March 30, 2000
United States
Securities and Exchange Commission
Washington, D.C. 20549
RE: Century Properties Fund XVII
Form 10-KSB
File No. 0-11137
To Whom it May Concern:
The accompanying Form 10-KSB for the year ended December 31, 1999 describes a
change in the method of accounting to capitalize exterior painting and major
landscaping, which would have been expensed under the old policy. The
Partnership believes that this accounting principle change is preferable because
it provides a better matching of expenses with the related benefit of the
expenditures and it is consistent with industry practice and the policies of the
Managing General Partner.
Please do not hesitate to contact the undersigned with any questions or comments
that you might have.
Very truly yours,
Stephen Waters
Real Estate Controller
<PAGE>
FORM 10-KSB--Annual or Transitional Report Under
Section 13 or 15(d)
Form 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [No Fee Required]
For the fiscal year ended December 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [No Fee Required]
For the transition period _________to _________
Commission file number 0-11137
CENTURY PROPERTIES FUND XVII
(Name of small business issuer in its charter)
California 94-2782037
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
Issuer's telephone number
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Units of Limited Partnership Interests
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No___
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year. $14,429,000
State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests as of December 31, 1999. No market exists for the limited partnership
interests of the Registrant, and, therefore, no aggregate market value can be
determined.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
PART I
Item 1. Description of Business
Century Properties Fund XVII (the "Partnership" or the "Registrant") was
organized in November 1981 as a California limited partnership under the Uniform
Limited Partnership Act of the California Corporations Code. Fox Partners, a
California general partnership, is the general partner of the Partnership. The
general partners of Fox Partners are Fox Capital Management Corporation (the
"Managing General Partner"), a California corporation, Fox Realty Investors
("FRI"), a California general partnership, and Fox Partners 82, a California
general partnership. NPI Equity Investments II Inc., a Florida Corporation ("NPI
Equity"), is the general partner of FRI. As a result of a series of transactions
which occurred during the fourth quarter of 1998 and the first quarter of 1999,
FCMC and NPI Equity are now wholly-owned by Apartment Investment and Management
Company ("AIMCO") (See "Transfer of Control" below). The Partnership Agreement
provides that the Partnership is to terminate on December 31, 2006, unless
terminated prior to such date.
The principal business of the Partnership is and has been to operate, hold for
investment, and ultimately sell income-producing multi-family residential
properties. The Partnership is a "closed" limited partnership real estate
syndicate formed to acquire multi-family residential properties. During 1982,
the Partnership offered and sold, pursuant to a Registration Statement filed
with the Securities and Exchange Commission, 75,000 units of limited partnership
interest ("Units") for an aggregate purchase price of $75,000,000. The net
proceeds of this offering were used to acquire twelve existing apartment
properties. Since its initial offering, the Partnership has not received, nor
are limited partners required to make, additional capital contributions. The
Partnership's original property portfolio was geographically diversified with
properties acquired in four states. Three apartment properties were sold in
1988. One apartment was acquired by the lender through a deed in-lieu of
foreclosure in 1992. During 1993, two apartment properties were sold and one was
acquired by the lender through foreclosure. The Partnership continues to own the
remaining five properties (see "Item 2. Description of Properties").
The Registrant has no full time employees. The Managing General Partner is
vested with full authority as to the general management and supervision of the
business and affairs of the Partnership. The non-managing general partners and
the Limited Partners have no right to participate in the management or conduct
of such business and affairs. Property management services are provided at the
Partnership's properties by an affiliate of the Managing General Partner.
There have been, and it is possible there may be other, Federal, state and local
legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.
The Partnership monitors its properties for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain cases
environmental testing has been performed which resulted in no material adverse
conditions or liabilities. In no case has the Partnership received notice that
it is a potentially responsible party with respect to an environmental clean up
site.
The real estate business in which the Partnership is engaged is highly
competitive. There are other residential properties within the market area of
the Registrant's properties. The number and quality of competitive properties,
including those which may be managed by an affiliate of the Managing General
Partner, in such market area could have a material effect on the rental market
for the apartments at the Registrant's properties and the rents that may be
charged for such apartments. While the Managing General Partner and its
affiliates own and/or control a significant number of apartment units in the
United States, such units represent an insignificant percentage of total
apartment units in the United States and competition for the apartments is
local.
Both the income and expenses of operating the properties owned by the
Partnership are subject to factors outside of the Partnership's control, such as
changes in the supply and demand for similar properties resulting from various
market conditions, increases/decreases in unemployment or population shifts,
changes in the availability of permanent mortgage financing, changes in zoning
laws, or changes in patterns or needs of users. In addition, there are risks
inherent in owning and operating residential properties because such properties
are susceptible to the impact of economic and other conditions outside of the
control of the Partnership.
A further description of the Partnership's business is included in "Management's
Discussion and Analysis or Plan of Operation" included in "Item 6" of this Form
10-KSB.
Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into AIMCO, a publicly traded real estate investment trust, with AIMCO
being the surviving corporation (the "Insignia Merger"). As a result, AIMCO
ultimately acquired 100% ownership interest in 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.
Item 2. Description of Properties:
The following table sets forth the Partnership's investment in properties:
<TABLE>
<CAPTION>
Date of
Property Purchase Type of Ownership Use
<S> <C> <C> <C>
Cherry Creek Gardens Apartments 09/82 Fee ownership subject Apartment
Englewood, Colorado to first mortgage (1) 296 units
Creekside Apartments 10/82 Fee ownership subject Apartment
Denver, Colorado to first mortgage (1) 328 units
The Lodge Apartments 10/82 Fee ownership subject Apartment
Denver, Colorado to first mortgage (1) 376 units
The Village in the Woods 10/82 Fee ownership subject Apartment
Apartments to first mortgage 530 units
Cypress, Texas
Cooper's Pond Apartments 03/83 Fee ownership subject Apartment
Tampa, Florida to first and second 463 units
mortgage
</TABLE>
(1) Property is owned by a limited partnership or limited liability
corporation in which the Registrant owns 100%.
Schedule of Properties:
Set forth below for each of the Registrant's properties is the gross carrying
value, accumulated depreciation, depreciable life, method of depreciation and
Federal tax basis.
<TABLE>
<CAPTION>
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Cherry Creek Gardens $15,258 $ 7,970 5-30 yrs S/L $ 2,562
Creekside 11,372 5,306 5-30 yrs S/L 3,347
The Lodge 12,959 6,254 5-30 yrs S/L 3,269
The Village in the Woods 15,599 7,578 5-30 yrs S/L 3,867
Coopers Pond 15,345 8,212 5-30 yrs S/L 2,891
$70,533 $35,320 $15,936
</TABLE>
See "Note A" of the consolidated financial statements included in "Item 7.
Financial Statements" for a description of the Partnership's depreciation policy
and "Note J - Change in Accounting Principle".
Schedule of Property Indebtedness:
The following table sets forth certain information relating to the loans
encumbering the Registrant's properties.
<TABLE>
<CAPTION>
Principal Principal
Balance At Balance
December 31, Interest Period Maturity Due At
Property 1999 Rate Amortized Date Maturity (3)
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Cherry Creek Gardens $12,415 7.99% 20 years 01/01/20 $ --
Creekside 6,407 6.43% 30 years 09/01/08 5,501
The Lodge 7,098 6.43% 30 years 09/01/08 6,093
The Village in the
Woods (4) 14,421 (1) (1) 01/24/00 14,421
Cooper's Pond
1st mortgage (4) 3,395 8.00% 23 years 07/01/99 3,439
2nd mortgage (4) 4,134 8.50% (2) 07/01/05 4,134
47,870 $33,588
Mortgage discount (93)
$47,777
</TABLE>
(1) Zero coupon note; discounted at an effective interest rate of 10.247%.
(2) Payments of interest only are required.
(3) See "Item 7. Financial Statements - Note C" for information with respect to
the Registrant's ability to prepay these loans and other specific details
about the loans.
(4) Mortgage was refinanced subsequent to December 31, 1999. See below for
information on the refinanced mortgages.
On December 10, 1999, the Partnership refinanced the mortgage encumbering Cherry
Creek Gardens Apartments. The refinancing replaced indebtedness of approximately
$7,320,000 with a new mortgage in the amount of $12,415,000. The new mortgage
carries a stated interest rate of 7.99%. Interest on the old mortgage was 8.63%.
Payments on the mortgage loan are due on the first day of each month beginning
on February 1, 2000 until the loan matures on January 1, 2020. The Partnership
received net proceeds from this refinancing in the aggregate amount of
approximately $4,829,000 of which approximately $4,810,000 was paid as a
distribution to the partners subsequent to December 31, 1999. In addition, the
Partnership was required to establish a repair escrow of $110,000 with the
lender for certain capital replacements. Total capitalized loan costs were
approximately $92,000 at December 31, 1999.
On January 28, 2000, the Partnership refinanced the mortgage encumbering Village
in the Woods Apartments. The refinancing replaced indebtedness of approximately
$14,421,000 with a new mortgage in the amount of $14,500,000. The new mortgage
carries a stated interest rate of 8.56%. The refinanced mortgage was a zero
coupon note which was discounted at an effective interest rate of 10.247%.
Payments on the mortgage loan are due on the first day of each month until the
loan matures on February 1, 2020. The Partnership did not receive any net
proceeds from this refinancing due to payoff of the old mortgage and loan costs.
On February 15, 2000, the Partnership refinanced the first and second mortgages
encumbering Cooper's Pond Apartments. The refinancing replaced indebtedness of
approximately $7,522,000 with a new mortgage in the amount of $8,300,000. The
new mortgage carries a stated interest rate of 8.47%. Interest on the refinanced
mortgages were 8.00% and 8.5%. Payments on the mortgage loan are due on the
first day of each month until the loan matures on March 1, 2020. The Partnership
received net proceeds from this refinancing in the aggregate amount of
approximately $653,000. The Partnership recognized an extraordinary loss on the
early extinguishment of debt of approximately $115,000 due to the write-off of
unamortized loan costs and a prepayment penalty in the first quarter of 2000.
Schedule of Rental Rates and Occupancy:
Average annual rental rate and occupancy for 1999 and 1998 for each property:
Average Annual Average Annual
Rental Rate Occupancy
(per unit)
Property 1999 1998 1999 1998
Cherry Creek Gardens $ 9,595 $ 9,138 97% 96%
Creekside 7,277 6,770 98% 97%
The Lodge 6,738 6,300 98% 97%
The Village in the Woods 7,391 7,103 92% 95%
Cooper's Pond 5,940 5,668 96% 96%
The Managing General Partner attributes the decrease in occupancy at The Village
in the Woods to an increase in home purchases and to a fire that occurred in
November 1999 that damaged 16 units. As of December 31, 1999, the repairs are in
process and will be completed in 2000.
<PAGE>
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. All of the properties of the Partnership are subject to
competition from other apartment complexes in the area. The Managing General
Partner believes that all of the properties are adequately insured. The
multi-family residential properties' lease terms are for one year or less. No
residential tenant leases 10% or more of the available rental space. All of the
properties are in good physical condition, subject to normal depreciation and
deterioration as is typical for assets of this type and age.
Real Estate Taxes and Rates:
Real estate taxes and rates in 1999 for each property were:
1999 1999
Billing Rate
(in thousands)
Cherry Creek Gardens $121 8.26%
Creekside 73 6.55%
The Lodge 76 6.55%
The Village in the Woods 375 2.73%
Cooper's Pond 193 2.45%
Capital Improvements:
Cherry Creek Gardens Apartments
During the year ended December 31, 1999, the Partnership completed approximately
$288,000 of capital improvements at the property, consisting primarily of vinyl
and carpet replacement, air conditioning unit replacement, electrical upgrades,
swimming pool upgrades, parking lot improvements, fencing, recreational facility
improvements, structural improvements and plumbing upgrades. These improvements
were funded from Partnership reserves and operating cash flow. The Partnership
is currently evaluating the capital improvement needs of the property for the
upcoming year. The minimum amount to be budgeted is expected to be $300 per unit
or $88,800. 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.
Creekside Apartments
During the year ended December 31, 1999, the Partnership completed approximately
$644,000 of capital improvements at the property, consisting primarily of roof
replacement, carpet and vinyl replacement, equipment purchases, parking lot
improvements, plumbing upgrades and appliance replacements. These improvements
were funded from Partnership reserves and operating cash flow. The Partnership
is currently evaluating the capital improvement needs of the property for the
upcoming year. The minimum amount to be budgeted is expected to be $300 per unit
or $98,400. Additional improvements may be considered and will depend on the
physical condition of the property as well as replacement reserves and
anticipated cash flow generated by the property.
The Lodge Apartments
During the year ended December 31, 1999, the Partnership completed approximately
$359,000 of capital improvements at the property, consisting primarily of carpet
and vinyl replacement, major landscaping, parking lot and swimming pool
improvements, plumbing upgrades and structural improvements. These improvements
were funded from Partnership reserves and operating cash flow. The Partnership
is currently evaluating the capital improvement needs of the property for the
upcoming year. The minimum amount to be budgeted is expected to be $300 per unit
or $112,800. 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 Village in the Woods Apartments
During the year ended December 31, 1999, the Partnership completed approximately
$478,000 of capital improvements at the property, consisting primarily of carpet
and vinyl replacement, lighting improvements, parking lot improvements, roof
replacement, electrical upgrades, and structural improvements. These
improvements were funded from operating cash flow. The Partnership is currently
evaluating the capital improvement needs of the property for the upcoming year.
The minimum amount to be budgeted is expected to be $300 per unit or $159,000.
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.
Cooper's Pond Apartments
During the year ended December 31, 1999, the Partnership completed approximately
$580,000 of capital improvements at the property, consisting primarily of carpet
and vinyl replacement, appliance replacements, parking lot and swimming pool
improvements, roof replacement, structural improvements, and major landscaping.
These improvements were funded from Partnership reserves and operating cash
flow. The Partnership is currently evaluating the capital improvement needs of
the property for the upcoming year. The minimum amount to be budgeted is
expected to be $300 per unit or $138,900. Additional improvements may be
considered and will depend on the physical condition of the property as well as
replacement reserves and anticipated cash flow generated by the property.
Item 3. Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the Managing General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Item 7. Financial Statements, Note B - Transfer of Control"). The plaintiffs
seek monetary damages and equitable relief, including judicial dissolution of
the Partnership. On June 25, 1998, the Managing General Partner filed a motion
seeking dismissal of the action. In lieu of responding to the motion, the
plaintiffs have filed an amended complaint. The Managing General Partner filed
demurrers to the amended complaint which were heard February 1999. Pending the
ruling on such demurrers, settlement negotiations commenced. On November 2,
1999, the parties executed and filed a Stipulation of Settlement, settling
claims, subject to final court approval, on behalf of the Partnership and all
limited partners who own units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Superior Court of the
State of California, County of San Mateo, at which time the Court set a final
approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing
the Court received various objections to the settlement, including a challenge
to the Court's preliminary approval based upon the alleged lack of authority of
class plaintiffs' counsel to enter the settlement. On December 14, 1999, the
Managing General Partner and its affiliates terminated the proposed settlement.
Certain plaintiffs have filed a motion to disqualify some of the plaintiffs'
counsel in the action. The Managing General Partner does not anticipate that
costs associated with this case will be material to the Partnership's overall
operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
Item 4. Submission of Matters to a Vote of Security Holders
The unit holders of the Registrant did not vote on any matter during the quarter
ended December 31, 1999.
PART II
Item 5. Market for the Partnership's Common Equity and Related Security Holder
Matters
The Partnership, a publicly held limited partnership, sold 75,000 Limited
Partnership Units aggregating $75,000,000 during its offering period. The
Partnership currently has 75,000 Units outstanding and 3,953 Limited Partners of
record. Affiliates of the Managing General Partner owned 41,479 Units or 55.305%
at December 31, 1999. No public trading market has developed for the Units, and
it is not anticipated that such a market will develop in the future.
The following table sets forth the distributions made by the Partnership for the
years ended December 31, 1998 and 1999, as well as for the subsequent period
from January 1, 2000 to February 29, 2000:
Distributions
Per Limited
Aggregate Partnership Unit
(in thousands)
01/01/98 - 12/31/98 $ 5,329 (1) $65.28
01/01/99 - 12/31/99 5,770 (2) 68.76
01/01/00 - 02/29/00 6,000 (3) 76.84
(1) Consists of approximately $3,329,000 of cash from operations and
approximately $2,000,000 of cash proceeds from the refinancing of the
mortgage loans encumbering Creekside and The Lodge Apartments in August
1998 (see "Item 6" for further details).
