of foreclosed properties by
auction reduced market
8 of 14
CENTURY PROPERTIES FUND XVII - FORM 10-Q - SEPTEMBER 30, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Real Estate Market (Continued)
values and caused a further restriction on the ability to obtain credit.
As a result, Registrant's ability to refinance or sell its existing
properties may be restricted. These factors caused a decline in market
property values and serve to reduce market rental rates and/or sales
prices. Compounding these difficulties have been relatively low interest
rates, which encourage existing and potential tenants to purchase homes.
In addition, there has been a significant decline nationally in new
household formation. Despite the above, the rental market appears to be
experiencing a gradual strengthening and management anticipates that
increases in revenue will generally exceed increases in expenses during the
next twelve months. Furthermore, management believes that the emergence of
new institutional purchasers, including real estate investment trusts and
insurance companies, should create a more favorable market for Registrant's
properties in the future.
Results of Operations
Nine Months Ended September 30, 1995 vs. September 30, 1994
Operating results, before the extraordinary gain on extinguishment of debt,
improved by $831,000 for the nine months ended September 30, 1995, as
compared to 1994, due to an increase in revenues of $558,000 and a decrease
in expenses of $273,000. Operating results improved primarily due to
improved operations at all of Registrant's properties, except for Cooper's
Pond Apartments.
Revenues increased by $558,000 for the nine months ended September 30,
1995, as compared to 1994, due to increases in rental revenue of $514,000
and interest income of $44,000. Rental revenue increased primarily due to
an increase in rental rates at all of Registrant's properties, which was
partially offset by an increase in concessions at Village in the Woods
Apartments. Occupancy remained relatively stable at all of Registrant's
properties. Interest income increased due to an increase in average
working capital reserves available for investment and the effect of higher
interest rates.
Expenses declined by $273,000 for the nine months ended September 30, 1995,
as compared to 1994, due to decreases in general and administrative
expenses of $178,000, operating expenses of $86,000 and interest expense of
$39,000, which were only slightly offset by an increase in depreciation
expense of $30,000. General and administrative expenses decreased due to a
reduction in asset management costs, effective July 1, 1994. Operating
expenses decreased due to exterior painting performed during the prior year
comparative period at all of Registrant's properties except for Cooper's
Pond Apartments, which was partially offset by an increase in maintenance
at Cherry Creek Gardens, Cooper's Pond Apartments, Creekside Apartments and
Village in the Woods Apartments. Interest expense declined due to the
prepayment of the second mortgage encumbering Village in the Woods
Apartments in August 1995 and the amortization of mortgage principal
balances. Depreciation expense increased due to the effect of fixed asset
additions during 1994.
9 of 14
CENTURY PROPERTIES FUND XVII - FORM 10-Q - SEPTEMBER 30, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Three Months Ended September 30, 1995 vs. September 30, 1994
Operating results, before the gain on extinguishment of debt, improved by
$245,000 for the three months ended September 30, 1995, as compared to
1994, due to an increase in revenues of $136,000 and a decrease in expenses
of $109,000. Operating results improved primarily due to improved
operations at all of Registrant's properties, except for Cooper's Pond
Apartments which decreased slightly and Village in the Woods Apartments
which remained relatively constant.
Revenues increased by $136,000 for the three months ended September 30,
1995, as compared to 1994, due to an increase in rental revenue. Rental
revenue increased primarily due to an increase in rental rates at all of
Registrant's properties, coupled with an increase in occupancy at
Registrant's Village in the Woods and Cooper's Pond Apartments, which was
partially offset by decreases in occupancy at Cherry Creek Gardens and
Creekside Apartments. Occupancy at The Lodge Apartments property remained
constant. Interest income remained constant as the increase in working
capital reserves available for investment and the effect of higher interest
rates, were offset by an adjustment in interest income during the three
months ended September 30, 1994.
