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
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period.........to.........
Commission file number 0-11137
CENTURY PROPERTIES FUND XVII
(Exact name of small business issuer as specified in its charter)
California 94-2782037
(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 registrant (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 XVII
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 1997
Assets
Cash and cash equivalents:
Unrestricted $ 6,229
Restricted - tenant security deposits 273
Escrows for taxes 685
Restricted escrows 919
Other assets 412
Investment properties:
Land $ 7,078
Buildings and related personal property 58,861
65,939
Less accumulated depreciation (29,754) 36,185
$ 44,703
Liabilities and Partners' Capital
Liabilities
Accounts payable $ 98
Other liabilities 368
Accrued taxes 594
Security deposit liabilities 273
Mortgage notes payable 37,099
Partners' (Deficit) Capital:
General partner $ (7,019)
Limited partners'(75,000 units issued and
outstanding) 13,290 6,271
$ 44,703
See Accompanying Notes to Consolidated Financial Statements
b) CENTURY PROPERTIES FUND XVII
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
Revenues:
Rental income $ 3,165 $ 2,964 $ 9,250 $ 8,783
Other income 215 191 598 610
Total revenues 3,380 3,155 9,848 9,393
Expenses:
Operating 994 997 2,919 2,965
General and administrative 77 61 208 257
Maintenance 403 416 1,083 1,160
Depreciation 569 527 1,673 1,580
Property taxes 198 200 581 608
Interest 908 884 2,732 2,657
Total expenses 3,149 3,085 9,196 9,227
Loss on disposal of property -- -- (64) --
Net income $ 231 $ 70 $ 588 $ 166
Net income allocated to
general partner (11.8%) $ 27 $ 8 $ 69 $ 20
Net income allocated to
limited partners (88.2%) 204 62 519 146
Net income $ 231 $ 70 $ 588 $ 166
Net income per limited
partnership unit $ 2.72 $ .83 $ 6.92 $ 1.95
See Accompanying Notes to Consolidated Financial Statements
c) CENTURY PROPERTIES FUND XVII
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Original capital contributions 75,000 $ -- $ 75,000 $ 75,000
Partners' (deficit) capital
at December 31, 1996 75,000 $ (7,057) $ 12,771 $ 5,714
Distributions to partners (31) -- (31)
Net income for the nine months
ended September 30, 1997 -- 69 519 588
Partners' (deficit) capital
at September 30, 1997 75,000 $ (7,019) $ 13,290 $ 6,271
See Accompanying Notes to Consolidated Financial Statements
d) CENTURY PROPERTIES FUND XVII
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
1997 1996
Cash flows from operating activities:
Net income $ 588 $ 166
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 1,673 1,580
Amortization of loan costs and debt discounts 1,105 1,011
Loss on disposal of property 64 --
Change in accounts:
Other assets (326) 41
Accrued expenses and other liabilities (110) 487
Net cash provided by operating activities 2,994 3,285
Cash flows from investing activities:
Deposits to restricted escrows, net of withdrawals (38) (169)
Property improvements and replacements (837) (774)
Net cash used in investing activities (875) (943)
Cash flows from financing activities:
Payments on mortgage notes payable (300) (289)
Distribution to partners (31) --
Net cash used in financing activities (331) (289)
Net increase in unrestricted cash and cash
equivalents 1,788 2,053
Unrestricted cash and cash equivalents at
beginning of period 4,441 2,623
Unrestricted cash and cash equivalents at
end of period $ 6,229 $ 4,676
Supplemental information:
Cash paid for interest $ 1,593 $ 1,645
See Accompanying Notes to Consolidated Financial Statements
e) CENTURY PROPERTIES FUND XVII
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements of Century Properties Fund XVII
(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.
In the opinion of Fox Capital Management Corporation ("FCMC" or 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 nine month periods ended September 30, 1997, are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 31, 1997. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Partnership's annual
report on Form 10-KSB for the year ended December 31, 1996.