(2) Consists of approximately $5,081,000 of cash from operations and
approximately $689,000 of cash proceeds from the refinancing of the
mortgage loans encumbering Creekside and The Lodge Apartments in August
1998 (see "Item 6" for further details).
(3) Consists of approximately $1,190,000 of cash from operations and
approximately $4,810,000 of cash proceeds from the refinancing of the
mortgage loan encumbering Cherry Creek Apartments in December 1999 (see
"Item 6" for further details).
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 quarterly basis. There can be no assurance, however, that the
Partnership will generate sufficient funds from operations after required
capital improvements to permit further distributions to its partners in the year
2000 or subsequent periods.
Several tender offers were made by various parties, including affiliates of the
Managing General Partner, during the years ended December 31, 1999 and 1998. As
a result of these and prior tender offers, AIMCO and its affiliates currently
own 41,479 limited partnership units in the Partnership representing 55.305% of
the outstanding units. It is possible that AIMCO or its affiliates will make one
or more additional offers to acquire additional limited partnership interests in
the Partnership for cash or in exchange for units in the operating partnership
of AIMCO. Consequently, AIMCO is in a position to influence all voting decisions
with respect to the Registrant. Under the Partnership Agreement, unitholders
holding a majority of the Units are entitled to take action with respect to a
variety of matters. When voting on matters, AIMCO would in all likelihood vote
the Units it acquired in a manner favorable to the interest of the Managing
General Partner because of their affiliation with the Managing General Partner.
Item 6. Management's Discussion and Analysis or Plan of Operation
The matters discussed in this Form 10-KSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-KSB and the other filings with the
Securities and Exchange Commission made by the Registrant from time to time. The
discussion of the Registrant's business and results of operations, including
forward-looking statements pertaining to such matters, does not take into
account the effects of any changes to the Registrant's business and results of
operations. Accordingly, actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.
This item should be read in conjunction with the consolidated financial
statements and other items contained elsewhere in this report.
Results of Operations
The Partnership realized net income for the year ended December 31, 1999 of
approximately $2,168,000 as compared to net income of approximately $1,423,000
for the corresponding period of 1998. The increase in net income was primarily
due to an increase in total revenues, a decrease in total expenses, and the
recognition of an extraordinary loss on the early extinguishment of debt
recognized in 1998. Total revenues increased primarily due to an increase in
rental income and, to a lessor extent, other income. The increase in rental
income was primarily due to an increase in average rental rates at all of the
Partnership's investment properties and, to a lessor extent, increased occupancy
at Cherry Creek Gardens Apartments, Creekside Apartments, and The Lodge
Apartments. These increases were partially offset by decreased occupancy at
Village in the Woods Apartments as well as increased concession costs and bad
debt expense at Village in the Woods Apartments. The increase in other income is
due primarily to increased income from tenant charges which was partially offset
by a decrease in interest income due to lower average cash balances in interest
bearing accounts.
Total expenses decreased primarily due to decreased operating expenses which was
offset by increases in general and administrative expenses, depreciation expense
and interest expense. The decrease in operating expenses was primarily due to a
decrease in maintenance expenses due to fewer repair and maintenance projects at
the Partnership's investment properties and decreased insurance expense due to
lower rates provided by a new insurance carrier late in 1998 at most of the
Partnership's properties. In addition, there was a loss on disposal of assets
included in operating expenses in 1998 that resulted from the write-off of roofs
at Village in the Woods Apartments which were not fully depreciated at the time
of their replacement in 1998. The increase in general and administrative
expenses resulted primarily from an increase in legal expenses due to the
settlement of a lawsuit as previously disclosed in the Partnership's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1998, and an
increase in professional fees. Included in general and administrative expenses
at both December 31, 1999 and 1998 are reimbursements to the General Partner
allowed under the Partnership Agreement associated with its management of the
Partnership. In addition, costs associated with the quarterly communications
with investors and regulatory agencies required by the Partnership Agreement are
included. Depreciation expense increased due to property improvements and
replacements put into service during the last twelve months. Interest expense
increased primarily due to the increasing mortgage balance at Village in the
Woods Apartments due to amortization of the debt discount on the zero-coupon
mortgage encumbering the property. The extraordinary loss on the early
extinguishment of debt in 1998 related to the refinancing of mortgages at
Creekside Apartments and The Lodge Apartments in August of 1998.
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping on a prospective
basis. The Partnership believes that this accounting principle change is
preferable because it provides a better matching of expenses with the related
benefit of the expenditures and it is consistent with industry practice and the
policies of the Managing General Partner. The effect of the change in 1999 was
to increase net income by approximately $123,000 ($1.44 per limited partnership
unit). The cumulative effect, had this change been applied to prior periods, is
not material. The accounting principle change will not have an effect on cash
flow, funds available for distribution or fees payable to the Managing General
Partner and affiliates.
As part of the ongoing business plan of the 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
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 December 31, 1999, the Partnership had cash and cash equivalents of
approximately $7,097,000 compared to approximately $4,031,000 at December 31,
1998. The increase in cash and cash equivalents of approximately $3,066,000 from
the Partnership's year ended December 31, 1999 is due to approximately
$5,887,000 of cash provided by operating activities, which was partially offset
by approximately $1,531,000 of cash used in investing activities and
approximately $1,290,000 of cash used in financing activities. Cash used in
investing activities consisted of property improvements and replacements
partially offset by net withdrawals from escrow accounts maintained by the
mortgage lenders. Cash used in financing activities consisted of payments of
principal made on the mortgages encumbering the Partnership's properties, the
payoff of the previous mortgage encumbering Cherry Creek Apartments, loan costs
paid and distributions to partners which was partially offset by the proceeds
from the debt refinancing of Cherry Creek Apartments. The Partnership invests
its working capital reserves in money market accounts.
On December 10, 1999, the Partnership refinanced the mortgage encumbering Cherry
Creek Gardens Apartments. The refinancing replaced indebtedness of approximately
$7,320,000 with a new mortgage in the amount of $12,415,000. The new mortgage
carries a stated rate of 7.99%. Interest on the old mortgage was 8.63%. Payments
on the mortgage loan are due on the first day of each month until the loan
matures on January 1, 2020. The Partnership received net proceeds from this
refinancing in the aggregate amount of approximately $4,829,000 of which
approximately $4,810,000 was paid as a distribution to the partners subsequent
to December 31, 1999. In addition, the Partnership was required to establish a
repair escrow of $110,000 with the lender for certain capital replacements.
Total capitalized loan costs were approximately $92,000 at December 31, 1999.
On August 24, 1998, the Partnership refinanced the mortgages encumbering
Creekside Apartments and The Lodge Apartments. The refinancing of Creekside
Apartments replaced indebtedness of approximately $5,091,000 with a new mortgage
in the amount of $6,500,000. The refinancing of The Lodge Apartments replaced
indebtedness of approximately $5,593,000 with a new mortgage in the amount of
$7,200,000. Both of the new mortgages carry a stated interest rate of 6.43%.
Interest on both of the refinanced mortgages was 7.875%. Payments on both
mortgage loans are due on the first day of each month until the loans mature on
September 1, 2008. The Partnership received net proceeds from these refinancings
in the aggregate amount of $2,797,000 of which $2,000,000 was paid as a
distribution to the partners during October 1998 and the remainder was
distributed during 1999. In addition, the Partnership was required to establish
escrows with the lender for repairs, insurance and tax costs. Total capitalized
loan costs were approximately $219,000 at December 31, 1998. The Partnership
recognized an extraordinary loss on the early extinguishment of debt of
approximately $96,000 due to the write-off of unamortized loan costs.
On January 28, 2000, the Partnership refinanced the mortgage encumbering The
Village in the Woods Apartments. The refinancing replaced indebtedness of
approximately $14,421,000 with a new mortgage in the amount of $14,500,000. The
new mortgage carries a stated interest rate of 8.56%. The refinanced mortgage
was a zero coupon note which was discounted at an effective interest rate of
10.247%. Payments on the mortgage loan are due on the first day of each month
until the loan matures on February 1, 2020. The Partnership did not receive any
net proceeds from this refinancing due to payoff of the old mortgage and loan
costs.
On February 15, 2000, the Partnership refinanced the first and second mortgages
encumbering Cooper's Pond Apartments. The refinancing replaced indebtedness of
approximately $7,522,000 with a new mortgage in the amount of $8,300,000. The
new mortgage carries a stated interest rate of 8.47%. Interest on the refinanced
mortgage were 8.00% and 8.5%. Payments on the mortgage loan are due on the first
day of each month until the loan matures on March 1, 2020. The Partnership
received net proceeds from this refinancing in the aggregate amount of
approximately $653,000. The Partnership recognized an extraordinary loss on the
early extinguishment of debt of approximately $115,000 due to the write-off of
unamortized loan costs and a prepayment penalty in the first quarter of 2000.
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 and to comply with Federal,
state, and local legal and regulatory requirements. The Partnership is currently
evaluating the capital improvement needs of the properties for the upcoming
year. The minimum amount to be budgeted is expected to be $300 per unit or
$597,900. Additional improvements may be considered and will depend on the
physical condition of the properties as well as replacement reserves and
anticipated cash flow generated by the properties. 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 Partnership's distributable cash flow, if any, may be adversely
affected.
The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Partnership. At December 31,
1999, the mortgage indebtedness of approximately $47,777,000, net of discount,
is amortized over varying periods with maturity dates ranging from July 1999 at
Cooper's Pond Apartments (see discussion above for information on the
refinancing of this debt subsequent to December 31, 1999) to January 2020 at
Cherry Creek Gardens Apartments. The Managing General Partner will attempt to
refinance such indebtedness and/or sell the properties prior to such maturity
dates. If the properties cannot be refinanced or sold for a sufficient amount,
the Partnership will risk losing such properties through foreclosure.
During the year ended December 31, 1999, the Partnership paid distributions of
approximately $5,770,000 (approximately $5,157,000 to the limited partners or
$68.76 per limited partnership unit) to its partners. The distributions
consisted of approximately $5,081,000 (approximately $4,482,000 to the limited
partners or $59.76 per limited partnership unit) from operations and
approximately $689,000 (approximately $675,000 to the limited partners or $9.00
per limited partnership unit) from the proceeds of the refinancing of the
mortgage loans encumbering Creekside Apartments and The Lodge Apartments in
August 1998. Subsequent to December 31, 1999, the Partnership declared and paid
a distribution of approximately $6,000,000 (approximately $5,763,000 to the
limited partners or $76.84 per limited partnership unit) to its partners. The
distribution consisted of approximately $1,190,000 (approximately $1,049,000 to
the limited partners or $13.99 per limited partnership unit) from operations and
approximately $4,810,000 (approximately $4,714,000 to the limited partners or
$62.85 per limited partnership unit) from the proceeds of the refinancing of the
mortgage loan encumbering Cherry Creek Apartments in December 1999. Cash
distributions of approximately $5,329,000 (approximately $4,896,000 to the
limited partners or $65.28 per limited partnership unit) were paid during the
year ended December 31, 1998. The distributions consisted of approximately
$3,329,000 (approximately $2,936,000 to the limited partners or $39.15 per
limited partnership unit) from operations and approximately $2,000,000
(approximately $1,960,000 to the limited partners or $26.13 per limited
partnership unit) from the proceeds of refinancing of the mortgage loans
encumbering Creekside Apartments and The Lodge Apartments in August 1998. Future
cash distributions will depend on the levels of net cash generated from
operations, the availabilty of cash reserves and the timing of debt maturities,
refinancings, and/or property sales. The Partnership's distribution policy is
reviewed on a quarterly basis. There can be no assurance, however, that the
Partnership will generate sufficient funds from operations, after required
capital improvements, to permit further distributions to its partners in the
year 2000 or subsequent periods.
Tender Offer
Several tender offers were made by various parties, including affiliates of the
Managing General Partner, during the years ended December 31, 1999 and 1998. As
a result of these and prior tender offers, AIMCO and its affiliates currently
own 41,479 limited partnership units in the Partnership representing 55.305% of
the outstanding units. It is possible that AIMCO or its affiliates will make one
or more additional offers to acquire additional limited partnership interests in
the Partnership for cash or in exchange for units in the operating partnership
of AIMCO. Consequently, AIMCO is in a position to influence all voting decisions
with respect to the Registrant. Under the Partnership Agreement, unitholders
holding a majority of the Units are entitled to take action with respect to a
variety of matters. When voting on matters, AIMCO would in all likelihood vote
the Units it acquired in a manner favorable to the interest of the Managing
General Partner because of their affiliation with the Managing General Partner.
Year 2000 Compliance
General Description
The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. The Partnership is
dependent upon the Managing General Partner and its affiliates for management
and administrative services ("Managing Agent"). Any of the Managing Agent's
computer programs or hardware that had date-sensitive software or embedded chips
might have recognized a date using "00" as the year 1900 rather than the year
2000. This could have resulted in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.
Computer Hardware, Software and Operating Equipment
In 1999, the Managing Agent completed all phases of its Year 2000 program by
completing the replacement and repair of any hardware or software system or
operating equipment that was not yet Year 2000 compliant. The Managing Agent's
hardware and software systems and its operating equipment are now Year 2000
compliant. No material failure or erroneous results have occurred in the
Managing Agent's computer applications related to the failure to reference the
Year 2000 to date.
Third Parties
To date, the Managing Agent is not aware of any significant supplier or
subcontractor (external agent) or financial institution of the Partnership that
has a Year 2000 issue that would have a material impact on the Partnership's
results of operations, liquidity or capital resources. However, the Managing
Agent has no means of ensuring or determining the Year 2000 compliance of
external agents. At this time, the Managing Agent does not believe that a Year
2000 issue of any non-compliant external agent will have a material impact on
the Partnership's financial position or results of operations.
Costs
The total cost of the Managing Agent's Year 2000 project was approximately $3.2
million and was funded from operating cash flows.
Risks Associated with the Year 2000
The Managing Agent completed all necessary phases of its Year 2000 program in
1999, and did not experience system or equipment malfunctions related to a
failure to reference the Year 2000. The Managing Agent or Partnership have not
been materially adversely effected by disruptions in the economy generally
resulting from the Year 2000 issue.
At this time, the Managing Agent does not believe that the Partnership's
businesses, results of operations or financial condition will be materially
adversely effected by the Year 2000 issue.
Contingency Plans Associated with the Year 2000
The Managing Agent has not had to implement contingency plans such as manual
workarounds or selecting new relationships for its banking or elevator operation
activities in order to avoid the Year 2000 issue.
Item 7. Financial Statements
CENTURY PROPERTIES FUND XVII
LIST OF FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Auditors
Consolidated Balance Sheet - December 31, 1999
Consolidated Statements of Operations - Years ended December 31, 1999
and 1998
Consolidated Statements of Changes in Partners' (Deficit) Capital -
Years ended December 31, 1999 and 1998
Consolidated Statements of Cash Flows - Years ended December 31, 1999
and 1998
Notes to Consolidated Financial Statements
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
The Partners
Century Properties Fund XVII
We have audited the accompanying consolidated balance sheet of Century
Properties Fund XVII as of December 31, 1999, and the related consolidated
statements of operations, changes in partners' (deficit) capital and cash flows
for each of the two years in the period ended December 31, 1999. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the Partnership's management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Century Properties
Fund XVII at December 31, 1999, and the consolidated results of its operations
and its cash flows for each of the two years in the period ended December 31,
1999, in conformity with accounting principles generally accepted in the United
States.
As discussed in Note J to the consolidated financial statements, the Partnership
changed its method of accounting to capitalize the cost of exterior painting and
major landscaping effective January 1, 1999.