Expenses declined by $109,000 for the three months ended September 30,
1995, as compared to 1994, due to decreases in operating expenses of
$85,000, interest expense of $29,000 and general and administrative
expenses of $5,000, which were only slightly offset by an increase in
depreciation expense of $10,000. Operating expenses decreased due to
exterior painting performed during the prior year comparative period at
Registrant's Creekside and The Lodge Apartments which was partially offset
by an increase in maintenance at Cherry Creek Gardens and the Village in
the Woods Apartments. Interest expense declined due to the prepayment of
the second mortgage encumbering Village in the Woods Apartments in August
1995 and the amortization of mortgage principal balances. General and
administrative expenses remained relatively constant. Depreciation expense
increased due to the effect of fixed asset additions during 1994.
10 of 14
CENTURY PROPERTIES FUND XVII - FORM 10-Q - SEPTEMBER 30, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Properties
A description of the properties in which Registrant has an ownership
interest during the period covered by this Report, along with occupancy
data, follows:
CENTURY PROPERTIES FUND XVII
OCCUPANCY SUMMARY
Average
Occupancy Rate (%)
Nine Months Three Months
Number Ended Ended
of Date of September 30, September 30,
Name and Location Units Purchase 1995 1994 1995 1994
- ----------------- ----- -------- ---- ---- ---- ----
Cherry Creek Gardens
Apartments 296 09/82 97 98 95 99
Englewood, Colorado
Creekside Apartments 328 10/82 97 97 97 99
Denver, Colorado
The Lodge Apartments 376 10/82 98 97 97 97
Denver, Colorado
The Village in the Woods
Apartments 530 10/82 95 94 96 93
Cypress, Texas
Cooper's Pond Apartments 463 03/83 93 94 96 94
Tampa, Florida
11 of 14
CENTURY PROPERTIES FUND XVII - FORM 10-Q - SEPTEMBER 30, 1995
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a)Exhibits
2. NPI, Inc. Stock Purchase Agreement dated as of August 17,
1995 incorporated by reference to Exhibit 2 to
Registrant's Current Report on Form 8-K filed with the
Securities and Exchange Commission on August 24, 1995.
(b) Report on Form 8-K
On August 24, 1995, Registrant filed a Current Report on Form
8-K with the Securities and Exchange Commission with respect
to the sale of the stock of NPI, Inc. (Item 1, Change in
Control).
12 of 14
CENTURY PROPERTIES FUND XVII - FORM 10-Q - SEPTEMBER 30, 1995
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CENTURY PROPERTIES FUND XVII
By: FOX CAPITAL MANAGEMENT CORPORATION,
A General Partner
/S/ ARTHUR N. QUELER
Secretary/Treasurer and Director
(Principal Financial Officer)
13 of 14
CENTURY PROPERTIES FUND XVII - FORM 10-Q - SEPTEMBER 30, 1995
EXHIBIT INDEX
Exhibit Page No.
2. NPI, Inc. Stock Purchase Agreement *
dated August 17, 1995
* Incorporated by reference to Exhibit 2 to Registrant's Current Report on
Form 8-K filed with the Securities and Exchange Commission on August 24,
1995.
14 of 14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Century
Properties Fund XVII and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 3,025,000 <F1>
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 65,549,000
<DEPRECIATION> (26,879,000) <F2>
<TOTAL-ASSETS> 43,443,000
<CURRENT-LIABILITIES> 0
<BONDS> 35,061,000
<COMMON> 0
0
0
<OTHER-SE> 7,414,000
<TOTAL-LIABILITY-AND-EQUITY> 43,443,000
<SALES> 0
<TOTAL-REVENUES> 8,890,000
<CGS> 0
<TOTAL-COSTS> 6,347,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,409,000
<INCOME-PRETAX> 209,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 209,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 209,000
<EPS-PRIMARY> 2.45
<EPS-DILUTED> 2.45
<FN>
<F1> Cash includes $860,000 of cash reserved for capital improvements.
<F2> Depreciation includes $1,430,000 of allowance for impairment of value.
</FN>
</TABLE>