Certain reclassifications have been made to the 1996 information to conform to
the 1997 presentation.
NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES
The Partnership has no employees and is dependent on its general partner, Fox
Realty Investors ("FRI"), a California general partnership, and the Managing
General Partner, a California corporation, and their 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.
Pursuant to a series of transactions which closed during the first half of 1996,
affiliates of Insignia Financial Group, Inc. ("Insignia") acquired all of the
issued and outstanding shares of stock of FCMC, NPI Equity Investments II, Inc.
("NPI Equity"), the managing general partner of FRI, and National Property
Investors, Inc. ("NPI"). In connection with these transactions, affiliates of
Insignia appointed new officers and directors of NPI Equity and FCMC.
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 Cherry Creek Garden Apartments, The Lodge
Apartments and Creekside Apartments, which general partners hold a 1% interest
in profits, losses and distributions of such subsidiary partnerships.
The following transactions with affiliates of Insignia were charged to expense
in 1997 and 1996:
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
(in thousands)
1997 1996
<S> <C> <C>
Property management fees (included in operating expenses) $ 481 $ 460
Reimbursement for services of affiliates (includes
approximately $10,000 and $2,000 in construction
oversight costs for the periods ended September 30, 1997
and 1996, respectively) 117 126
</TABLE>
From January 19, 1996, through August 31, 1997, the Partnership insured its
properties under a master policy through an agency and 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 who 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.
On August 28, 1997, an Insignia affiliate commenced tender offers for limited
partnership interests in six real estate limited partnerships (including the
Partnership) in which various Insignia affiliates act as general partner. The
Purchaser offered to purchase up to 22,500 of the outstanding units of limited
partnership interest in the Partnership, at $225.00 per Unit, net to the seller
in cash, upon the terms and subject to the conditions set forth in the Offer to
Purchase dated August 28, 1997 (the "Offer to Purchase") and the related
Assignment of the Partnership Interest attached as Exhibits (a)(1) and (a)(2),
respectively, to the Tender Offer Statement on Schedule 14D-1 originally filled
with the Securities and Exchange Commission on August 28, 1997. Because of the
existing and potential future conflicts of interest (described in the
Partnership's Statements on Schedule 14D-9 filed with the Securities Exchange
Commission), neither the partnership nor the General Partner expressed any
opinion as to the Offer to Purchase and made no recommendation as to whether
unit holders should tender their units in response to the Offer to Purchase.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of five apartment complexes.
The following table sets forth the average occupancy of the properties for the
nine months ended September 30, 1997 and 1996:
Average
Occupancy
Property 1997 1996
Cherry Creek Garden Apartments
Englewood, Colorado 95% 96%
Creekside Apartments
Denver, Colorado 96% 97%
The Lodge Apartments
Denver, Colorado 97% 96%
The Village in the Woods Apartments
Cypress, Texas 95% 93%
Cooper's Pond Apartments
Tampa, Florida 95% 94%
The Partnership generated net income of approximately $588,000 for the nine
months ended September 30, 1997, compared to net income of approximately
$166,000 for the corresponding period of 1996. For the three months ended
September 30, 1997, the Partnership generated net income of approximately
$231,000, compared to net income of approximately $70,000 for the three months
ended September 30, 1996.
The increase in net income for the three and nine months ended September 30,
1997, compared to the corresponding period of 1996, is primarily attributable to
an increase in rental revenue which resulted from increased rental rates at all
of the Partnership's properties. Also contributing to the increase in net
income are decreases in operating, general and administrative and maintenance
costs.