/s/ERNST & YOUNG LLP
Greenville, South Carolina
February 25, 2000
<PAGE>
CENTURY PROPERTIES FUND XVII
CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)
December 31, 1999
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and cash equivalents $ 7,097
Receivables and deposits 1,311
Restricted escrows 463
Other assets 477
Investment properties (Notes C and F):
Land $ 7,078
Buildings and related personal property 63,455
70,533
Less accumulated depreciation (35,320) 35,213
$ 44,561
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 252
Tenant security deposit liabilities 308
Accrued property taxes 612
Other liabilities 323
Mortgage notes payable (Note C) 47,777
Partners' (Deficit) Capital
General partner $ (8,023)
Limited partners (75,000 units issued and
outstanding) 3,312 (4,711)
$ 44,561
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
CENTURY PROPERTIES FUND XVII
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998
Revenues:
<S> <C> <C>
Rental income $13,650 $13,051
Other income 779 744
Total revenues 14,429 13,795
Expenses:
Operating 4,913 5,295
General and administrative 358 282
Depreciation 2,611 2,418
Interest 3,573 3,490
Property taxes 806 791
Total expenses 12,261 12,276
Income before extraordinary loss 2,168 1,519
Extraordinary loss on early extinguishment of debt
(Note C) (--) (96)
Net income (Note D) $ 2,168 $ 1,423
Net income allocated to general partner (11.8%) $ 256 $ 168
Net income allocated to limited partners (88.2%) 1,912 1,255
$ 2,168 $ 1,423
Per limited partnership unit:
Income before extraordinary loss $ 25.49 $ 17.86
Extraordinary loss -- (1.13)
Net income $ 25.49 $ 16.73
Distributions per limited partnership unit $ 68.76 $ 65.28
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
CENTURY PROPERTIES FUND XVII
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 75,000 $ -- $75,000 $75,000
Partners' (deficit) capital at
December 31, 1997 75,000 $(7,401) $10,198 $2,797
Distributions to partners -- (433) (4,896) (5,329)
Net income for the year ended
December 31, 1998 -- 168 1,255 1,423
Partners' (deficit) capital at
December 31, 1998 75,000 (7,666) 6,557 (1,109)
Distributions to partners -- (613) (5,157) (5,770)
Net income for the year ended
December 31, 1999 -- 256 1,912 2,168
Partners' (deficit) capital at
December 31, 1999 75,000 $(8,023) $ 3,312 $(4,711)
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
CENTURY PROPERTIES FUND XVII
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998
Cash flows from operating activities:
<S> <C> <C>
Net income $ 2,168 $ 1,423
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 2,611 2,418
Amortization of loan costs and debt discounts 1,420 1,309
Extraordinary loss on debt refinancing -- 96
Loss on disposal of property -- 36
Change in accounts:
Receivables and deposits (279) 3
Other assets (53) 51
Accounts payable 110 (64)
Tenant security deposit liabilities 34 10
Accrued property taxes (66) 88
Other liabilities (58) 31
Net cash provided by operating activities 5,887 5,401
Cash flows from investing activities:
Property improvements and replacements (2,349) (2,111)
Net withdrawals from (deposits to) restricted escrows 818 (329)
Net cash used in investing activities (1,531) (2,440)
Cash flows from financing activities:
Payments on mortgage notes payable (409) (409)
Payoff of mortgage note payable (7,320) (10,684)
Proceeds from mortgage note payable 12,415 13,700
Loan costs paid (206) (219)
Distributions to partners (5,770) (5,329)
Net cash used in financing activities (1,290) (2,941)
Net increase in cash and cash equivalents $ 3,066 $ 20
Cash and cash equivalents at beginning of period 4,031 4,011
Cash and cash equivalents at end of period $ 7,097 $ 4,031
Supplemental disclosure of cash flow information:
Cash paid for interest $ 2,213 $ 2,181
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
CENTURY PROPERTIES FUND XVII
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note A - Organization and Significant Accounting Policies
Organization: Century Properties Fund XVII (the "Partnership" or the
"Registrant") is a California limited partnership organized in November 1981 to
acquire and operate residential apartment complexes. The Partnership currently
owns five residential apartment complexes of which three are located in
Colorado, and one each in Florida and Texas. Fox Partners, a California general
partnership, is the general partner of the Partnership. The general partners of
Fox Partners are Fox Capital Management Corporation (the "Managing General
Partner"), Fox Realty Investors ("FRI"), and Fox Partners 82. NPI Equity
Investments II, Inc., a Florida corporation ("NPI Equity"), is the general
partner of FRI. On February 26, 1999, Insignia Properties Trust ("IPT") which
was the sole shareholder of both FCMC and NPI Equity, merged into Apartment
Investment and Management Company ("AIMCO"). See "Note B - Transfer of Control".
The Partnership Agreement provides that the Partnership is to terminate on
December 31, 2006 unless terminated prior to such date.
Principles of Consolidation: The financial statements include all the accounts
of the Partnership and Apartment CCG 17, L.P., which owns Cherry Creek
Apartments, Apartment Creek 17, LLC, which owns Creekside Apartments and
Apartment Lodge 17, LLC, which owns The Lodge Apartments, entities. The
Partnership ultimately holds 100% interest in each of the entities. All
intra-entity balances have been eliminated.
The financial statements include all the accounts of the Partnership and its
wholly owned partnerships.
Allocation of Profits, Gains and Losses: Profits, gains and losses of the
Partnership are allocated between the general partner and limited partners in
accordance with the provision of the Partnership Agreement.
The general partner is entitled to receive, as a management incentive, an
allocation of ten percent of the net income and net loss, taxable income and
taxable loss, and cash available for distribution distributed to the partners.
After payment of the management incentive, net income (including that arising
from the occurrence of sales or dispositions) and net loss of the Partnership
and taxable income (loss) are allocated 98% to the limited partners and 2% to
the general partner.
Depreciation: Depreciation is provided by the straight-line method over the
estimated lives of the apartment properties and related personal property. For
Federal income tax purposes, the accelerated cost recovery method is used (1)
for real property over 15 years for additions prior to March 16, 1984, 18 years
for additions after March 15, 1984 and before May 9, 1985, and 19 years for
additions after May 8, 1985, and before January 1, 1987, and (2) for personal
property over 5 years for additions prior to January 1, 1987. As a result of the
Tax Reform Act of 1986, for additions after December 31, 1986, the modified
accelerated cost recovery method is used for depreciation of (1) real property
over 27 1/2 years and (2) personal property additions over 5 years.
<PAGE>
Effective January 1, 1999 the Partnership changed its method of accounting to
capitalize the costs of exterior painting and major landscaping (Note J).
Cash and Cash Equivalents: Cash and cash equivalents include cash on hand and in
banks and money market accounts. At certain times, the amount of cash deposited
at a bank may exceed the limit on insured deposits.
Tenant Security Deposits: The Partnership requires security deposits from
lessees for the duration of the lease and such deposits are included in
receivables and deposits. Deposits are refunded when the tenant vacates,
provided the tenant has not damaged its space and is current on its rental
payments.
Restricted Escrows:
Reserve Account: A general reserve account was established in 1998 with
the refinancing proceeds for Creekside Apartments and The Lodge Apartments
and in 1999 with the refinancing proceeds from Cherry Creek Apartments.
These funds were established to cover necessary repairs and replacements
of existing improvements, assurance of completion and payment of real
property taxes and insurance premiums. The reserve account balance at
December 31, 1999, is approximately $348,000 which includes interest.
Replacement Reserve: A replacement reserve account was established in 1998
with the refinancing proceeds for Creekside Apartments and The Lodge
Apartments. These funds were established to complete listed repairs and
replacements. There is also a reserve balance at Cooper's Pond from an
earlier refinancing. The remaining funds in the replacement reserve at
Creekside Apartments were withdrawn in 1999. The reserve account balance
at December 31, 1999 is approximately $115,000 which includes interest.
Leases: The Partnership generally leases apartment units for twelve-month terms
or less. The Partnership recognizes income as earned on its leases. In addition,
the Managing General Partner's policy is to offer rental concessions during
particularly slow months or in response to heavy competition from other similar
complexes in the area. Concessions are charged against rental income as
incurred.
Loan Costs: Loan costs of approximately $688,000, less accumulated amortization
of approximately $317,000, are included in other assets in the accompanying
consolidated balance sheet and are being amortized on a straight-line basis over
the lives of the related loans.
Amortization of loan costs is included in interest expense in the accompanying
consolidated statements of operations.
Investment Properties: Investment properties consist of five apartment complexes
and are stated at cost. Acquisition fees are capitalized as a cost of real
estate. In accordance with Statement of Financial Accounting Standards ("SFAS")
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of", the Partnership records impairment losses on
long-lived assets used in operations when events and circumstances indicate that
the assets might be impaired and the undiscounted cash flows estimated to be
generated by those assets are less than the carrying amounts of these assets.
For the years ended December 31, 1999 and 1998, no adjustments for impairment of
value were necessary.
Fair Value: SFAS No. 107, "Disclosures about Fair Value of Financial
Instruments", as amended by SFAS No. 119, "Disclosures about Derivative
Financial Instruments and Fair Value of Financial Instruments", requires
disclosure of fair value information about financial instruments, whether or not
recognized in the balance sheet, for which it is practicable to estimate fair
value. Fair value is defined in the SFAS as the amount at which the instruments
could be exchanged in a current transaction between willing parties, other than
in a forced or liquidation sale. The Partnership believes that the carrying
amount of its financial instruments (except for long term debt) approximates
their fair value due to the short term maturity of these instruments. The
estimated fair value of the Partnership's long term debt, after discounting the
scheduled loan payments to maturity, approximates its carrying balance.
Segment Reporting: SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information" established standards for the way that public business
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports. It also establishes standards
for related disclosures about products and services, geographic areas, and major
customers. (See "Note H" for required disclosure).
Advertising Costs: Advertising costs of approximately $292,000 and $318,000 for
the years ended December 31, 1999 and 1998, respectively, are charged to
operating expense in the accompanying consolidated statements of operations.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
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 IPT 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.
<PAGE>
Note C - Mortgage Notes Payable
The principle terms of mortgage notes payable are as follows:
<TABLE>
<CAPTION>
Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Including Interest Maturity Due At
Property 1999 Interest Rate Date Maturity
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Cherry Creek Gardens $12,415 $ 104 7.99% 01/01/20 $ --
Creekside 6,407 41 6.43% 09/01/08 5,501
The Lodge 7,098 45 6.43% 09/01/08 6,093
The Village in the
Woods (2) 14,421 (1) (1) 01/24/00 14,421
Cooper's Pond
1st mortgage (2) 3,395 30 8.00% 07/01/99 3,439
2nd mortgage (2) 4,134 29 8.50% 07/01/05 4,134
47,870 $ 249 $33,588
Mortgage discount (93)
$47,777
</TABLE>
(1) Zero coupon note; discounted at an effective interest rate of 10.247%
(2) Mortgage was refinanced subsequent to December 31, 1999. See below for
information on the refinanced mortgages.
On February 15, 2000, the Partnership refinanced the mortgage encumbering
Cooper's Pond Apartments. On January 28, 2000, the Partnership refinanced the
mortgage encumbering Village in the Woods Apartments (see "Note K" for further
information on these refinancings).
On December 10, 1999, the Partnership refinanced the mortgage encumbering Cherry
Creek Gardens Apartments. The refinancing replaced indebtedness of approximately
$7,320,000 with a new mortgage in the amount of $12,415,000. The new mortgage
carries a stated interest rate of 7.99%. Interest on the old mortgage was 8.63%.
Payments on the mortgage loan are due on the first day of each month beginning
on February 1, 2000 until the loan matures on January 1, 2020. The Partnership
received net proceeds from this refinancing in the aggregate amount of
approximately $4,829,000 of which approximately $4,810,000 was paid as a
distribution to the partners subsequent to December 31, 1999. In addition, the
Partnership was required to establish a repair escrow of $110,000 with the
lender for certain capital replacements. Total capitalized loan costs were
approximately $92,000 at December 31, 1999.
On August 24, 1998, the Partnership refinanced the mortgages encumbering
Creekside Apartments and The Lodge Apartments. The refinancing of Creekside
Apartments replaced indebtedness of approximately $5,091,000 with a new mortgage
in the amount of $6,500,000. The refinancing of The Lodge Apartments replaced
indebtedness of approximately $5,593,000 with a new mortgage in the amount of
$7,200,000. Both of the new mortgages carry a stated interest rate of 6.43%.
Interest on both of the refinanced mortgages was 7.875%. Payments on both
mortgage loans are due on the first day of each month until the loans mature on
September 1, 2008. The Partnership received net proceeds from these refinancings
in the aggregate amount of $2,797,000 of which $2,000,000 was paid as a
distribution to the partners during October 1998 and the remainder was
distributed during 1999. In addition, the Partnership was required to establish
escrows with the lender for repairs, insurance, and tax costs. Total capitalized
loan costs were approximately $219,000 at December 31, 1998. The Partnership
recognized an extraordinary loss on the early extinguishment of debt of
approximately $96,000 due to the write-off of unamortized loan costs.
The mortgage notes payable are non-recourse and are secured by pledge of the
respective apartment properties and by pledge of revenues from the respective
apartment properties. Certain of the notes require prepayment penalties if
repaid prior to maturity and prohibit resale of the properties subject to
existing indebtedness.
Scheduled principal payments on the mortgage notes payable subsequent to
December 31, 1999 are as follows (dollar amounts in thousands):
2000 $18,225
2001 462
2002 497
2003 535
2004 576
Thereafter 27,575
$47,870
Included in the 2000 payments is the December 31, 1999 outstanding loan balance
on the Cooper's Pond notes payable, as it matured in July 1999. The loan was not
in default due to the maturity date extension granted by the lender while the
Managing General Partner negotiated refinancing of the loan. Subsequent to
December 31, 1999, the first mortgage note encumbering Cooper's Pond was
refinanced with a new maturity date of March 1, 2020 (see "Note K").
Note D - Income Taxes
Taxable income or loss of the Partnership is reported in the income tax returns
of its partners. Accordingly, no provision for income taxes is made in the
consolidated financial statements of the Partnership.
The following is a reconciliation of reported net income and Federal taxable
income:
1999 1998
(in thousands, except unit data)
Net income as reported $ 2,168 $ 1,423
Add (deduct):
Depreciation differences 1,594 919
Amortization of discount 1,335 1,201
Miscellaneous 5 345
Federal taxable income $ 5,102 $ 3,888
Federal taxable income per limited
partnership unit $ 60.00 $ 45.72
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):
Net liabilities as reported $ (4,711)
Land and Buildings 7,933
Accumulated Depreciation (27,210)
Syndication and Distribution Costs 9,319
Amortization of discount on
notes payable (93)
Original issue discount 10,653
Other (278)
Net liabilities - Federal tax basis $ (4,387)
Note E - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
partnership activities. The Partnership Agreement provides for payments to
affiliates for services and as the reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership.
The following payments were made to the Managing General Partner and affiliates
during the years ended December 31, 1999 and 1998.
1999 1998
(in thousands)
Property management fees (included in
operating expenses) $721 $680
Reimbursement for services of affiliates
(included in investment properties,
general and administrative expense and
operating expense) 216 215
Partnership management fee (included in 508 333
general partner distributions)
During the years ended December 31, 1999 and 1998, affiliates of the Managing
General Partner were entitled to receive 5% of gross receipts from all of the
Registrant's properties for providing property management services. The
Registrant paid to such affiliates approximately $721,000 and $680,000 for the
years ended December 31, 1999 and 1998, respectively.
An affiliate of the Managing General Partner received reimbursement of
accountable administrative expenses amounting to approximately $216,000 and
$215,000 for the years ended December 31, 1999 and 1998, respectively. Included
in this expense is approximately $54,000 and $61,000 in construction oversight
costs for the years ended December 31, 1999 and 1998, respectively.
Pursuant to the Partnership Agreement for managing the affairs of the
Partnership, the general partner is entitled to receive a Partnership management
fee equal to 10% of the Partnership's adjusted cash from operations as
distributed. Approximately $508,000 and $333,000 in Partnership management fees
were paid along with the distributions from operations made during the year
ended December 31, 1999 and 1998, respectively.
In addition, the Partnership paid to an affiliate approximately $27,000 in loan
costs related to the refinancing of mortgages at Creekside Apartments and The
Lodge Apartments during the twelve months ended December 31, 1998. These loan
costs are included in other assets and are amortized as interest expense over
the terms of the loan agreements.
An affiliate of the Managing General Partner has made available to the
Partnership a credit line of up to $150,000 per property owned by the
Partnership. The Partnership has no outstanding amounts due under this line of
credit. Based on present plans, the Managing General Partner does not anticipate
the need to borrow in the near future. Other than cash and cash equivalents, the
line of credit is the Partnership's only unused source of liquidity.
Several tender offers were made by various parties, including affiliates of the
Managing General Partner, during the years ended December 31, 1999 and 1998. As
a result of these, and prior tender offers, AIMCO and its affiliates currently
own 41,479 limited partnership units in the Partnership representing 55.305% of
the outstanding units. It is possible that AIMCO or its affiliates will make one
or more additional offers to acquire additional limited partnership interests in
the Partnership for cash or in exchange for units in the operating partnership
of AIMCO. Consequently, AIMCO is in a position to influence all voting decisions
with respect to the Registrant. Under the Partnership Agreement, unitholders
holding a majority of the Units are entitled to take action with respect to a
variety of matters. When voting on matters, AIMCO would in all likelihood vote
the Units it acquired in a manner favorable to the interest of the Managing
General Partner because of their affiliation with the Managing General Partner.
