FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________to _________
Commission file number 0-11137
CENTURY PROPERTIES FUND XVII
(Exact name of small business issuer as specified in its charter)
California 94-2782037
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No___
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
CENTURY PROPERTIES FUND XVII
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, 2000
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and cash equivalents $ 1,003
Receivables and deposits 556
Restricted escrows 177
Other assets 753
Investment properties:
Land $ 7,078
Buildings and related personal property 64,210
71,288
Less accumulated depreciation (36,688) 34,600
$ 37,089
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 255
Tenant security deposit liabilities 344
Accrued property taxes 448
Other liabilities 461
Mortgage notes payable 48,397
Partners' Deficit
General partner $ (8,451)
Limited partners (75,000 units issued and
outstanding) (4,365) (12,816)
$ 37,089
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
b)
CENTURY PROPERTIES FUND XVII
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
Revenues:
<S> <C> <C> <C> <C>
Rental income $ 3,497 $ 3,409 $ 6,970 $ 6,765
Other income 290 198 487 361
Total revenues 3,787 3,607 7,457 7,126
Expenses:
Operating 1,209 1,147 2,393 2,300
General and administrative 83 105 155 174
Depreciation 709 621 1,401 1,232
Interest 963 890 1,937 1,784
Property taxes 221 205 490 403
Total expenses 3,185 2,968 6,376 5,893
Income before extraordinary loss 602 639 1,081 1,233
Extraordinary loss on early extinguishment
of debt -- -- (102) --
Net income $ 602 $ 639 $ 979 $ 1,233
Net income allocated to general partner $ 71 $ 75 $ 116 $ 145
Net income allocated to limited partners 531 564 863 1,088
$ 602 $ 639 $ 979 $ 1,233
Per limited partnership unit:
Income before extraordinary loss $ 7.08 $ 7.52 $ 12.71 $ 14.51
Extraordinary loss -- -- (1.20) --
Net income $ 7.08 $ 7.52 $ 11.51 $ 14.51
Distributions per limited partnership
unit $ 37.03 $ -- $113.87 $ 30.31
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
c)
CENTURY PROPERTIES FUND XVII
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(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, 1999 75,000 $(8,023) $ 3,312 $ (4,711)
Distributions to partners -- (544) (8,540) (9,084)
Net income for the six months
ended June 30, 2000 -- 116 863 979
Partners' deficit at
June 30, 2000 75,000 $(8,451) $(4,365) $(12,816)
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
d)
CENTURY PROPERTIES FUND XVII
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
2000 1999
Cash flows from operating activities:
<S> <C> <C>
Net income $ 979 $ 1,233
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,401 1,232
Amortization of loan costs and debt discounts 125 710
Extraordinary loss on debt refinancing 102 --
Loss on disposal of property 193 --
Change in accounts:
Receivables and deposits 578 72
Other assets (35) (44)
Accounts payable 3 (49)
Tenant security deposit liabilities 36 22
Accrued property taxes (164) (145)
Other liabilities 138 (48)
Net cash provided by operating activities 3,356 2,983
Cash flows from investing activities:
Property improvements and replacements (981) (944)
Net withdrawals from restricted escrows 286 684
Insurance proceeds received 177 --
Net cash used in investing activities (518) (260)
Cash flows from financing activities:
Payments on mortgage notes payable (330) (199)
Payoff of mortgage notes payable (21,943) --
Proceeds from mortgage notes payable 22,800 --
Loan costs paid (296) --
Prepayment penalty (79) --
Distributions to partners (9,084) (2,500)
Net cash used in financing activities (8,932) (2,699)
Net (decrease) increase in cash and cash equivalents (6,094) 24
Cash and cash equivalents at beginning of period 7,097 4,031
Cash and cash equivalents at end of period $ 1,003 $ 4,055
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,622 $ 1,075
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
e)
CENTURY PROPERTIES FUND XVII
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Century
Properties Fund XVII (the "Partnership" or the "Registrant") have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310(b)
of Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of Fox Capital Management Corporation
("FCMC" or the "Managing General Partner") the general partner of the
Partnership's General Partner, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three and six month periods ended June 30, 2000 are
not necessarily indicative of the results that may be expected for the fiscal
year ending December 31, 2000. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Partnership's Annual Report on Form 10-KSB for the fiscal year ended December
31, 1999.