The decrease in operating expenses are primarily attributable to decreases in
advertising at Cherry Creek Gardens Apartments. Print advertisement and tenant
relations were decreased in an effort to control advertising costs at this
property. General and administrative expenses decreased for the nine month
period ended September 30, 1997, as a result of expenses incurred in the
transition and relocation of the administrative offices during the first quarter
of 1996. The decrease in maintenance expense for the nine months ended
September 30, 1997, compared to the same period in 1996, is primarily due to
decreases in deferred maintenance and enhancement projects completed in 1996 at
Coopers Pond Apartments and Creekside Apartments. Offsetting these decreases in
expenses were increases to depreciation and interest expense. Depreciation
expense increased due to significant additions of depreciable assets at all of
the Partnership's investment properties in 1997 and 1996. Interest expense
increased due to the increased amortization of the debt discount secured by The
Village in the Woods Apartments' zero coupon note. Also offsetting the increase
in net income for the nine months ended September 30, 1997, was a loss on
disposal of property due to roof replacements at Creekside Apartments and The
Village in the Woods Apartments. This loss is the result of the write-off of
roof's that were not fully depreciated at the time of the replacement.
Included in maintenance expense for the nine months ended September 30, 1997, is
approximately $200,000 of major repairs and maintenance mainly comprised of
exterior building improvements and major landscaping. Included in maintenance
expense for the nine months ended September 30, 1996, is $171,000 of major
repairs and maintenance mainly comprised of gutter repairs, major landscaping
and exterior building improvements.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from increases in
expense. As part of this plan, the Managing General Partner attempts to protect
the Partnership from the burden of inflation-related increases in expenses by
increasing rents and maintaining a high overall occupancy level. However, due
to changing market conditions, which can result in the use of rental concessions
and rental reductions to offset softening market conditions, there is no
guarantee that the Managing General Partner will be able to sustain such a plan.
At September 30, 1997, the Partnership had unrestricted cash and cash
equivalents of approximately $6,229,000 compared to approximately $4,676,000 at
September 30, 1996. Net cash provided by operating activities decreased
primarily as a result of an increase in other assets and a decrease in accrued
expenses and other liabilities. The increase in other assets is a result of
deposits to tax and insurance escrows and an increase in the amount of prepaid
insurance. The decrease in accrued and other liabilities resulted from a
decrease in accounts payable due to the timing of payments. Net cash used in
investing activities decreased due to a reduction in deposits to restricted
reserves, net of withdrawals. Net cash used in financing activities increased
due to the distribution of approximately $31,000 to the general partner that
owns a 1% interest in the lower-tier partnerships that own Cherry Creek Gardens
Apartments, The Lodge Apartments and Creekside Apartments. This distribution
was necessitated by a distribution of approximately $3,136,000 from these lower-
tier partnerships to the Partnership in order to accumulate funds into one pool
for investment purposes.
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 for the Partnership to borrow in the near future. Other
than unrestricted 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 various 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 $37,099,000, net of discount, is
amortized over varying periods with maturity dates ranging from July 1999 to
July 2005, at which time the properties will either be refinanced or sold.
Future cash distributions will depend on the levels of net cash generated from
operations, property sales and the availability of cash reserves. Currently, the
Managing General Partner is evaluating the feasibility of a distribution during
1997.