Note F - Real Estate and Accumulated Depreciation
<TABLE>
<CAPTION>
Initial Cost
To Partnership
(in thousands)
Cost
Buildings Capitalized
and Related (Removed)
Personal Subsequent to
Description Encumbrances Land Property Acquisition
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Cherry Creek Gardens $12,415 $ 1,320 $11,879 $ 2,059
Creekside 6,407 1,366 7,307 2,700
The Lodge 7,098 1,575 8,580 2,805
The Village in the Woods 14,421 2,852 20,915 (8,169)
Cooper's Pond 7,529 1,476 12,505 1,363
Total $47,870 $ 8,589 $61,186 $ 758
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Gross Amount At Which
Carried
At December 31, 1999
(in thousands)
Buildings
And Related Year of
Personal Accumulated Constru- Date Depreciable
Description Land Property Total Depreciation tion Acquired Life-Years
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Cherry Creek $ 1,320 $13,938 $15,258 $ 7,970 1979 09/82 5-30 yrs
Gardens
Creekside 1,366 10,006 11,372 5,306 1974 10/82 5-30 yrs
The Lodge 1,577 11,382 12,959 6,254 1974 10/82 5-30 yrs
Village in 1,500 14,099 15,599 7,578 1983 10/82 5-30 yrs
the Woods
Cooper's Pond 1,315 14,030 15,345 8,212 1979-1981 03/83 5-30 yrs
Total 7,078 $63,455 $70,533 $35,320
</TABLE>
Reconciliation of "Real Estate and Accumulated Depreciation":
Years Ended December 31,
1999 1998
Real Estate (in thousands)
Balance at beginning of year $68,184 $66,141
Property improvements 2,349 2,111
Disposals of property -- (68)
Balance at end of year $70,533 $68,184
Accumulated Depreciation
Balance at beginning of year $32,709 $30,323
Additions charged to expense 2,611 2,418
Disposals on property -- (32)
Balance at end of year $35,320 $32,709
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1999 and 1998 is approximately $78,466,000 and $76,116,000,
respectively. The accumulated depreciation taken for Federal income tax purposes
at December 31, 1999 and 1998, is approximately $62,530,000 and $61,513,000,
respectively.
Note G - Distributions to Partners
During the year ended December 31, 1999, the Partnership paid distributions of
approximately $5,770,000 (approximately $5,157,000 to the limited partners or
$68.76 per limited partnership unit) to its partners. The distributions
consisted of approximately $5,081,000 (approximately $4,482,000 to the limited
partners or $59.76 per limited partnership unit) from operations and
approximately $689,000 (approximately $675,000 to the limited partners or $9.00
per limited partnership unit) from the proceeds of the refinancing of the
mortgage loans encumbering Creekside Apartments and The Lodge Apartments in
August 1998. Subsequent to December 31, 1999, the Partnership declared and paid
a distribution of approximately $6,000,000 (approximately $5,763,000 to the
limited partners or $76.84 per limited partnership unit) to its partners. The
distribution consisted of approximately $1,190,000 (approximately $1,049,000 to
the limited partners or $13.99 per limited partnership unit) from operations and
approximately $4,810,000 (approximately $4,714,000 to the limited partners or
$62.85 per limited partnership unit) from the proceeds of the refinancing of the
mortgage loan encumbering Cherry Creek Apartments in December 1999. Cash
distributions of approximately $5,329,000 (approximately $4,896,000 to the
limited partners or $65.28 per limited partnership unit) were paid during the
year ended December 31, 1998. The distributions consisted of approximately
$3,329,000 (approximately $2,936,000 to the limited partners or $39.15 per
limited partnership unit) from operations and approximately $2,000,000
(approximately $1,960,000 to the limited partners or $26.13 per limited
partnership unit) from the proceeds of refinancing of the mortgage loans
encumbering Creekside Apartments and The Lodge Apartments in August 1998.
Note H - Segment Reporting
The Partnership has one reportable segment: residential properties. The
Partnership's residential property segment consists of five apartment complexes,
three of which are located in Colorado, and one each in Florida and Texas. The
Partnership rents apartment units to tenants for terms that are typically twelve
months or less.
The Partnership evaluates performance based on segment profit (loss) before
depreciation. The accounting policies of the reportable segment are the same as
those described in the summary of significant accounting policies.
The Partnership's reportable segment consists of investment properties that
offer similar products and services. Although each of the investment properties
is managed separately, they have been aggregated into one segment as they
provide services with similar types of products and customers.
Segment information for the years ended December 31, 1999 and 1998 is shown in
the tables below (in thousands). The "Other" column includes Partnership
administration related items and income and expense not allocated to the
reportable segment.
1999 Residential Other Totals
Rental income $13,650 $ -- $13,650
Other income 743 36 779
Interest expense 3,573 -- 3,573
Depreciation 2,611 -- 2,611
General and administrative expense -- 358 358
Segment profit (loss) 2,490 (322) 2,168
Total assets 39,099 5,462 44,561
Capital expenditures for
investment properties 2,349 -- 2,349
<PAGE>
1998 Residential Other Totals
Rental income $13,051 $ -- $13,051
Other income 633 111 744
Interest expense 3,490 -- 3,490
Depreciation 2,418 -- 2,418
General and administrative expense -- 282 282
Extraordinary loss on early
extinguishment of debt (96) -- (96)
Segment profit (loss) 1,593 (170) 1,423
Total assets 41,361 761 42,122
Capital expenditures for
investment properties 2,111 -- 2,111
Note I - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the Managing General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Note B - Transfer of Control"). The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998, the Managing General Partner filed a motion seeking dismissal of the
action. In lieu of responding to the motion, the plaintiffs have filed an
amended complaint. The Managing General Partner filed demurrers to the amended
complaint which were heard February 1999. Pending the ruling on such demurrers,
settlement negotiations commenced. On November 2, 1999, the parties executed and
filed a Stipulation of Settlement, settling claims, subject to final court
approval, on behalf of the Partnership and all limited partners who own units as
of November 3, 1999. Preliminary approval of the settlement was obtained on
November 3, 1999 from the Superior Court of the State of California, County of
San Mateo, at which time the Court set a final approval hearing for December 10,
1999. Prior to the December 10, 1999 hearing the Court received various
objections to the settlement, including a challenge to the Court's preliminary
approval based upon the alleged lack of authority of class plaintiffs' counsel
to enter the settlement. On December 14, 1999, the Managing General Partner and
its affiliates terminated the proposed settlement. Certain plaintiffs have filed
a motion to disqualify some of the plaintiffs' counsel in the action. The
Managing General Partner does not anticipate that costs associated with this
case will be material to the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
Note J - Change in Accounting Principle
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping on a prospective
basis. The Partnership believes that this accounting principle change is
preferable because it provides a better matching of expenses with the related
benefit of the expenditures and it is consistent with industry practice and the
policies of the Managing General Partner. The effect of the change in 1999 was
to increase net income by approximately $123,000 ($1.44 per limited partnership
unit). The cumulative effect, had this change been applied to prior periods, is
not material. The accounting principle change will not have an effect on cash
flow, funds available for distribution or fees payable to the Managing General
Partner and affiliates.
Note K - Subsequent Events
On January 28, 2000, the Partnership refinanced the mortgage encumbering Village
in the Woods Apartments. The refinancing replaced indebtedness of approximately
$14,421,000 with a new mortgage in the amount of $14,500,000. The new mortgage
carries a stated interest rate of 8.56%. The refinanced mortgage was a zero
coupon note which was discounted at an effective interest rate of 10.247%.
Payments on the mortgage loan are due on the first day of each month until the
loan matures on February 1, 2020. The Partnership did not receive any net
proceeds from this refinancing due to payoff of the old mortgage and loan costs.
On February 15, 2000, the Partnership refinanced the first and second mortgages
encumbering Cooper's Pond Apartments. The refinancing replaced indebtedness of
approximately $7,522,000 with a new mortgage in the amount of $8,300,000. The
new mortgage carries a stated interest rate of 8.47%. Interest on the refinanced
mortgage were 8.00% and 8.5%. Payments on the mortgage loan are due on the first
day of each month until the loan matures on March 1, 2020. The Partnership
received net proceeds from this refinancing in the aggregate amount of
approximately $653,000. The Partnership recognized an extraordinary loss on the
early extinguishment of debt of approximately $115,000 due to the write-off of
unamortized loan costs and a prepayment penalty in the first quarter of 2000.
Item 8. Changes in and Disagreements with Accountant on Accounting and Financial
Disclosures
None.
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act
Century Properties Fund XVII (the "Partnership" or the "Registrant") has no
officers or directors. The managing general partner of the Partnership is Fox
Capital Management Corporation ("FCMC" or the "Managing General Partner"). The
names and ages of, as well as the positions and offices held by, the executive
officers and directors of the Managing General Partner are set forth below.
There are no family relationships between or among any officers or directors.
Name Age Position
Patrick J. Foye 42 Executive Vice President and Director
Martha L. Long 40 Senior Vice President and Controller
Patrick J. Foye has been Executive Vice President and Director of the Managing
General Partner since October 1, 1998. Mr. Foye has served as Executive Vice
President of AIMCO since May 1998. Prior to joining AIMCO, Mr. Foye was a
partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to
1998 and was Managing Partner of the firm's Brussels, Budapest and Moscow
offices from 1992 through 1994. Mr. Foye is also Deputy Chairman of the Long
Island Power Authority and serves as a member of the New York State
Privatization Council. He received a B.A. from Fordham College and a J.D. from
Fordham University Law School.
Martha L. Long has been Senior Vice President and Controller of the Managing
General Partner and AIMCO since October 1998, as a result of the acquisition of
Insignia Financial Group, Inc. From June 1994 until January 1997, she was the
Controller for Insignia, and was promoted to Senior Vice President - Finance and
Controller in January 1997, retaining that title until October 1998. From 1988
to June 1994, Ms. Long was Senior Vice President and Controller for The First
Savings Bank, FSB in Greenville, South Carolina.
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to
the Registrant under Rule 16a-3(e) during the Registrant's most recent fiscal
year and Form 5 and amendments thereto furnished to the Registrant with respect
to its most recent fiscal year, the Registrant is not aware of any director,
officer, beneficial owner of more than ten percent of the units of limited
partnership interest in the Registrant that failed to file on a timely basis, as
disclosed in the above Forms, reports required by section 16(a) of the Exchange
Act during the most recent fiscal year or prior fiscal years except as follows:
AIMCO Properties, L.P. and its joint filers failed to timely file a Form 3 with
respect to its acquisition of Units and AIMCO and its joint filers failed to
timely file a Form 4 with respect to its acquisition of Units.
Item 10. Executive Compensation
Neither the director nor the officers received any remuneration from the
Partnership during the year ended December 31, 1999.
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding limited partnership
units of the Registrant owned by each person who is known by the Registrant to
own beneficially or exercise voting or dispositive control over more than 5% of
the Registrant's limited partnership units, by each of the directors and by all
directors and executive officers of the Managing General Partner as a group as
of December 31, 1999.
Amount and nature of %
Name of Beneficial Owner Beneficial Owner of Units
Insignia Properties, LP 25,833.50 34.445%
(an affiliate of AIMCO)
IPLP Acquisition I LLC 3,369.50 4.493%
(an affiliate of AIMCO)
AIMCO Properties LP 12,276.00 16.367%
(an affiliate of AIMCO)
Insignia Properties LP and IPLP Acquisition I LLC are indirectly ultimately
owned by AIMCO. Their business address is 55 Beattie Place, Greenville, South
Carolina 29602.
AIMCO Properties LP is indirectly ultimately controlled by AIMCO. Its business
address is 2000 South Colorado Boulevard, Denver, Colorado 80222.
No director or officer of the Managing General Partner owns any Units. The
general partner owns 100 Units as required by the terms of the Partnership
Agreement governing the Partnership.
As a result of its ownership of 41,479 units, AIMCO could be in a position to
influence all voting decision with respect to the Partnership. Under the
Partnership Agreement, unitholders holding a majority of the Units are entitled
to take action with respect to a variety of matters. When voting on matters,
AIMCO would in all likelihood vote the Units it acquired in a manner favorable
to the interest of the Managing General Partner because of its affiliation with
the Managing General Partner. However, DeForest Ventures I L.P., from whom
Insignia Properties, L.P. acquired its units, had agreed for the benefit of
non-tendering unitholders, that it would vote its 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 unit holders. Except for the
foregoing, no other limitations are imposed on Insiginia Properties, L.P.'s
right to vote each Unit acquired.
Item 12. Certain Relationships and Related Transactions
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
partnership activities. The Partnership Agreement provides for payments to
affiliates for services and as the reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership.
<PAGE>
The following payments were made to the Managing General Partner and affiliates
during the years ended December 31, 1999 and 1998.
1999 1998
(in thousands)
Property management fees $721 $680
Reimbursement for services of affiliates 216 215
Partnership management fee 508 333
During the years ended December 31, 1999 and 1998, affiliates of the Managing
General Partner were entitled to receive 5% of gross receipts from all of the
Registrant's properties for providing property management services. The
Registrant paid to such affiliates approximately $721,000 and $680,000 for the
years ended December 31, 1999 and 1998, respectively.
An affiliate of the Managing General Partner received reimbursement of
accountable administrative expenses amounting to approximately $216,000 and
$215,000 for the years ended December 31, 1999 and 1998, respectively. Included
in this expense is approximately $54,000 and $61,000 in construction oversight
costs for the years ended December 31, 1999 and 1998, respectively.
Pursuant to the Partnership Agreement for managing the affairs of the
Partnership, the general partner is entitled to receive a Partnership management
fee equal to 10% of the Partnership's adjusted cash from operations as
distributed. Approximately $508,000 and $333,000 in Partnership management fees
were paid along with the distributions from operations made during the year
ended December 31, 1999 and 1998, respectively.
In addition, the Partnership paid to an affiliate approximately $27,000 in loan
costs related to the refinancing of mortgages at Creekside Apartments and The
Lodge Apartments during the twelve months ended December 31, 1998. These loan
costs are included in other assets and are amortized as interest expense over
the terms of the loan agreements.
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 unusual source of liquidity.
Several tender offers were made by various parties, including affiliates of the
Managing General Partner, during the years ended December 31, 1999 and 1998. As
a result of these and prior tender offers, AIMCO and its affiliates currently
own 41,479 limited partnership units in the Partnership representing 55.305% of
the outstanding units. It is possible that AIMCO or its affiliates will make one
or more additional offers to acquire additional limited partnership interests in
the Partnership for cash or in exchange for units in the operating partnership
of AIMCO. Consequently, AIMCO is in a position to influence all voting decisions
with respect to the Registrant. Under the Partnership Agreement, unitholders
holding a majority of the Units are entitled to take action with respect to a
variety of matters. When voting on matters, AIMCO would in all likelihood vote
the Units it acquired in a manner favorable to the interest of the Managing
General Partner because of their affiliation with the Managing General Partner.
<PAGE>
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 18, Independent Accountants' Preferability Letter for Change
in Accounting Principle, is filed as an exhibit to this report
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
(b) Reports on Form 8-K filed during the fourth quarter of calendar year
1999:
None.
<PAGE>
SIGNATURES
In accordance with section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CENTURY PROPERTIES FUND XVII
By: Fox Partners
Its General Partner
By: Fox Capital Management Corporation
Its Managing General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
and Controller
Date:
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
date indicated.
/s/Patrick J. Foye Executive Vice President Date:
Patrick J. Foye and Director
/s/Martha L. Long Senior Vice President Date:
Martha L. Long and Controller
<PAGE>
CENTURY PROPERTIES FUND XVII
EXHIBIT INDEX
Exhibit Number Description of Exhibit
2.5 Master Indemnity Agreement incorporated by reference to Exhibit 2.5 to Form
8-K filed by Insignia with the Securities and Exchange Commission on
September 1, 1995.
2.6 Agreement and Plan of Merger, dated as of October 1, 1998, by and between
AIMCO and IPT (incorporated by reference to Exhibit 2.1 of Registrant's
Current Report on Form 8-K dated October 1, 1998).
3.4 Agreement of Limited Partnership incorporated by reference to Exhibit A to
the Prospectus of the Registrant dated March 29, 1982 and as thereafter
supplemented contained in the Registrant's Registration Statement on Form
S-11 (Reg. No. 2-75411).