Principles of Consolidation
The financial statements include all the accounts of the Partnership and
Apartment CCG 17, L.P., which owns Cherry Creek Gardens Apartments, Apartment
Creek 17, LLC, which owns Creekside Apartments and Apartment Lodge 17, LLC,
which owns The Lodge Apartments. The Partnership ultimately holds a 100%
interest in Apartment CCG 17, L.P., Apartment Creek 17, LLC, and Apartment Lodge
17, LLC. All intra-entity balances have been eliminated.
Note B - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment Investment and Management Company ("AIMCO"), a publicly
traded real estate investment trust, with AIMCO being the surviving corporation
(the "Insignia Merger"). As a result, AIMCO acquired a 100% ownership interest
in the Managing General Partner. The Managing General Partner does not believe
that this transaction has had or will have a material effect on the affairs and
operations of the Partnership.
Note C - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
Partnership activities. The Partnership Agreement provides for payments to
affiliates for services and as 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 six months ended June 30, 2000 and 1999:
2000 1999
(in thousands)
Property management fees (included in operating expenses) $371 $356
Reimbursement for services of affiliates (included in
investment properties, general and administrative
expense and operating expense) 104 121
Partnership management fee (included in general partner
distributions) 370 181
<PAGE>
During the six months ended June 30, 2000 and 1999, affiliates of the Managing
General Partner were entitled to receive 5% of gross receipts from all of the
Registrant's properties for providing property management services. The
Registrant paid to such affiliates approximately $371,000 and $356,000 for the
six months ended June 30, 2000 and 1999, respectively.
An affiliate of the Managing General Partner received reimbursement of
accountable administrative expenses amounting to approximately $104,000 and
$121,000 for the six months ended June 30, 2000 and 1999, 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 $370,000 and $181,000 in Partnership management fees
were paid along with the distributions from operations made during the six
months ended June 30, 2000 and 1999, respectively.
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.
AIMCO and its affiliates currently own 41,637 limited partnership units in the
Partnership representing 55.52% of the outstanding units. A number of these
units were acquired pursuant to tender offers made by AIMCO or its affiliates or
affiliates of the Managing General Partner. It is possible that AIMCO or its
affiliates will make one or more additional offers to acquire additional limited
partnership interests in the Partnership for cash or in exchange for units in
the operating partnership of AIMCO. In this regard, on July 24, 2000 an
affiliate of AIMCO commenced a tender offer to purchase any and all of the
remaining partnership interests for a purchase price of $309.00 per unit. Under
the Partnership Agreement, unitholders holding a majority of the Units are
entitled to take action with respect to a variety of matters. As a result of its
ownership of 55.52% of the outstanding units, AIMCO is in a position to
influence all voting decisions with respect to the Registrant. When voting on
matters, AIMCO would in all likelihood vote the Units it acquired in a manner
favorable to the interest of the Managing General Partner because of their
affiliation with the Managing General Partner. However, DeForest Ventures I
L.P., from whom AIMCO, through its merger with Insignia, 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 AIMCO and its
affiliates right to vote each Unit acquired.