On August 28, 1997, an Insignia affiliate commenced tender offers for limited
partnership interests in six real estate limited partnerships (including the
Partnership) in which various Insignia affiliates act as general partner. The
Purchaser offered to purchase up to 22,500 of the outstanding units of limited
partnership interest in the Partnership, at $225.00 per Unit, net to the seller
in cash, upon the terms and subject to the conditions set forth in the Offer to
Purchase dated August 28, 1997 (the "Offer to Purchase") and the related
Assignment of the Partnership Interest attached as Exhibits (a)(1) and (a)(2),
respectively, to the Tender Offer Statement on Schedule 14D-1 originally filled
with the Securities and Exchange Commission on August 28, 1997. Because of the
existing and potential future conflicts of interest (described in the
Partnership's Statements on Schedule 14D-9 filed with the Securities Exchange
Commission), neither the partnership nor the General Partner expressed any
opinion as to the Offer to Purchase and made no recommendation as to whether
unit holders should tender their units in response to the Offer to Purchase.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In August 1997, an Insignia affiliate (the "Purchaser") commenced tender offers
for limited partner interests in six real estate limited partnerships including
the Partnership (collectively, the "Tender Partnerships"), in which various
Insignia affiliates act as general partner. On September 5, 1997, a partnership
claiming to be a holder of limited partnership units in one of the Tender
Partnerships, filed a complaint with respect to a punative class action in the
Court of Chancery in the State of Delaware in and for New Castle County (the
"City Partnerships complaint") challenging the actions of the defendants
(including the Purchaser, Insignia and certain Insignia affiliates) in
connection with the tender offers. Neither the Partnership nor the Managing
General Partner were named as defendants in the action. The City Partnerships
complaint alleges that, among other things, the defendants have intentionally
mismanaged the Tender Partnerships and coerced the limited partners into selling
their units pursuant to the tender offers for substantially lower prices than
the units are worth. The plaintiffs also allege that the defendants breached an
alleged duty to provide an independent analysis of the fair market value of the
limited partnership units, failed to appoint a disinterested committee to review
the tender offer and did not adequately consider other alternatives available to
the limited partners.
On September 8, 1997, persons claiming to be holders of limited partnership
units in the Tender Partnerships filed a complaint with respect to a punative
class action and derivative suit in the Superior Court for the State of
California for the County of San Mateo (the "Kline complaint") challenging the
actions of the defendants (including the Purchaser, Insignia, certain Insignia
affiliates and the Tender Partnerships) in connection with the tender offers.
The Kline complaint alleges that, among other things, the defendants have
intentionally mismanaged the Tender Partnerships and that, as a result of the
tender offers, the Purchaser will acquire effective voting control over the
Tender Partnerships at substantially lower prices, than the units are worth. On
September 24, 1997, the court denied the plaintiffs' application for a temporary
restraining order and their request for preliminary injunctive relief preventing
the completion of the tender offers.
On September 10, 1997, persons claiming to be holders of limited partnership
units in the Tender Partnerships filed a complaint with respect to a punative
class action and derivative suit in the Superior Court for the State of
California for the County of Alameda (the "Heller complaint") challenging the
actions of the defendants (including the Purchaser, Insignia, certain Insignia
affiliates and the Tender Partnerships) in connection with the tender offers.
The Heller complaint alleges that, among other things, the defendants have
intentionally mismanaged the Tender Partnerships and that, as a result of the
tender offers, the Purchaser will acquire effective voting control of the Tender
Partnerships at substantially lower prices than the units are worth. The
Plaintiffs also allege that the defendants breached an alleged duty to retain an
independent advisor to consider alternatives to the tender offers.
The Managing General Partner believes that the allegations contained in the City
Partnerships, Kline and Heller complaints are without merit and intends to
vigorously contest each of those complaints.
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 three months ended September 30,
1997.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act, 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 Partners
Its General Partner
By: Fox Capital Management Corporation
Managing General Partner
By: /s/ William H. Jarrard, Jr.
William H. Jarrard, Jr.
President and Director
BY: /s/ Ronald Uretta
Ronald Uretta
Vice President and Treasurer
Date: November 3, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Century
Properties Fund XVII 1997 Third Quarter 10-QSB and is qualified in its entirety
by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000356472
<NAME> CENTURY PROPERTIES FUND XVII
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 6,229
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 65,939
<DEPRECIATION> 29,754
<TOTAL-ASSETS> 44,703
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 37,099
0
0
<COMMON> 0
<OTHER-SE> 6,271
<TOTAL-LIABILITY-AND-EQUITY> 44,703
<SALES> 0
<TOTAL-REVENUES> 9,848
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,196
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,732
<INCOME-PRETAX> 588
<INCOME-TAX> 0
<INCOME-CONTINUING> 588
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 588
<EPS-PRIMARY> 6.92<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