16.1 Letter from the Registrant's former Independent Auditor dated April 27,
1994 incorporated by reference to Exhibit 10 to the Registrant's Current
Report on Form 8-K dated April 22, 1994.
16.2 Letter dated November 10, 1998 from the Registrant's former independent
accountant regarding its concurrence with the statements made by the
Registrant; incorporated by reference to the Exhibit 16 to the Registrant's
Current Report on Form 8-K dated November 10, 1998.
16.3 Multifamily Note dated December 7, 1999, by and between Apartment CCG 17,
L.P., a California limited partnership, and GMAC Commercial Mortgage
Corporation, a California Corporation.
16.4 Multifamily Note dated January 27, 2000, by and between Century Properties
Fund XVII, a California limited partnership, and GMAC Commercial Mortgage
Corporation, a California Corporation.
16.5 Multifamily Note dated February 11, 2000, by and between Century Properties
Fund XVII, a California limited partnership, and GMAC Commercial Mortgage
Corporation, a California Corporation.
18 Independent Accountants' Preferability Letter for Change in Accounting
Principle.
27 Financial Data Schedule.
<PAGE>
Exhibit 18
February 7, 2000
Mr. Patrick J. Foye
Executive Vice President
Fox Capital Management Corporation
Managing General Partner of Century Properties Fund XVII
55 Beattie Place
P.O. Box 1089
Greenville, South Carolina 29602
Dear Mr. Foye:
Note J of Notes to the Consolidated Financial Statements of Century Properties
Fund XVII included in its Form 10-KSB for the year ended December 31, 1999
describes a change in the method of accounting to capitalize exterior painting
and major landscaping, which would have been expensed under the old policy. You
have advised us that you believe that the change is to a preferable method in
your circumstances because it provides a better matching of expenses with the
related benefit of the expenditures and is consistent with policies currently
being used by your industry and conforms to the policies of the Managing General
Partner.
There are no authoritative criteria for determining a preferable method based on
the particular circumstances; however, we conclude that the change in the method
of accounting for exterior painting and major landscaping is to an acceptable
alternative method which, based on your business judgment to make this change
for the reasons cited above, is preferable in your circumstances.
Very truly yours,
/s/Ernst & Young LLP
<PAGE>
Exhibit 16.3
FHLMC Loan No. 002642786
MULTIFAMILY NOTE
(MULTISTATE)
US $12,415,000.00 As of December 7, 1999
FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally (if
more than one) promises to pay to the order of GMAC COMMERCIAL MORTGAGE
CORPORATION, a California corporation, the principal sum of Twelve Million Four
Hundred Fifteen Thousand and 00/100 Dollars (US $12,415,000.00), with interest
on the unpaid principal balance at the annual rate of seven and ninety-nine
hundredths percent (7.99%).
1. Defined Terms. As used in this Note, (i) the term "Lender" means the holder
of this Note, and (ii) the term "Indebtedness" means the principal of, interest
on, or any other amounts due at any time under, this Note, the Security
Instrument or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances to protect the security of the Security
Instrument under Section 12 of the Security Instrument. "Event of Default" and
other capitalized terms used but not defined in this Note shall have the
meanings given to such terms in the Security Instrument.
2. Address for Payment. All payments due under this Note shall be payable at 650
Dresher Road, P.O. Box 1015, Horsham, Pennsylvania 19044-8015, Attn: Servicing -
Account Manager, or such other place as may be designated by written notice to
Borrower from or on behalf of Lender.
3. Payment of Principal and Interest. Principal and interest shall be paid as
follows:
(a) Unless disbursement of principal is made by Lender to Borrower on the first
day of the month, interest for the period beginning on the date of disbursement
and ending on and including the last day of the month in which such disbursement
is made shall be payable simultaneously with the execution of this Note.
Interest under this Note shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
(b) Consecutive monthly installments of principal and interest, each in the
amount of One Hundred Three Thousand Seven Hundred Sixty-Fixe and 78/100 Dollars
(US $103,766.78), shall be payable on the first day of each month beginning on
February 1, 2000, until the entire unpaid principal balance evidenced by this
Note is fully paid. Any accrued interest remaining past due for 30 days or more
shall be added to and become part of the unpaid principal balance and shall bear
interest at the rate or rates specified in this Note, and any reference below to
"accrued interest" shall refer to accrued interest which has not become part of
the unpaid principal balance. Any remaining principal and interest shall be due
and payable on January 1, 2020 or on any earlier date on which the unpaid
principal balance of this Note becomes due and payable, by acceleration or
otherwise (the "Maturity Date"). The unpaid principal balance shall continue to
bear interest after the Maturity Date at the Default Rate set forth in this Note
until and including the date on which it is paid in full.
(c) Any regularly scheduled monthly installment of principal and interest that
is received by Lender before the date it is due shall be deemed to have been
received on the due date solely for the purpose of calculating interest due.
4. Application of Payments. If at any time Lender receives, from Borrower or
otherwise, any amount applicable to the Indebtedness which is less than all
amounts due and payable at such time, Lender may apply that payment to amounts
then due and payable in any manner and in any order determined by Lender, in
Lender's discretion. Borrower agrees that neither Lender's acceptance of a
payment from Borrower in an amount that is less than all amounts then due and
payable nor Lender's application of such payment shall constitute or be deemed
to constitute either a waiver of the unpaid amounts or an accord and
satisfaction.
5. Security. The Indebtedness is secured, among other things, by a multifamily
mortgage, deed to secure debt or deed of trust dated as of the date of this Note
(the "Security Instrument"), and reference is made to the Security Instrument
for other rights of Lender as to collateral for the Indebtedness.
6. Acceleration. If an Event of Default has occurred and is continuing, the
entire unpaid principal balance, any accrued interest, the prepayment premium
payable under Paragraph 10, if any, and all other amounts payable under this
Note and any other Loan Document shall at once become due and payable, at the
option of Lender, without any prior notice to Borrower. Lender may exercise this
option to accelerate regardless of any prior forbearance.
7. Late Charge. If any monthly amount payable under this Note or under the
Security Instrument or any other Loan Document is not received by Lender within
ten (10) days after the amount is due, Borrower shall pay to Lender, immediately
and without demand by Lender, a late charge equal to five percent (5%) of such
amount. Borrower acknowledges that its failure to make timely payments will
cause Lender to incur additional expenses in servicing and processing the loan
evidenced by this Note (the "Loan"), and that it is extremely difficult and
impractical to determine those additional expenses. Borrower agrees that the
late charge payable pursuant to this Paragraph represents a fair and reasonable
estimate, taking into account all circumstances existing on the date of this
Note, of the additional expenses Lender will incur by reason of such late
payment. The late charge is payable in addition to, and not in lieu of, any
interest payable at the Default Rate pursuant to Paragraph 8.
8. Default Rate. So long as (a) any monthly installment under this Note remains
past due for 30 days or more, or (b) any other Event of Default has occurred and
is continuing, interest under this Note shall accrue on the unpaid principal
balance from the earlier of the due date of the first unpaid monthly installment
or the occurrence of such other Event of Default, as applicable, at a rate (the
"Default Rate") equal to the lesser of 4 percentage points above the rate stated
in the first paragraph of this Note or the maximum interest rate which may be
collected from Borrower under applicable law. If the unpaid principal balance
and all accrued interest are not paid in full on the Maturity Date, the unpaid
principal balance and all accrued interest shall bear interest from the Maturity
Date at the Default Rate. Borrower also acknowledges that its failure to make
timely payments will cause Lender to incur additional expenses in servicing and
processing the Loan, that, during the time that any monthly installment under
this Note is delinquent for more than 30 days, Lender will incur additional
costs and expenses arising from its loss of the use of the money due and from
the adverse impact on Lender's ability to meet its other obligations and to take
advantage of other investment opportunities, and that it is extremely difficult
and impractical to determine those additional costs and expenses. Borrower also
acknowledges that, during the time that any monthly installment under this Note
is delinquent for more than 30 days or any other Event of Default has occurred
and is continuing, Lender's risk of nonpayment of this Note will be materially
increased and Lender is entitled to be compensated for such increased risk.
Borrower agrees that the increase in the rate of interest payable under this
Note to the Default Rate represents a fair and reasonable estimate, taking into
account all circumstances existing on the date of this Note, of the additional
costs and expenses Lender will incur by reason of the Borrower's delinquent
payment and the additional compensation Lender is entitled to receive for the
increased risks of nonpayment associated with a delinquent loan.
9. Limits on Personal Liability.
(a) Except as otherwise provided in this Paragraph 9, Borrower shall have no
personal liability under this Note, the Security Instrument or any other Loan
Document for the repayment of the Indebtedness or for the performance of any
other obligations of Borrower under the Loan Documents, and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such
obligations shall be Lender's exercise of its rights and remedies with respect
to the Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit or
impair Lender's enforcement of its rights against any guarantor of the
Indebtedness or any guarantor of any obligations of Borrower.
(b) Borrower shall be personally liable to Lender for the repayment of a portion
of the Indebtedness equal to zero percent (0%) of the original principal balance
of this Note, plus any other amounts for which Borrower has personal liability
under this Paragraph 9.
(c) In addition to Borrower's personal liability under Paragraph 9(b), Borrower
shall be personally liable to Lender for the repayment of a further portion of
the Indebtedness equal to any loss or damage suffered by Lender as a result of
(1) failure of Borrower to pay to Lender upon demand after an Event of Default
all Rents to which Lender is entitled under Section 3(a) of the Security
Instrument and the amount of all security deposits collected by Borrower from
tenants then in residence; (2) failure of Borrower to apply all insurance
proceeds and condemnation proceeds as required by the Security Instrument; or
(3) failure of Borrower to comply with Section 14(d) or (e) of the Security
Instrument relating to the delivery of books and records, statements, schedules
and reports.
(d) For purposes of determining Borrower's personal liability under Paragraph
9(b) and Paragraph 9(c), all payments made by Borrower or any guarantor of this
Note with respect to the Indebtedness and all amounts received by Lender from
the enforcement of its rights under the Security Instrument shall be applied
first to the portion of the Indebtedness for which Borrower has no personal
liability.
(e) Borrower shall become personally liable to Lender for the repayment of all
of the Indebtedness upon the occurrence of any of the following Events of
Default: (1) Borrower's acquisition of any property or operation of any business
not permitted by Section 33 of the Security Instrument; (2) a Transfer
(including, but not limited to, a lien or encumbrance) that is an Event of
Default under Section 21 of the Security Instrument, other than a Transfer
consisting solely of the involuntary removal or involuntary withdrawal of a
general partner in a limited partnership or a manager in a limited liability
company; or (3) fraud or written material misrepresentation by Borrower or any
officer, director, partner, member or employee of Borrower in connection with
the application for or creation of the Indebtedness or any request for any
action or consent by Lender.
(f) In addition to any personal liability for the Indebtedness, Borrower shall
be personally liable to Lender for (1) the performance of all of Borrower's
obligations under Section 18 of the Security Instrument (relating to
environmental matters); (2) the costs of any audit under Section 14(d) of the
Security Instrument; and (3) any costs and expenses incurred by Lender in
connection with the collection of any amount for which Borrower is personally
liable under this Paragraph 9, including fees and out of pocket expenses of
attorneys and expert witnesses and the costs of conducting any independent audit
of Borrower's books and records to determine the amount for which Borrower has
personal liability.
(g) To the extent that Borrower has personal liability under this Paragraph 9,
Lender may exercise its rights against Borrower personally without regard to
whether Lender has exercised any rights against the Mortgaged Property or any
other security, or pursued any rights against any guarantor, or pursued any
other rights available to Lender under this Note, the Security Instrument, any
other Loan Document or applicable law. For purposes of this Paragraph 9, the
term "Mortgaged Property" shall not include any funds that (1) have been applied
by Borrower as required or permitted by the Security Instrument prior to the
occurrence of an Event of Default or (2) Borrower was unable to apply as
required or permitted by the Security Instrument because of a bankruptcy,
receivership, or similar judicial proceeding.
10. Voluntary and Involuntary Prepayments.
(a) A prepayment premium shall be payable in connection with any prepayment made
under this Note as provided below:
(1) Borrower may voluntarily prepay all of the unpaid principal balance of this
Note on the last Business Day of a calendar month if Borrower has given Lender
at least 30 days prior notice of its intention to make such prepayment. Such
prepayment shall be made by paying (A) the amount of principal being prepaid,
(B) all accrued interest, (C) all other sums due Lender at the time of such
prepayment, and (D) the prepayment premium calculated pursuant to Schedule A.
For all purposes including the accrual of interest, any prepayment received by
Lender on any day other than the last calendar day of the month shall be deemed
to have been received on the last calendar day of such month. For purposes of
this Note, a "Business Day" means any day other than a Saturday, Sunday or any
other day on which Lender is not open for business. Borrower shall not have the
option to voluntarily prepay less than all of the unpaid principal balance.
(2) Upon Lender's exercise of any right of acceleration under this Note,
Borrower shall pay to Lender, in addition to the entire unpaid principal balance
of this Note outstanding at the time of the acceleration, (A) all accrued
interest and all other sums due Lender, and (B) the prepayment premium
calculated pursuant to Schedule A.
(3) Any application by Lender of any collateral or other security to the
repayment of any portion of the unpaid principal balance of this Note prior to
the Maturity Date and in the absence of acceleration shall be deemed to be a
partial prepayment by Borrower, requiring the payment to Lender by Borrower of a
prepayment premium. The amount of any such partial prepayment shall be computed
so as to provide to Lender a prepayment premium computed pursuant to Schedule A
without Borrower having to pay out-of-pocket any additional amounts.
(b) Notwithstanding the provisions of Paragraph 10(a), no prepayment premium
shall be payable with respect to (A) any prepayment made no more than 180 days
before the Maturity Date, or (B) any prepayment occurring as a result of the
application of any insurance proceeds or condemnation award under the Security
Instrument.
(c) Schedule A is hereby incorporated by reference into this Note.
(d) Any permitted or required prepayment of less than the unpaid principal
balance of this Note shall not extend or postpone the due date of any subsequent
monthly installments or change the amount of such installments, unless Lender
agrees otherwise in writing.
(e) Borrower recognizes that any prepayment of the unpaid principal balance of
this Note, whether voluntary or involuntary or resulting from a default by
Borrower, will result in Lender's incurring loss, including reinvestment loss,
additional expense and frustration or impairment of Lender's ability to meet its
commitments to third parties. Borrower agrees to pay to Lender upon demand
damages for the detriment caused by any prepayment, and agrees that it is
extremely difficult and impractical to ascertain the extent of such damages.
Borrower therefore acknowledges and agrees that the formula for calculating
prepayment premiums set forth on Schedule A represents a reasonable estimate of
the damages Lender will incur because of a prepayment.
(f) Borrower further acknowledges that the prepayment premium provisions of this
Note are a material part of the consideration for the Loan, and acknowledges
that the terms of this Note are in other respects more favorable to Borrower as
a result of the Borrower's voluntary agreement to the prepayment premium
provisions.
11. Costs and Expenses. Borrower shall pay all expenses and costs, including
fees and out-of-pocket expenses of attorneys and expert witnesses and costs of
investigation, incurred by Lender as a result of any default under this Note or
in connection with efforts to collect any amount due under this Note, or to
enforce the provisions of any of the other Loan Documents, including those
incurred in post-judgment collection efforts and in any bankruptcy proceeding
(including any action for relief from the automatic stay of any bankruptcy
proceeding) or judicial or non-judicial foreclosure proceeding.
12. Forbearance. Any forbearance by Lender in exercising any right or remedy
under this Note, the Security Instrument, or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of that or any other right or remedy. The acceptance by Lender of any
payment after the due date of such payment, or in an amount which is less than
the required payment, shall not be a waiver of Lender's right to require prompt
payment when due of all other payments or to exercise any right or remedy with
respect to any failure to make prompt payment. Enforcement by Lender of any
security for Borrower's obligations under this Note shall not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.
13. Waivers. Presentment, demand, notice of dishonor, protest, notice of
acceleration, notice of intent to demand or accelerate payment or maturity,
presentment for payment, notice of nonpayment, grace, and diligence in
collecting the Indebtedness are waived by Borrower and all endorsers and
guarantors of this Note and all other third party obligors.