<PAGE>
Note D - Distributions to Partners
During the six months ended June 30, 2000, the Partnership declared and paid
distributions of approximately $9,084,000 (approximately $8,540,000 to the
limited partners or $113.87 per limited partnership unit) to its partners. The
distributions consisted of approximately $3,695,000 (approximately $3,259,000 to
the limited partners or $43.46 per limited partnership unit) from operations and
approximately $5,389,000 (approximately $5,281,000 to the limited partners or
$70.41 per limited partnership unit) from the proceeds of the refinancing of
Cherry Creek Gardens Apartments in December 1999 and the refinancing of Cooper's
Pond Apartments in February 2000. During the six months ended June 30, 1999, the
Partnership paid a distribution of approximately $2,500,000 (approximately
$2,273,000 to the limited partners or $30.31 per limited partnership unit) to
its partners. The distribution consisted of approximately $1,811,000
(approximately $1,598,000 to the limited partners or approximately $21.31 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 Creekside Apartments and The Lodge
Apartments in August 1998.
Note E - Refinancing and Extraordinary Loss
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 monthly until the loan matures on January
1, 2020. 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. Additional loan
costs of approximately $6,000 were capitalized during the six months ended June
30, 2000.
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 monthly until the loan matures on February
1, 2020. Total capitalized loan costs were approximately $143,000 at June 30,
2000.
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 rates on the
refinanced mortgages were 8.0% and 8.5%. Payments on the mortgage loan are due
monthly until the loan matures on March 1, 2020. Total capitalized loan costs
were approximately $147,000 at June 30, 2000. The Partnership recognized an
extraordinary loss on the early extinguishment of debt of approximately $102,000
due to the write-off of unamortized loan costs and a prepayment penalty.
Note F - Casualty Event
In November 1999, a fire occurred at The Village in the Woods Apartments which
caused damage to sixteen units of the complex. As of June 30, 2000, the loss and
expenditures associated with this casualty have been offset by insurance
proceeds. The financial impact may change in future months depending on final
negotiations with the insurance company.
<PAGE>
Note G - Segment Reporting
Description of the types of products and services from which the reportable
segment derives its revenues: The Partnership has one reportable segment:
residential properties. The Partnership's residential property segment consists
of five apartment complexes, three of which are located in Colorado and one each
in Texas and Florida. The Partnership rents apartment units to tenants for terms
that are typically twelve months or less.
Measurement of segment profit or loss: The Partnership evaluates performance
based on segment profit (loss) before depreciation. The accounting policies of
the reportable segment are the same as those described in the Partnership's
Annual Report on Form 10-KSB for the year ended December 31, 1999.
Factors management used to identify the enterprise's reportable segments: The
Partnership's reportable segment consists of investment properties that offer
similar products and services. Although each of the investment properties is
managed separately, they have been aggregated into one segment as they provide
services with similar types of products and customers.
Segment information for the three and six month periods ended June 30, 2000 and
1999 is shown in the tables below (in thousands). The "Other" column includes
Partnership administration related items and income and expense not allocated to
the reportable segment.
Six months ended June 30, 2000 Residential Other Totals
Rental income $ 6,970 $ -- $ 6,970
Other income 443 44 487
Interest expense 1,937 -- 1,937
Depreciation 1,401 -- 1,401
General and administrative expense -- 155 155
Extraordinary loss on early
extinguishment of debt (102) -- (102)
Segment profit (loss) 1,090 (111) 979
Total assets 36,846 243 37,089
Capital expenditures for investment
properties 981 -- 981
Three months ended June 30, 2000 Residential Other Totals
Rental income $ 3,497 $ -- $ 3,497
Other income 281 9 290
Interest expense 963 -- 963
Depreciation 709 -- 709
General and administrative expense -- 83 83
Segment profit (loss) 676 (74) 602
<PAGE>
Six months ended June 30, 1999 Residential Other Totals
Rental income $ 6,765 $ -- $ 6,765
Other income 337 24 361
Interest expense 1,784 -- 1,784
Depreciation 1,232 -- 1,232
General and administrative expense -- 174 174
Segment profit (loss) 1,383 (150) 1,233
Total assets 40,498 605 41,103
Capital expenditures for investment
properties 944 -- 944
Three months ended June 30, 1999 Residential Other Totals
Rental income $ 3,409 $ -- $ 3,409
Other income 184 14 198