14. Loan Charges. If any applicable law limiting the amount of interest or other
charges permitted to be collected from Borrower in connection with the Loan is
interpreted so that any interest or other charge provided for in any Loan
Document, whether considered separately or together with other charges provided
for in any other Loan Document, violates that law, and Borrower is entitled to
the benefit of that law, that interest or charge is hereby reduced to the extent
necessary to eliminate that violation. The amounts, if any, previously paid to
Lender in excess of the permitted amounts shall be applied by Lender to reduce
the unpaid principal balance of this Note. For the purpose of determining
whether any applicable law limiting the amount of interest or other charges
permitted to be collected from Borrower has been violated, all Indebtedness that
constitutes interest, as well as all other charges made in connection with the
Indebtedness that constitute interest, shall be deemed to be allocated and
spread ratably over the stated term of the Note. Unless otherwise required by
applicable law, such allocation and spreading shall be effected in such a manner
that the rate of interest so computed is uniform throughout the stated term of
the Note.
15. Commercial Purpose. Borrower represents that the Indebtedness is being
incurred by Borrower solely for the purpose of carrying on a business or
commercial enterprise, and not for personal, family or household purposes.
16. Counting of Days. Except where otherwise specifically provided, any
reference in this Note to a period of "days" means calendar days, not Business
Days.
17. Governing Law. This Note shall be governed by the law of the jurisdiction in
which the Land is located.
18. Captions. The captions of the paragraphs of this Note are for convenience
only and shall be disregarded in construing this Note.
19. Notices. All notices, demands and other communications required or permitted
to be given by Lender to Borrower pursuant to this Note shall be given in
accordance with Section 31 of the Security Instrument.
20. Consent to Jurisdiction and Venue. Borrower agrees that any controversy
arising under or in relation to this Note shall be litigated exclusively in the
jurisdiction in which the Land is located (the "Property Jurisdiction"). The
state and federal courts and authorities with jurisdiction in the Property
Jurisdiction shall have exclusive jurisdiction over all controversies which
shall arise under or in relation to this Note. Borrower irrevocably consents to
service, jurisdiction, and venue of such courts for any such litigation and
waives any other venue to which it might be entitled by virtue of domicile,
habitual residence or otherwise.
21. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) AGREES NOT TO ELECT A
TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE
RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT
BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE
TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
ATTACHED SCHEDULES. The following Schedules are attached to this Note:
X Schedule A Prepayment Premium (required)
X Schedule B Modifications to Multifamily Note
<PAGE>
IN WITNESS WHEREOF, Borrower has signed and delivered this Note or has
caused this Note to be signed and delivered by its duly authorized
representative.
APARTMENT CCG 17, L.P., a California limited
partnership
By: APARTMENT CCG 17, L.L.C., a South Carolina
limited liability company, its general
partner
By: CENTURY PROPERTIES FUND XVII, a
California limited partnership, its
sole member
By: FOX PARTNERS, a California general
partnership, its general partner
By: FOX CAPITAL MANAGEMENT
CORPORATION, a California
corporation, its managing partner
By:
Patti K. Fielding
Vice President
Borrower's Social Security/Employer ID Number
<PAGE>
PAY TO THE ORDER OF FEDERAL HOME LOAN MORTGAGE CORPORATION, WITHOUT RECOURSE,
THIS ____ DAY OF DECEMBER, 1999.
GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation
By:
Donald W. Marshall
Vice President
<PAGE>
SCHEDULE A
PREPAYMENT PREMIUM
Any prepayment premium payable under Paragraph 10 of this Note shall be
computed as follows:
(a) If the prepayment is made between the date of this Note and the date that is
180 months after the first day of the first calendar month following the date of
this Note (the "Yield Maintenance Period"), the prepayment premium shall be the
greater of:
(i) 1.0% of the unpaid principal balance of this Note; or
(ii) the product obtained by multiplying:
(A) the amount of principal being prepaid,
by
(B) the excess (if any) of the Monthly Note Rate over the Assumed Reinvestment
Rate,
by
(C) the Present Value Factor.
For purposes of subparagraph (ii), the following definitions shall
apply:
Monthly Note Rate: one-twelfth (1/12) of the annual interest rate of
the Note, expressed as a decimal calculated to five digits.
Prepayment Date: in the case of a voluntary prepayment, the date on
which the prepayment is made; in any other case, the date on which
Lender accelerates the unpaid principal balance of the Note.
Assumed Reinvestment Rate: one-twelfth (1/12) of the yield rate as of
the date 5 Business Days before the Prepayment Date, on the 9.25% U.S.
Treasury Security due February 1, 2016, as reported in The Wall Street
Journal, expressed as a decimal calculated to five digits. In the
event that no yield is published on the applicable date for the
Treasury Security used to determine the Assumed Reinvestment Rate,
Lender, in its discretion, shall select the non-callable Treasury
Security maturing in the same year as the Treasury Security specified
above with the lowest yield published in The Wall Street Journal as of
the applicable date. If the publication of such yield rates in The
Wall Street Journal is discontinued for any reason, Lender shall
select a security with a comparable rate and term to the Treasury
Security used to determine the Assumed Reinvestment Rate. The
selection of an alternate security pursuant to this Paragraph shall be
made in Lender's discretion.
<PAGE>
Present Value Factor: the factor that discounts to present value the
costs resulting to Lender from the difference in interest rates during
the months remaining in the Yield Maintenance Period, using the
Assumed Reinvestment Rate as the discount rate, with monthly
compounding, expressed numerically as follows:
n = number of months remaining in Yield Maintenance Period
ARR = Assumed Reinvestment Rate
(b) If the prepayment is made after the expiration of the Yield Maintenance
Period but more than 180 days before the Maturity Date, the prepayment premium
shall be 1.0% of the unpaid principal balance of this Note.
<PAGE>
SCHEDULE B
MODIFICATIONS TO MULTIFAMILY NOTE
1. The first sentence of 8 of the Note ("Default Rate") is hereby deleted and
replaced with the following:
So long as (a) any monthly installment under this Note remains past
due for more than thirty (30) days or (b) any other event of Default
has occurred and is continuing, interest under this Note shall
accrue on the unpaid principal balance from the earlier of the due
date of the first unpaid monthly installment or the occurrence of
such other Event of Default, as applicable, at a rate (the "Default
Rate") equal to the lesser of (1) the maximum interest rate which
may be collected from Borrower under applicable law or (2) the
greater of (i) three percent (3%) above the Interest Rate or (ii)
four percent (4.0%) above the then-prevailing Prime Rate. As used
herein, the term "Prime Rate" shall mean the rate of interest
announced by The Wall Street Journal from time to time as the "Prime
Rate".
2. Paragraph 9(c) of the Note is amended to add the following subparagraph (4):
(4) failure by Borrower to pay the amount of the water and sewer
charges, taxes, fire, hazard or other insurance premiums, ground
rents in accordance with the terms of the Security Instrument.
<PAGE>
Exhibit 16.4
FHLMC Loan No. 002644029
MULTIFAMILY NOTE
(TEXAS)
US $14,500,000.00 As of January 27, 2000
FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally (if
more than one) promises to pay to the order of GMAC COMMERCIAL MORTGAGE
CORPORATION, a California corporation, the principal sum of Fourteen Million
Five Hundred Thousand and 00/100 Dollars (US $14,500,000.00), with interest on
the unpaid principal balance at the annual rate of eight and fifty-six
hundredths percent (8.56%).
1. Defined Terms. As used in this Note, (i) the term "Lender" means the holder
of this Note, and (ii) the term "Indebtedness" means the principal of, interest
on, or any other amounts due at any time under, this Note, the Security
Instrument or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances to protect the security of the Security
Instrument under Section 12 of the Security Instrument. "Event of Default" and
other capitalized terms used but not defined in this Note shall have the
meanings given to such terms in the Security Instrument.
2. Address for Payment. All payments due under this Note shall be payable at 650
Dresher Road, P.O. Box 1015, Horsham, Pennsylvania 19044-8015, Attn: Servicing -
Account Manager, or such other place as may be designated by written notice to
Borrower from or on behalf of Lender.
3. Payment of Principal and Interest. Principal and interest shall be paid as
follows:
(a) Unless disbursement of principal is made by Lender to Borrower on the first
day of the month, interest for the period beginning on the date of disbursement
and ending on and including the last day of the month in which such disbursement
is made shall be payable simultaneously with the execution of this Note.
Interest under this Note shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
(b) Consecutive monthly installments of principal and interest, each in the
amount of One Hundred Twenty Six Thousand Three Hundred Eighty-Five and 55/100
Dollars (US $126,385.55), shall be payable on the first day of each month
beginning on March 1, 2000, until the entire unpaid principal balance evidenced
by this Note is fully paid. Any accrued interest remaining past due for 30 days
or more shall be added to and become part of the unpaid principal balance and
shall bear interest at the rate or rates specified in this Note, and any
reference below to "accrued interest" shall refer to accrued interest which has
not become part of the unpaid principal balance. Any remaining principal and
interest shall be due and payable on February 1, 2020 or on any earlier date on
which the unpaid principal balance of this Note becomes due and payable, by
acceleration or otherwise (the "Maturity Date"). The unpaid principal balance
shall continue to bear interest after the Maturity Date at the Default Rate set
forth in this Note until and including the date on which it is paid in full.
(c) Any regularly scheduled monthly installment of principal and interest that
is received by Lender before the date it is due shall be deemed to have been
received on the due date solely for the purpose of calculating interest due.
4. Application of Payments. If at any time Lender receives, from Borrower or
otherwise, any amount applicable to the Indebtedness which is less than all
amounts due and payable at such time, Lender may apply that payment to amounts
then due and payable in any manner and in any order determined by Lender, in
Lender's discretion. Borrower agrees that neither Lender's acceptance of a
payment from Borrower in an amount that is less than all amounts then due and
payable nor Lender's application of such payment shall constitute or be deemed
to constitute either a waiver of the unpaid amounts or an accord and
satisfaction.
5. Security. The Indebtedness is secured, among other things, by a multifamily
mortgage, deed to secure debt or deed of trust dated as of the date of this Note
(the "Security Instrument"), and reference is made to the Security Instrument
for other rights of Lender as to collateral for the Indebtedness.
6. Acceleration. If an Event of Default has occurred and is continuing, the
entire unpaid principal balance, any accrued interest, the prepayment premium
payable under Paragraph 10, if any, and all other amounts payable under this
Note and any other Loan Document shall at once become due and payable, at the
option of Lender, without any prior notice to Borrower. Lender may exercise this
option to accelerate regardless of any prior forbearance.
7. Default Rate. So long as (a) any monthly installment under this Note remains
past due for 30 days or more, or (b) any other Event of Default has occurred and
is continuing, interest under this Note shall accrue on the unpaid principal
balance from the earlier of the due date of the first unpaid monthly installment
or the occurrence of such other Event of Default, as applicable, at a rate (the
"Default Rate") equal to the lesser of 4 percentage points above the rate stated
in the first paragraph of this Note or the maximum interest rate which may be
collected from Borrower under applicable law. If the unpaid principal balance
and all accrued interest are not paid in full on the Maturity Date, the unpaid
principal balance and all accrued interest shall bear interest from the Maturity
Date at the Default Rate. Borrower also acknowledges that its failure to make
timely payments will cause Lender to incur additional expenses in servicing and
processing the loan evidenced by this Note (the "Loan"), that, during the time
that any monthly installment under this Note is delinquent for more than 30
days, Lender will incur additional costs and expenses arising from its loss of
the use of the money due and from the adverse impact on Lender's ability to meet
its other obligations and to take advantage of other investment opportunities,
and that it is extremely difficult and impractical to determine those additional
costs and expenses. Borrower also acknowledges that, during the time that any
monthly installment under this Note is delinquent for more than 30 days or any
other Event of Default has occurred and is continuing, Lender's risk of
nonpayment of this Note will be materially increased and Lender is entitled to
be compensated for such increased risk. Borrower agrees that the increase in the
rate of interest payable under this Note to the Default Rate represents a fair
and reasonable estimate, taking into account all circumstances existing on the
date of this Note, of the additional costs and expenses Lender will incur by
reason of the Borrower's delinquent payment and the additional compensation
Lender is entitled to receive for the increased risks of nonpayment associated
with a delinquent loan.
8. Loan Charges. Borrower and Lender intend at all times to comply with the law
of the State of Texas governing the maximum rate or amount of interest payable
on or in connection with this Note and the Indebtedness (or applicable United
States federal law to the extent that it permits Lender to contract for, charge,
take, reserve or receive a greater amount of interest than under Texas law). If
the applicable law is ever judicially interpreted so as to render usurious any
amount payable under this Note or under any other Loan Document, or contracted
for, charged, taken, reserved or received with respect to the Indebtedness, or
if acceleration of the maturity of this Note, or if any prepayment by Borrower
results in Borrower having paid any interest in excess of that permitted by any
applicable law, then Borrower and Lender expressly intend that all excess
amounts collected by Lender shall be applied to reduce the unpaid principal
balance of this Note (or, if this Note has been or would thereby be paid in
full, shall be refunded to Borrower), and the provisions of this Note, the
Security Instrument and any other Loan Documents immediately shall be deemed
reformed and the amounts thereafter collectible under this Note or any other
Loan Document reduced, without the necessity of the execution of any new
documents, so as to comply with any applicable law, but so as to permit the
recovery of the fullest amount otherwise payable under this Note or any other
Loan Document. The right to accelerate the maturity of this Note does not
include the right to accelerate any interest which has not otherwise accrued on
the date of such acceleration, and Lender does not intend to collect any
unearned interest in the event of acceleration. All sums paid or agreed to be
paid to Lender for the use, forbearance or detention of the Indebtedness shall,
to the extent permitted by any applicable law, be amortized, prorated, allocated
and spread throughout the full term of the Indebtedness until payment in full so
that the rate or amount of interest on account of the Indebtedness does not
exceed the applicable usury ceiling. Notwithstanding any provision contained in
this Note, the Security Instrument or any other Loan Document that permits the
compounding of interest, including any provision by which any accrued interest
is added to the principal amount of this Note, the total amount of interest that
Borrower is obligated to pay and Lender is entitled to receive with respect to
the Indebtedness shall not exceed the amount calculated on a simple (i.e.,
noncompounded) interest basis at the maximum rate on principal amounts actually
advanced to or for the account of Borrower, including all current and prior
advances and any advances made pursuant to the Security Instrument or other Loan
Documents (such as for the payment of taxes, insurance premiums and similar
expenses or costs).
9. Limits on Personal Liability.
(a) Except as otherwise provided in this Paragraph 9, Borrower shall have no
personal liability under this Note, the Security Instrument or any other Loan
Document for the repayment of the Indebtedness or for the performance of any
other obligations of Borrower under the Loan Documents, and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such
obligations shall be Lender's exercise of its rights and remedies with respect
to the Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit or
impair Lender's enforcement of its rights against any guarantor of the
Indebtedness or any guarantor of any obligations of Borrower.
(b) Borrower shall be personally liable to Lender for the repayment of a portion
of the Indebtedness equal to zero percent (0%) of the original principal balance
of this Note, plus any other amounts for which Borrower has personal liability
under this Paragraph 9.
(c) In addition to Borrower's personal liability under Paragraph 9(b), Borrower
shall be personally liable to Lender for the repayment of a further portion of
the Indebtedness equal to any loss or damage suffered by Lender as a result of
(1) failure of Borrower to pay to Lender upon demand after an Event of Default
all Rents to which Lender is entitled under Section 3(a) of the Security
Instrument and the amount of all security deposits collected by Borrower from
tenants then in residence; (2) failure of Borrower to apply all insurance
proceeds and condemnation proceeds as required by the Security Instrument; or
(3) failure of Borrower to comply with Section 14(d) or (e) of the Security
Instrument relating to the delivery of books and records, statements, schedules
and reports.
(d) For purposes of determining Borrower's personal liability under Paragraph
9(b) and Paragraph 9(c), all payments made by Borrower or any guarantor of this
Note with respect to the Indebtedness and all amounts received by Lender from
the enforcement of its rights under the Security Instrument shall be applied
first to the portion of the Indebtedness for which Borrower has no personal
liability.
(e) Borrower shall become personally liable to Lender for the repayment of all
of the Indebtedness upon the occurrence of any of the following Events of
Default: (1) Borrower's acquisition of any property or operation of any business
not permitted by Section 33 of the Security Instrument; (2) a Transfer
(including, but not limited to, a lien or encumbrance) that is an Event of
Default under Section 21 of the Security Instrument, other than a Transfer
consisting solely of the involuntary removal or involuntary withdrawal of a
general partner in a limited partnership or a manager in a limited liability
company; or (3) fraud or written material misrepresentation by Borrower or any
officer, director, partner, member or employee of Borrower in connection with
the application for or creation of the Indebtedness or any request for any
action or consent by Lender.