Interest expense 890 -- 890
Depreciation 621 -- 621
General and administrative expense -- 105 105
Segment profit (loss) 730 (91) 639
Note H - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, its Managing General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition of interests in certain general partner
entities by Insignia Financial Group, Inc. and entities which were, at one time,
affiliates of Insignia; past tender offers by the Insignia affiliates to acquire
limited partnership units; the management of partnerships by the Insignia
affiliates; and the Insignia Merger. The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998, the Managing General Partner filed a motion seeking dismissal of the
action. In lieu of responding to the motion, the plaintiffs have filed an
amended complaint. The Managing General Partner filed demurrers to the amended
complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to final court approval, on behalf of the Partnership
and all limited partners who owned units as of November 3, 1999. Preliminary
approval of the settlement was obtained on November 3, 1999 from the Court, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Managing General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case. The Court will entertain applications for lead
counsel which must be filed by August 4, 2000. The Court has scheduled a hearing
on August 21, 2000 to address the issue of appointing lead counsel. The Managing
General Partner does not anticipate that costs associated with this case will be
material to the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB and the other filings with the
Securities and Exchange Commission made by the Registrant from time to time. The
discussion of the Registrant's business and results of operations, including
forward-looking statements pertaining to such matters, does not take into
account the effects of any changes to the Registrant's business and results of
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.
The Partnership's investment properties consist of five apartment complexes. The
following table sets forth the average occupancy of the properties for the six
months ended June 30, 2000 and 1999:
Average Occupancy
Property 2000 1999
Cherry Creek Gardens Apartments 96% 97%
Englewood, Colorado
Creekside Apartments 97% 98%
Denver, Colorado
The Lodge Apartments 98% 98%
Denver, Colorado
The Village in the Woods Apartments 90% 93%
Cypress, Texas
Cooper's Pond Apartments 96% 96%
Tampa, Florida
The Managing General Partner attributes the decrease in occupancy at The Village
in the Woods to an increase in home purchases and increased competition due to
the construction of new apartment complexes in the area.
Results of Operations
The Partnership realized net income for the six months ended June 30, 2000 of
approximately $979,000 as compared to net income of approximately $1,233,000 for
the corresponding period of 1999. The Partnership's net income for the three
months ended June 30, 2000 was approximately $602,000 compared to approximately
$639,000 for the three months ended June 30, 1999. The decrease in net income
for the six month period ended June 30, 2000 was primarily due to recognition of
a $102,000 extraordinary loss on the extinguishment of debt. Income before
extraordinary loss for the six months ended June 30, 2000 and 1999 was
approximately $1,081,000 and $1,233,000, respectively. This decrease was due to
an increase in total revenues which was more than offset by an increase in total
expenses. The extraordinary loss on extinguishment of debt relates to the
refinancing of the mortgage at Cooper's Pond Apartments (see discussion below).
The decrease in net income for the three month period ended June 30, 2000 was
due to an increase in total expenses partially offset by an increase in total
revenues.
Total revenues increased for the three and six month periods ended June 30, 2000
due to an increase in rental income and other income. The increase in rental
income was due to an increase in average rental rates at all of the
Partnership's investment properties. These increases were partially offset by
decreases in occupancy at Cherry Creek Gardens Apartments, Creekside Apartments,
and Village in the Woods Apartments, as well as increased concession costs and
bad debt expense at Village in the Woods Apartments and Cherry Creek Gardens
Apartments. The increase in other income is due primarily to an increase in
interest income due to higher average cash balances in interest bearing accounts
and an increase in income from utility charges at Cherry Creek Gardens
Apartments and Creekside Apartments.
Total expenses increased for the three and six month periods ended June 30, 2000
primarily due to increased depreciation expense, property tax expense and
interest expense which was partially offset by decreased general and
administrative expenses. Depreciation expense increased due to property
improvements and replacements put into service during the last twelve months.
Property tax expense increased due to an increase in the assessed value at
Village in the Woods Apartments. Interest expense increased due to the
refinancings of Cherry Creek Gardens Apartments in December 1999, Village in the
Woods Apartments in January 2000, and Cooper's Pond Apartments in February 2000,
as discussed below. General and administrative expenses decreased due to a
decrease in professional fees associated with the administration of the
Partnership. Included in general and administrative expenses at both June 30,
2000 and 1999 are reimbursements to the Managing 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.
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 June 30, 2000, the Partnership had cash and cash equivalents of approximately
$1,003,000 compared to approximately $4,055,000 at June 30, 1999. The decrease
in cash and cash equivalents of approximately $6,094,000 from the Partnership's
year ended December 31, 1999 is due to approximately $8,932,000 of cash used in
financing activities and approximately $518,000 of cash used in investing
activities, which was partially offset by approximately $3,356,000 of cash
provided by operating activities. Cash used in financing activities consisted of
payments of principal made on the mortgages encumbering the Partnership's
properties, the payoff of the previous mortgages encumbering Village in the
Woods Apartments and Cooper's Pond Apartments, loan costs paid, the payment of a
prepayment penalty on the refinancing of Cooper's Pond Apartments, and
distributions to partners which was partially offset by the proceeds from the
debt refinancing of Village in the Woods Apartments and Cooper's Pond
Apartments. Cash used in investing activities consisted of property improvements
and replacements largely offset by net withdrawals from escrow accounts
maintained by the mortgage lenders and insurance proceeds received. 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 interest rate of 7.99%. Interest on the old mortgage was 8.63%.
Payments on the mortgage loan are due monthly until the loan matures on January
1, 2020. 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. Additional loan
costs of approximately $6,000 were capitalized during the six months ended June
30, 2000.
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 monthly until the loan matures on
February 1, 2020. Total capitalized loan costs were approximately $143,000 at
June 30, 2000.
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 rates on the
refinanced mortgages were 8.0% and 8.5%. Payments on the mortgage loan are due
monthly until the loan matures on March 1, 2020. Total capitalized loan costs
were approximately $147,000 at June 30, 2000. The Partnership recognized an
extraordinary loss on the early extinguishment of debt of approximately $102,000
due to the write-off of unamortized loan costs and a prepayment penalty.
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. Capital improvements planned
for each of the Partnership's properties are detailed below.
Cherry Creek Gardens Apartments
During the six months ended June 30, 2000, the Partnership completed
approximately $169,000 of capital improvements at the property, consisting
primarily of swimming pool upgrades, exterior painting, carpet and vinyl
replacements, parking area improvements, and water heater replacements. These
improvements were funded from operating cash flow. The Partnership has evaluated
the capital improvement needs of the property for the year. The amount budgeted
for 2000 is approximately $626,000, consisting primarily of swimming pool
upgrades, clubhouse renovations, carpet replacement, appliances, and other
building improvements. 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 six months ended June 30, 2000, the Partnership completed
approximately $84,000 of capital improvements at the property, consisting
primarily of roof replacement, air conditioning unit replacement, carpet and
vinyl replacements, and water heater replacements. These improvements were
funded from operating cash flow and the Partnership's reserves. The Partnership
has evaluated the capital improvement needs of the property for the year. The
amount budgeted for 2000 is approximately $443,000, consisting primarily of
appliances, carpet replacement, and submetering improvements. 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.
<PAGE>
The Lodge Apartments
During the six months ended June 30, 2000, the Partnership completed
approximately $56,000 of capital improvements at the property, consisting
primarily of carpet and vinyl replacements and HVAC condensing units. These
improvements were funded from operating cash flow and the Partnership's
reserves. The Partnership has evaluated the capital improvement needs of the
property for the year. The amount budgeted for 2000 is approximately $450,000,
consisting primarily of carpet replacements and submetering improvements.