(f) In addition to any personal liability for the Indebtedness, Borrower shall
be personally liable to Lender for (1) the performance of all of Borrower's
obligations under Section 18 of the Security Instrument (relating to
environmental matters); (2) the costs of any audit under Section 14(d) of the
Security Instrument; and (3) any costs and expenses incurred by Lender in
connection with the collection of any amount for which Borrower is personally
liable under this Paragraph 9, including fees and out of pocket expenses of
attorneys and expert witnesses and the costs of conducting any independent audit
of Borrower's books and records to determine the amount for which Borrower has
personal liability.
(g) To the extent that Borrower has personal liability under this Paragraph 9,
Lender may exercise its rights against Borrower personally without regard to
whether Lender has exercised any rights against the Mortgaged Property or any
other security, or pursued any rights against any guarantor, or pursued any
other rights available to Lender under this Note, the Security Instrument, any
other Loan Document or applicable law. For purposes of this Paragraph 9, the
term "Mortgaged Property" shall not include any funds that (1) have been applied
by Borrower as required or permitted by the Security Instrument prior to the
occurrence of an Event of Default or (2) Borrower was unable to apply as
required or permitted by the Security Instrument because of a bankruptcy,
receivership, or similar judicial proceeding.
10. Voluntary and Involuntary Prepayments.
(a) A prepayment premium shall be payable in connection with any prepayment made
under this Note as provided below:
(1) Borrower may voluntarily prepay all of the unpaid principal balance of this
Note on the last Business Day of a calendar month if Borrower has given Lender
at least 30 days prior notice of its intention to make such prepayment. Such
prepayment shall be made by paying (A) the amount of principal being prepaid,
(B) all accrued interest, (C) all other sums due Lender at the time of such
prepayment, and (D) the prepayment premium calculated pursuant to Schedule A.
For all purposes including the accrual of interest, any prepayment received by
Lender on any day other than the last calendar day of the month shall be deemed
to have been received on the last calendar day of such month. For purposes of
this Note, a "Business Day" means any day other than a Saturday, Sunday or any
other day on which Lender is not open for business. Borrower shall not have the
option to voluntarily prepay less than all of the unpaid principal balance.
(2) Upon Lender's exercise of any right of acceleration under this Note,
Borrower shall pay to Lender, in addition to the entire unpaid principal balance
of this Note outstanding at the time of the acceleration, (A) all accrued
interest and all other sums due Lender, and (B) the prepayment premium
calculated pursuant to Schedule A.
(3) Any application by Lender of any collateral or other security to the
repayment of any portion of the unpaid principal balance of this Note prior to
the Maturity Date and in the absence of acceleration shall be deemed to be a
partial prepayment by Borrower, requiring the payment to Lender by Borrower of a
prepayment premium. The amount of any such partial prepayment shall be computed
so as to provide to Lender a prepayment premium computed pursuant to Schedule A
without Borrower having to pay out-of-pocket any additional amounts.
(b) Notwithstanding the provisions of Paragraph 10(a), no prepayment premium
shall be payable with respect to (A) any prepayment made no more than 180 days
before the Maturity Date, or (B) any prepayment occurring as a result of the
application of any insurance proceeds or condemnation award under the Security
Instrument.
(c) Schedule A is hereby incorporated by reference into this Note.
(d) Any permitted or required prepayment of less than the unpaid principal
balance of this Note shall not extend or postpone the due date of any subsequent
monthly installments or change the amount of such installments, unless Lender
agrees otherwise in writing.
(e) Borrower recognizes that any prepayment of the unpaid principal balance of
this Note, whether voluntary or involuntary or resulting from a default by
Borrower, will result in Lender's incurring loss, including reinvestment loss,
additional expense and frustration or impairment of Lender's ability to meet its
commitments to third parties. Borrower agrees to pay to Lender upon demand
damages for the detriment caused by any prepayment, and agrees that it is
extremely difficult and impractical to ascertain the extent of such damages.
Borrower therefore acknowledges and agrees that the formula for calculating
prepayment premiums set forth on Schedule A represents a reasonable estimate of
the damages Lender will incur because of a prepayment.
(f) Borrower further acknowledges that the prepayment premium provisions of this
Note are a material part of the consideration for the Loan, and acknowledges
that the terms of this Note are in other respects more favorable to Borrower as
a result of the Borrower's voluntary agreement to the prepayment premium
provisions.
11. Costs and Expenses. Borrower shall pay all expenses and costs, including
fees and out-of-pocket expenses of attorneys and expert witnesses and costs of
investigation, incurred by Lender as a result of any default under this Note or
in connection with efforts to collect any amount due under this Note, or to
enforce the provisions of any of the other Loan Documents, including those
incurred in post-judgment collection efforts and in any bankruptcy proceeding
(including any action for relief from the automatic stay of any bankruptcy
proceeding) or judicial or non-judicial foreclosure proceeding.
12. Forbearance. Any forbearance by Lender in exercising any right or remedy
under this Note, the Security Instrument, or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of that or any other right or remedy. The acceptance by Lender of any
payment after the due date of such payment, or in an amount which is less than
the required payment, shall not be a waiver of Lender's right to require prompt
payment when due of all other payments or to exercise any right or remedy with
respect to any failure to make prompt payment. Enforcement by Lender of any
security for Borrower's obligations under this Note shall not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.
13. Waivers. Presentment, demand, notice of dishonor, protest, notice of
acceleration, notice of intent to demand or accelerate payment or maturity,
presentment for payment, notice of nonpayment, grace, and diligence in
collecting the Indebtedness are waived by Borrower and all endorsers and
guarantors of this Note and all other third party obligors.
14. Commercial Purpose. Borrower represents that the Indebtedness is being
incurred by Borrower solely for the purpose of carrying on a business or
commercial enterprise, and not for personal, family or household purposes.
15. Counting of Days. Except where otherwise specifically provided, any
reference in this Note to a period of "days" means calendar days, not Business
Days.
16. Governing Law. This Note shall be governed by the law of the jurisdiction in
which the Land is located.
17. Captions. The captions of the paragraphs of this Note are for convenience
only and shall be disregarded in construing this Note.
18. Notices. All notices, demands and other communications required or permitted
to be given by Lender to Borrower pursuant to this Note shall be given in
accordance with Section 31 of the Security Instrument.
19. Consent to Jurisdiction and Venue. Borrower agrees that any controversy
arising under or in relation to this Note shall be litigated exclusively in the
jurisdiction in which the Land is located (the "Property Jurisdiction"). The
state and federal courts and authorities with jurisdiction in the Property
Jurisdiction shall have exclusive jurisdiction over all controversies which
shall arise under or in relation to this Note. Borrower irrevocably consents to
service, jurisdiction, and venue of such courts for any such litigation and
waives any other venue to which it might be entitled by virtue of domicile,
habitual residence or otherwise.
20. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) AGREES NOT TO ELECT A
TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE
RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT
BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE
TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
<PAGE>
ATTACHED SCHEDULES. The following Schedules are attached to this Note:
X Schedule A Prepayment Premium (required)
X Schedule B Modifications to Multifamily Note
IN WITNESS WHEREOF, Borrower has signed and delivered this Instrument or
has caused this Instrument to be signed and delivered by its duly authorized
representative.
CENTURY PROPERTIES FUND XVII, a
California limited partnership
By: Fox Partners, a California general
partnership, its managing general
partner
By: Fox Capital Management
Corporation, a California
corporation, its managing
general partner
By:
Patti K. Fielding
Vice President
94-2782037
Borrower's Social Security/Employer ID
Number
<PAGE>
PAY TO THE ORDER OF FEDERAL HOME LOAN
MORTGAGE CORPORATION, WITHOUT RECOURSE, THIS
27TH DAY OF JANUARY, 2000
GMAC COMMERCIAL MORTGAGE
CORPORATION, a California
corporation
By:
Donald W. Marshall
Vice President
<PAGE>
SCHEDULE A
PREPAYMENT PREMIUM
Any prepayment premium payable under Paragraph 10 of this Note shall be computed
as follows:
(a) If the prepayment is made between the date of this Note and the date that is
180 months after the first day of the first calendar month following the date of
this Note (the "Yield Maintenance Period"), the prepayment premium shall be the
greater of:
(i) of the unpaid principal balance of this Note; or
(ii) the product obtained by multiplying:
(A) the amount of principal being prepaid,
by
(B) the excess (if any) of the Monthly Note Rate over the Assumed Reinvestment
Rate,
by
(C) the Present Value Factor.
For purposes of subparagraph (ii), the following definitions shall apply:
Monthly Note Rate: one-twelfth (1/12) of the annual interest rate of the Note,
expressed as a decimal calculated to five digits.
Prepayment Date: in the case of a voluntary prepayment, the date on which the
prepayment is made; in any other case, the date on which Lender accelerates the
unpaid principal balance of the Note.
Assumed Reinvestment Rate: one-twelfth (1/12) of the yield rate as of the date 5
Business Days before the Prepayment Date, on the 9.250% U.S. Treasury Security
due February 1, 2016, as reported in The Wall Street Journal, expressed as a
decimal calculated to five digits. In the event that no yield is published on
the applicable date for the Treasury Security used to determine the Assumed
Reinvestment Rate, Lender, in its discretion, shall select the non-callable
Treasury Security maturing in the same year as the Treasury Security specified
above with the lowest yield published in The Wall Street Journal as of the
applicable date. If the publication of such yield rates in The Wall Street
Journal is discontinued for any reason, Lender shall select a security with a
comparable rate and term to the Treasury Security used to determine the Assumed
Reinvestment Rate. The selection of an alternate security pursuant to this
Paragraph shall be made in Lender's discretion.
<PAGE>
Present Value Factor: the factor that discounts to present value the costs
resulting to Lender from the difference in interest rates during the months
remaining in the Yield Maintenance Period, using the Assumed Reinvestment Rate
as the discount rate, with monthly compounding, expressed numerically as
follows:
[OBJECT OMITTED]
n = number of months remaining in Yield Maintenance Period
ARR = Assumed Reinvestment Rate
(b) If the prepayment is made after the expiration of the Yield Maintenance
Period but more than 180 days before the Maturity Date, the prepayment premium
shall be 1.0% of the unpaid principal balance of this Note.
<PAGE>
SCHEDULE B
MODIFICATIONS TO MULTIFAMILY NOTE
1. The first sentence of 7 of the Note ("Default Rate") is hereby deleted and
replaced with the following:
So long as (a) any monthly installment under this Note remains past
due for more than thirty (30) days or (b) any other event of Default
has occurred and is continuing, interest under this Note shall
accrue on the unpaid principal balance from the earlier of the due
date of the first unpaid monthly installment or the occurrence of
such other Event of Default, as applicable, at a rate (the "Default
Rate") equal to the lesser of (1) the maximum interest rate which
may be collected from Borrower under applicable law or (2) the
greater of (i) three percent (3%) above the Interest Rate or (ii)
four percent (4.0%) above the then-prevailing Prime Rate. As used
herein, the term "Prime Rate" shall mean the rate of interest
announced by The Wall Street Journal from time to time as the "Prime
Rate".
2. Paragraph 9(c) of the Note is amended to add the following subparagraph
(4):
(4) failure by Borrower to pay the amount of the water and sewer
charges, taxes, fire, hazard or other insurance premiums, ground
rents in accordance with the terms of the Security Instrument.
<PAGE>
Exhibit 16.5
FHLMC Loan No. 002682850
MULTIFAMILY NOTE
(MULTISTATE)
US $8,300,000.00 As of February 11, 2000
FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally (if
more than one) promises to pay to the order of GMAC COMMERCIAL MORTGAGE
CORPORATION, a California corporation, the principal sum of Eight Million Three
Hundred Thousand and 00/100 Dollars (US $8,300,000.00), with interest on the
unpaid principal balance at the annual rate of eight and four hundred seventy
thousandths percent (8.470%).
1. Defined Terms. As used in this Note, (i) the term "Lender" means the holder
of this Note, and (ii) the term "Indebtedness" means the principal of, interest
on, or any other amounts due at any time under, this Note, the Security
Instrument or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances to protect the security of the Security
Instrument under Section 12 of the Security Instrument. "Event of Default" and
other capitalized terms used but not defined in this Note shall have the
meanings given to such terms in the Security Instrument.
2. Address for Payment. All payments due under this Note shall be payable at 650
Dresher Road, P.O. Box 1015, Horsham, Pennsylvania 19044-8015, Attn: Servicing
- -Account Manager, or such other place as may be designated by written notice to
Borrower from or on behalf of Lender.
3. Payment of Principal and Interest. Principal and interest shall be paid as
follows:
(a) Unless disbursement of principal is made by Lender to Borrower on the first
day of the month, interest for the period beginning on the date of disbursement
and ending on and including the last day of the month in which such disbursement
is made shall be payable simultaneously with the execution of this Note.
Interest under this Note shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
(b) Consecutive monthly installments of principal and interest, each in the
amount of Seventy One Thousand Eight Hundred Seventy One and 81/100 Dollars (US
$71,871.81), shall be payable on the first day of each month beginning on April
1, 2000, until the entire unpaid principal balance evidenced by this Note is
fully paid. Any accrued interest remaining past due for 30 days or more shall be
added to and become part of the unpaid principal balance and shall bear interest
at the rate or rates specified in this Note, and any reference below to "accrued
interest" shall refer to accrued interest which has not become part of the
unpaid principal balance. Any remaining principal and interest shall be due and
payable on March 1, 2020 or on any earlier date on which the unpaid principal
balance of this Note becomes due and payable, by acceleration or otherwise (the
"Maturity Date"). The unpaid principal balance shall continue to bear interest
after the Maturity Date at the Default Rate set forth in this Note until and
including the date on which it is paid in full.
(c) Any regularly scheduled monthly installment of principal and interest that
is received by Lender before the date it is due shall be deemed to have been
received on the due date solely for the purpose of calculating interest due.
4. Application of Payments. If at any time Lender receives, from Borrower or
otherwise, any amount applicable to the Indebtedness which is less than all
amounts due and payable at such time, Lender may apply that payment to amounts
then due and payable in any manner and in any order determined by Lender, in
Lender's discretion. Borrower agrees that neither Lender's acceptance of a
payment from Borrower in an amount that is less than all amounts then due and
payable nor Lender's application of such payment shall constitute or be deemed
to constitute either a waiver of the unpaid amounts or an accord and
satisfaction.
5. Security. The Indebtedness is secured, among other things, by a multifamily
mortgage, deed to secure debt or deed of trust dated as of the date of this Note
(the "Security Instrument"), and reference is made to the Security Instrument
for other rights of Lender as to collateral for the Indebtedness.
6. Acceleration. If an Event of Default has occurred and is continuing, the
entire unpaid principal balance, any accrued interest, the prepayment premium
payable under Paragraph 10, if any, and all other amounts payable under this
Note and any other Loan Document shall at once become due and payable, at the
option of Lender, without any prior notice to Borrower. Lender may exercise this
option to accelerate regardless of any prior forbearance.
7. Late Charge. If any monthly amount payable under this Note or under the
Security Instrument or any other Loan Document is not received by Lender within
ten (10) days after the amount is due, Borrower shall pay to Lender, immediately
and without demand by Lender, a late charge equal to five percent (5%) of such
amount. Borrower acknowledges that its failure to make timely payments will
cause Lender to incur additional expenses in servicing and processing the loan
evidenced by this Note (the "Loan"), and that it is extremely difficult and
impractical to determine those additional expenses. Borrower agrees that the
late charge payable pursuant to this Paragraph represents a fair and reasonable
estimate, taking into account all circumstances existing on the date of this
Note, of the additional expenses Lender will incur by reason of such late
payment. The late charge is payable in addition to, and not in lieu of, any
interest payable at the Default Rate pursuant to Paragraph 8.
8. Default Rate. So long as (a) any monthly installment under this Note remains
past due for 30 days or more, or (b) any other Event of Default has occurred and
is continuing, interest under this Note shall accrue on the unpaid principal
balance from the earlier of the due date of the first unpaid monthly installment
or the occurrence of such other Event of Default, as applicable, at a rate (the
"Default Rate") equal to the lesser of 4 percentage points above the rate stated
in the first paragraph of this Note or the maximum interest rate which may be
collected from Borrower under applicable law. If the unpaid principal balance
and all accrued interest are not paid in full on the Maturity Date, the unpaid
principal balance and all accrued interest shall bear interest from the Maturity
Date at the Default Rate. Borrower also acknowledges that its failure to make
timely payments will cause Lender to incur additional expenses in servicing and
processing the Loan, that, during the time that any monthly installment under
this Note is delinquent for more than 30 days, Lender will incur additional
costs and expenses arising from its loss of the use of the money due and from
the adverse impact on Lender's ability to meet its other obligations and to take
advantage of other investment opportunities, and that it is extremely difficult
and impractical to determine those additional costs and expenses. Borrower also
acknowledges that, during the time that any monthly installment under this Note
is delinquent for more than 30 days or any other Event of Default has occurred
and is continuing, Lender's risk of nonpayment of this Note will be materially
increased and Lender is entitled to be compensated for such increased risk.
Borrower agrees that the increase in the rate of interest payable under this
Note to the Default Rate represents a fair and reasonable estimate, taking into
account all circumstances existing on the date of this Note, of the additional
costs and expenses Lender will incur by reason of the Borrower's delinquent
payment and the additional compensation Lender is entitled to receive for the
increased risks of nonpayment associated with a delinquent loan.
9. Limits on Personal Liability.
(a) Except as otherwise provided in this Paragraph 9, Borrower shall have no
personal liability under this Note, the Security Instrument or any other Loan
Document for the repayment of the Indebtedness or for the performance of any
other obligations of Borrower under the Loan Documents, and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such
obligations shall be Lender's exercise of its rights and remedies with respect
to the Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit or
impair Lender's enforcement of its rights against any guarantor of the
Indebtedness or any guarantor of any obligations of Borrower.
(b) Borrower shall be personally liable to Lender for the repayment of a portion
of the Indebtedness equal to zero percent (0%) of the original principal balance
of this Note, plus any other amounts for which Borrower has personal liability
under this Paragraph 9.
(c) In addition to Borrower's personal liability under Paragraph 9(b), Borrower
shall be personally liable to Lender for the repayment of a further portion of
the Indebtedness equal to any loss or damage suffered by Lender as a result of
(1) failure of Borrower to pay to Lender upon demand after an Event of Default
all Rents to which Lender is entitled under Section 3(a) of the Security
Instrument and the amount of all security deposits collected by Borrower from
tenants then in residence; (2) failure of Borrower to apply all insurance
proceeds and condemnation proceeds as required by the Security Instrument; or
(3) failure of Borrower to comply with Section 14(d) or (e) of the Security
Instrument relating to the delivery of books and records, statements, schedules
and reports.
(d) For purposes of determining Borrower's personal liability under Paragraph
9(b) and Paragraph 9(c), all payments made by Borrower or any guarantor of this
Note with respect to the Indebtedness and all amounts received by Lender from
the enforcement of its rights under the Security Instrument shall be applied
first to the portion of the Indebtedness for which Borrower has no personal
liability.
(e) Borrower shall become personally liable to Lender for the repayment of all
of the Indebtedness upon the occurrence of any of the following Events of
Default: (1) Borrower's acquisition of any property or operation of any business
not permitted by Section 33 of the Security Instrument; (2) a Transfer
(including, but not limited to, a lien or encumbrance) that is an Event of
Default under Section 21 of the Security Instrument, other than a Transfer
consisting solely of the involuntary removal or involuntary withdrawal of a
general partner in a limited partnership or a manager in a limited liability
company; or (3) fraud or written material misrepresentation by Borrower or any
officer, director, partner, member or employee of Borrower in connection with
the application for or creation of the Indebtedness or any request for any
action or consent by Lender.
(f) In addition to any personal liability for the Indebtedness, Borrower shall
be personally liable to Lender for (1) the performance of all of Borrower's
obligations under Section 18 of the Security Instrument (relating to
environmental matters); (2) the costs of any audit under Section 14(d) of the
Security Instrument; and (3) any costs and expenses incurred by Lender in
connection with the collection of any amount for which Borrower is personally
liable under this Paragraph 9, including fees and out of pocket expenses of
attorneys and expert witnesses and the costs of conducting any independent audit
of Borrower's books and records to determine the amount for which Borrower has
personal liability.
(g) To the extent that Borrower has personal liability under this Paragraph 9,
Lender may exercise its rights against Borrower personally without regard to
whether Lender has exercised any rights against the Mortgaged Property or any
other security, or pursued any rights against any guarantor, or pursued any
other rights available to Lender under this Note, the Security Instrument, any
other Loan Document or applicable law. For purposes of this Paragraph 9, the
term "Mortgaged Property" shall not include any funds that (1) have been applied
by Borrower as required or permitted by the Security Instrument prior to the
occurrence of an Event of Default or (2) Borrower was unable to apply as
required or permitted by the Security Instrument because of a bankruptcy,
receivership, or similar judicial proceeding.
10. Voluntary and Involuntary Prepayments.
(a) A prepayment premium shall be payable in connection with any prepayment made
under this Note as provided below:
(1) Borrower may voluntarily prepay all of the unpaid principal balance of this
Note on the last Business Day of a calendar month if Borrower has given Lender
at least 30 days prior notice of its intention to make such prepayment. Such
prepayment shall be made by paying (A) the amount of principal being prepaid,
(B) all accrued interest, (C) all other sums due Lender at the time of such
prepayment, and (D) the prepayment premium calculated pursuant to Schedule A.
For all purposes including the accrual of interest, any prepayment received by
Lender on any day other than the last calendar day of the month shall be deemed
to have been received on the last calendar day of such month. For purposes of
this Note, a "Business Day" means any day other than a Saturday, Sunday or any
other day on which Lender is not open for business. Borrower shall not have the
option to voluntarily prepay less than all of the unpaid principal balance.
(2) Upon Lender's exercise of any right of acceleration under this Note,
Borrower shall pay to Lender, in addition to the entire unpaid principal balance
of this Note outstanding at the time of the acceleration, (A) all accrued
interest and all other sums due Lender, and (B) the prepayment premium
calculated pursuant to Schedule A.
(3) Any application by Lender of any collateral or other security to the
repayment of any portion of the unpaid principal balance of this Note prior to
the Maturity Date and in the absence of acceleration shall be deemed to be a
partial prepayment by Borrower, requiring the payment to Lender by Borrower of a
prepayment premium. The amount of any such partial prepayment shall be computed
so as to provide to Lender a prepayment premium computed pursuant to Schedule A
without Borrower having to pay out-of-pocket any additional amounts.
(b) Notwithstanding the provisions of Paragraph 10(a), no prepayment premium
shall be payable with respect to (A) any prepayment made no more than 180 days
before the Maturity Date, or (B) any prepayment occurring as a result of the
application of any insurance proceeds or condemnation award under the Security
Instrument.
(c) Schedule A is hereby incorporated by reference into this Note.
(d) Any permitted or required prepayment of less than the unpaid principal
balance of this Note shall not extend or postpone the due date of any subsequent
monthly installments or change the amount of such installments, unless Lender
agrees otherwise in writing.
(e) Borrower recognizes that any prepayment of the unpaid principal balance of
this Note, whether voluntary or involuntary or resulting from a default by
Borrower, will result in Lender's incurring loss, including reinvestment loss,
additional expense and frustration or impairment of Lender's ability to meet its
commitments to third parties. Borrower agrees to pay to Lender upon demand
damages for the detriment caused by any prepayment, and agrees that it is
extremely difficult and impractical to ascertain the extent of such damages.
Borrower therefore acknowledges and agrees that the formula for calculating
prepayment premiums set forth on Schedule A represents a reasonable estimate of
the damages Lender will incur because of a prepayment.
(f) Borrower further acknowledges that the prepayment premium provisions of this
Note are a material part of the consideration for the Loan, and acknowledges
that the terms of this Note are in other respects more favorable to Borrower as
a result of the Borrower's voluntary agreement to the prepayment premium
provisions.
11. Costs and Expenses. Borrower shall pay all expenses and costs, including
fees and out-of-pocket expenses of attorneys and expert witnesses and costs of
investigation, incurred by Lender as a result of any default under this Note or
in connection with efforts to collect any amount due under this Note, or to
enforce the provisions of any of the other Loan Documents, including those
incurred in post-judgment collection efforts and in any bankruptcy proceeding
(including any action for relief from the automatic stay of any bankruptcy
proceeding) or judicial or non-judicial foreclosure proceeding.
12. Forbearance. Any forbearance by Lender in exercising any right or remedy
under this Note, the Security Instrument, or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of that or any other right or remedy. The acceptance by Lender of any
payment after the due date of such payment, or in an amount which is less than
the required payment, shall not be a waiver of Lender's right to require prompt
payment when due of all other payments or to exercise any right or remedy with
respect to any failure to make prompt payment. Enforcement by Lender of any
security for Borrower's obligations under this Note shall not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.
13. Waivers. Presentment, demand, notice of dishonor, protest, notice of
acceleration, notice of intent to demand or accelerate payment or maturity,
presentment for payment, notice of nonpayment, grace, and diligence in
collecting the Indebtedness are waived by Borrower and all endorsers and
guarantors of this Note and all other third party obligors.
14. Loan Charges. If any applicable law limiting the amount of interest or other
charges permitted to be collected from Borrower in connection with the Loan is
interpreted so that any interest or other charge provided for in any Loan
Document, whether considered separately or together with other charges provided
for in any other Loan Document, violates that law, and Borrower is entitled to
the benefit of that law, that interest or charge is hereby reduced to the extent
necessary to eliminate that violation. The amounts, if any, previously paid to
Lender in excess of the permitted amounts shall be applied by Lender to reduce
the unpaid principal balance of this Note. For the purpose of determining
whether any applicable law limiting the amount of interest or other charges
permitted to be collected from Borrower has been violated, all Indebtedness that
constitutes interest, as well as all other charges made in connection with the
Indebtedness that constitute interest, shall be deemed to be allocated and
spread ratably over the stated term of the Note. Unless otherwise required by
applicable law, such allocation and spreading shall be effected in such a manner
that the rate of interest so computed is uniform throughout the stated term of
the Note.
15. Commercial Purpose. Borrower represents that the Indebtedness is being
incurred by Borrower solely for the purpose of carrying on a business or
commercial enterprise, and not for personal, family or household purposes.
16. Counting of Days. Except where otherwise specifically provided, any
reference in this Note to a period of "days" means calendar days, not Business
Days.
17. Governing Law. This Note shall be governed by the law of the jurisdiction in
which the Land is located.
18. Captions. The captions of the paragraphs of this Note are for convenience
only and shall be disregarded in construing this Note.
19. Notices. All notices, demands and other communications required or permitted
to be given by Lender to Borrower pursuant to this Note shall be given in
accordance with Section 31 of the Security Instrument.
20. Consent to Jurisdiction and Venue. Borrower agrees that any controversy
arising under or in relation to this Note shall be litigated exclusively in the
jurisdiction in which the Land is located (the "Property Jurisdiction"). The
state and federal courts and authorities with jurisdiction in the Property
Jurisdiction shall have exclusive jurisdiction over all controversies which
shall arise under or in relation to this Note. Borrower irrevocably consents to
service, jurisdiction, and venue of such courts for any such litigation and
waives any other venue to which it might be entitled by virtue of domicile,
habitual residence or otherwise.
21. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) AGREES NOT TO ELECT A
TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE
RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT
BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE
TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
ATTACHED SCHEDULES. The following Schedules are attached to this Note:
X Schedule A Prepayment Premium (required)
X Schedule B Modifications to Multifamily Note
IN WITNESS WHEREOF, Borrower has signed and delivered this Note or has caused
this Note to be signed and delivered by its duly authorized representative.
CENTURY PROPERTIES FUND XVII, a California
limited partnership, doing business in
Florida as Century Properties Fund XVII,
Ltd.
By: Fox Partners, a California
general partnership, its
general partner
By: Fox Capital Management
Corporation, a California
corporation, its managing
general partner
By:
Patti K. Fielding
Vice President
94-2782037
Borrower's Social Security/Employer
ID Number
<PAGE>
PAY TO THE ORDER OF FEDERAL HOME LOAN MORTGAGE CORPORATION, WITHOUT RECOURSE,
THIS ____ DAY OF FEBRUARY, 2000.
GMAC COMMERCIAL MORTGAGE
CORPORATION, a California
corporation
By:
Donald W. Marshall
Vice President
<PAGE>
SCHEDULE A
PREPAYMENT PREMIUM
Any prepayment premium payable under Paragraph 10 of this Note shall be
computed as follows:
(a) If the prepayment is made between the date of this Note and the date that is
180 months after the first day of the first calendar month following the date of
this Note (the "Yield Maintenance Period"), the prepayment premium shall be the
greater of:
(i) 1.0% of the unpaid principal balance of this Note; or
(ii) the product obtained by multiplying:
(A) the amount of principal being prepaid,
by
(B) the excess (if any) of the Monthly Note Rate over the Assumed
Reinvestment Rate,
by
(C) the Present Value Factor.
For purposes of subparagraph (ii), the following definitions shall
apply:
Monthly Note Rate: one-twelfth (1/12) of the annual interest
rate of the Note, expressed as a decimal calculated to five
digits.
Prepayment Date: in the case of a voluntary prepayment, the
date on which the prepayment is made; in any other case, the
date on which Lender accelerates the unpaid principal
balance of the Note.
Assumed Reinvestment Rate: one-twelfth (1/12) of the yield rate as
of the date 5 Business Days before the Prepayment Date, on the
9.250% U.S. Treasury Security due February 1, 2016, as reported in
The Wall Street Journal, expressed as a decimal calculated to five
digits. In the event that no yield is published on the applicable
date for the Treasury Security used to determine the Assumed
Reinvestment Rate, Lender, in its discretion, shall select the
non-callable Treasury Security maturing in the same year as the
Treasury Security specified above with the lowest yield published in
The Wall Street Journal as of the applicable date. If the
publication of such yield rates in The Wall Street Journal is
discontinued for any reason, Lender shall select a security with a
comparable rate and term to the Treasury Security used to determine
the Assumed Reinvestment Rate. The selection of an alternate
security pursuant to this Paragraph shall be made in Lender's
discretion.
<PAGE>
Present Value Factor: the factor that discounts to present value the
costs resulting to Lender from the difference in interest rates
during the months remaining in the Yield Maintenance Period, using
the Assumed Reinvestment Rate as the discount rate, with monthly
compounding, expressed numerically as follows:
[OBJECT OMITTED]
n = number of months remaining in Yield Maintenance Period
ARR = Assumed Reinvestment Rate
(b) If the prepayment is made after the expiration of the Yield Maintenance
Period but more than 180 days before the Maturity Date, the prepayment premium
shall be 1.0% of the unpaid principal balance of this Note.
<PAGE>
SCHEDULE B
MODIFICATIONS TO MULTIFAMILY NOTE
1. The first sentence of 8 of the Note ("Default Rate") is hereby deleted and
replaced with the following:
So long as (a) any monthly installment under this Note remains past due for more
than thirty (30) days or (b) any other event of Default has occurred and is
continuing, interest under this Note shall accrue on the unpaid principal
balance from the earlier of the due date of the first unpaid monthly installment
or the occurrence of such other Event of Default, as applicable, at a rate (the
"Default Rate") equal to the lesser of (1) the maximum interest rate which may
be collected from Borrower under applicable law or (2) the greater of (i) three
percent (3%) above the Interest Rate or (ii) four percent (4.0%) above the
then-prevailing Prime Rate. As used herein, the term "Prime Rate" shall mean the
rate of interest announced by The Wall Street Journal from time to time as the
"Prime Rate".
2. Paragraph 9(c) of the Note is amended to add the following subparagraph (4):
(4) failure by Borrower to pay the amount of the water and sewer charges, taxes,
fire, hazard or other insurance premiums, ground rents in accordance with the
terms of the Security Instrument.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from CENTURY
PROPERTIES FUND XVII 1999 Fourth Quarter 10-KSB and is qualified in its entirety
by reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000356472
<NAME> CENTURY PROPERTIES FUND XVII
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 7,097
<SECURITIES> 0
<RECEIVABLES> 1,311
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 70,533
<DEPRECIATION> (35,320)
<TOTAL-ASSETS> 44,561
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 47,777
0
0
<COMMON> 0
<OTHER-SE> (4,711)
<TOTAL-LIABILITY-AND-EQUITY> 44,561
<SALES> 0
<TOTAL-REVENUES> 14,429
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 12,261
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,573
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,168
<EPS-BASIC> 25.49 <F2>
<EPS-DILUTED> 0
<FN>
<F1> Registrant has an unclassified balance sheet. <F2> Multiplier is 1.
</FN>
</TABLE>