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 six months ended June 30, 2000, the Partnership completed
approximately $390,000 of budgeted and non-budgeted capital improvements at the
property, consisting primarily of parking area improvements, office equipment,
carpet replacements, and other building improvements. In addition, the
Partnership completed repairs and replacements related to a fire in November
1999. These improvements were funded from operating cash flow and insurance
proceeds. The Partnership has evaluated the capital improvement needs of the
property for the year. The amount budgeted for 2000 is approximately $223,000,
consisting primarily of appliances, air conditioning unit replacement, and
carpet and vinyl replacements. 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 six months ended June 30, 2000, the Partnership completed
approximately $282,000 of capital improvements at the property, consisting
primarily of carpet and vinyl replacements, appliances, light fixture
replacements, swimming pool improvements, and plumbing upgrades. These
improvements were funded from Partnership reserves. The Partnership has
evaluated the capital improvement needs of the property for the year. The amount
budgeted for 2000 is approximately $558,000, consisting primarily of air
conditioning unit replacement, carpet and vinyl replacement, major landscaping,
swimming pool improvements, plumbing upgrades, and structural improvements.
Additional improvements may be considered and will depend on the physical
condition of the property as well as replacement reserves and anticipated cash
flow generated by the property.
The additional capital expenditures will be incurred only if cash is available
from operations or from Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Partnership's distributable cash flow,
if any, may be adversely affected at least in the short term.
The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Partnership. The mortgage
indebtedness of approximately $48,397,000 is amortized over varying periods with
maturity dates ranging from September 2008 at Creekside Apartments and The Lodge
Apartments to March 2020 at Cooper's Pond 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 six months ended June 30, 2000, the Partnership declared and paid
distributions of approximately $9,084,000 (approximately $8,540,000 to the
limited partners or $113.87 per limited partnership unit) to its partners. The
distributions consisted of approximately $3,695,000 (approximately $3,259,000 to
the limited partners or $43.46 per limited partnership unit) from operations and
approximately $5,389,000 (approximately $5,281,000 to the limited partners or
$70.41 per limited partnership unit) from the proceeds of the refinancing of
Cherry Creek Gardens Apartments in December 1999 and the refinancing of Cooper's
Pond Apartments in February 2000. During the six months ended June 30, 1999, the
Partnership paid a distribution of approximately $2,500,000 (approximately
$2,273,000 to the limited partners or $30.31 per limited partnership unit) to
its partners. The distribution consisted of approximately $1,811,000
(approximately $1,598,000 to the limited partners or approximately $21.31 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 Creekside Apartments and The Lodge
Apartments in August 1998. 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 during the remainder of 2000 or subsequent periods.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, its Managing General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition of interests in certain general partner
entities by Insignia Financial Group, Inc. and entities which were, at one time,
affiliates of Insignia; past tender offers by the Insignia affiliates to acquire
limited partnership units; the management of partnerships by the Insignia
affiliates; and the Insignia Merger. The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998, the Managing General Partner filed a motion seeking dismissal of the
action. In lieu of responding to the motion, the plaintiffs have filed an
amended complaint. The Managing General Partner filed demurrers to the amended
complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to final court approval, on behalf of the Partnership
and all limited partners who owned units as of November 3, 1999. Preliminary
approval of the settlement was obtained on November 3, 1999 from the Court, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Managing General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case. The Court will entertain applications for lead
counsel which must be filed by August 4, 2000. The Court has scheduled a hearing
on August 21, 2000 to address the issue of appointing lead counsel. The Managing
General Partner does not anticipate that costs associated with this case will be
material to the Partnership's overall operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to
this report.
b) Reports on Form 8-K filed during the quarter ended June 30, 2000:
None.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Partnership caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CENTURY PROPERTIES FUND 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:
