SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-11934
Century Properties Fund XVIII
(Exact name of registrant as specified in its charter)
California 94-2834149
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5665 Northside Drive N.W., Ste. 370, Atlanta, Georgia 30328
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (404) 916-9090
N/A
Former name, former address and fiscal year, if changed since last report.
Indicate by check mark whether registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 12, 13, or 15(d) of the Securities Exchange
Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes No
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APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date .
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CENTURY PROPERTIES FUND XVIII - FORM 10-Q - MARCH 31, 1995
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets
March 31, December 31,
1995 1994
(Unaudited) (Audited)
Assets
Cash and cash equivalents $ 1,034,000 $ 972,000
Other assets 179,000 318,000
Real Estate:
Real estate 26,272,000 26,159,000
Accumulated depreciation (7,918,000) (7,760,000)
-------------- --------------
Real estate, net 18,354,000 18,399,000
Deferred financing costs, net 346,000 364,000
-------------- --------------
Total assets $ 19,913,000 $ 20,053,000
============== ==============
Liabilities and Partners' Equity
Notes payable $ 19,282,000 $ 19,303,000
Accrued expenses and other liabilities 311,000 453,000
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Total liabilities 19,593,000 19,756,000
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Commitments and Contingencies
Partners' Equity (Deficit):
General partner (6,423,000) (6,425,000)
Limited partners (75,000 units outstanding at
March 31, 1995 and December 31, 1994) 6,743,000 6,722,000
-------------- --------------
Total partners' equity 320,000 297,000
-------------- --------------
Total liabilities and partners' equity $ 19,913,000 $ 20,053,000
============== ==============
See notes to financial statements.
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CENTURY PROPERTIES FUND XVIII - FORM 10-Q - MARCH 31, 1995
Statements of Operations (Unaudited)
For the Three Months Ended
March 31, 1995 March 31, 1994
Revenues:
Rental $ 1,072,000 $ 1,322,000
Interest 10,000 6,000
Gain on sale of property - 1,246,000
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Total revenues 1,082,000 2,574,000
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Expenses:
Operating 473,000 733,000
Interest 370,000 513,000
Depreciation 158,000 157,000
General and administrative 58,000 111,000
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Total expenses 1,059,000 1,514,000
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Net income $ 23,000 $ 1,060,000
============== ==============
Net income per limited partnership unit: $ - $ 13
============== ==============
See notes to financial statements.
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CENTURY PROPERTIES FUND XVIII - FORM 10-Q - MARCH 31, 1995
Statements of Cash Flows (Unaudited)
For the Three Months Ended
March 31, 1995 March 31, 1994
Operating Activities:
Net income $ 23,000 $ 1,060,000
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 176,000 176,000
Gain on sale of property - (1,246,000)
Changes in operating assets and liabilities:
Other assets 139,000 (54,000)
Accrued expenses and other liabilities (130,000) (252,000)
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Net cash provided by (used in) operating activities 208,000 (316,000)
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Investing Activities:
Additions to real estate (113,000) (30,000)
Net proceeds from sale of rental property - 15,143,000
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Net cash (used in) provided by investing activities (113,000) 15,113,000
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Financing Activities:
Repayment of notes payable to affiliate of
the general partner - (608,000)
Notes payable principal payments (33,000) (69,000)
Assumption of note payable on sale of property - (13,653,000)
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Cash (used in) financing activities (33,000) (14,330,000)
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Increase in Cash and Cash Equivalents 62,000 467,000
Cash and Cash Equivalents at Beginning of Period 972,000 363,000
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Cash and Cash Equivalents at End of Period $1,034,000 $ 830,000
=========== ============
Supplemental Disclosure of Cash Flow Information:
Interest paid in cash during the period $ 340,000 $ 735,000
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Supplemental Disclosure of Non-Cash
Financing Activities:
Increase in notes payable due to
debt modification $ - $ 1,084,000
=========== ============
Accrued interest added to notes payable balance $ 12,000 $ -
=========== ============
See notes to financial statements.
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CENTURY PROPERTIES FUND XVIII - FORM 10-Q - MARCH 31, 1995
NOTES TO FINANCIAL STATEMENTS
1. General
The accompanying financial statements, footnotes and discussions should be
read in conjunction with the financial statements, related footnotes and
discussions contained in the Partnership's Annual Report for the year ended
December 31, 1994.
The financial information contained herein is unaudited. In the opinion
of management, all adjustments necessary for a fair presentation of such
financial information have been included. All adjustments are of a normal
recurring nature, except as disclosed in Note 3 below.
At March 31, 1995, the Partnership had approximately $796,000 invested in
overnight repurchase agreements earning approximately 6% per annum.
The results of operations for the three months ended March 31, 1995 and
1994 are not necessarily indicative of the results to be expected for the full
year.
2. Transactions with Related Parties
(a) An affiliate of NPI, Inc. received reimbursements of administrative
expenses amounting to $36,000 and $35,000, during the three months ended March
31, 1995 and 1994, respectively. These reimbursements are primarily included
in general and administrative expenses.
(b) An affiliate of NPI, Inc. is entitled to receive a management fee
equal to 5% of the annual gross receipts from certain properties it manages.
For the three months ended March 31, 1995 and 1994, affiliates of NPI, Inc.
received $46,000 and $15,000, respectively. These fees are included in
operating expenses.
(c) An affiliate of NPI, Inc. was paid $7,000 relating to a successful
real estate tax appeal on the Partnership's Overlook Point Apartments property
during the three months ended March 31, 1995. This fee is included in
operating expenses.
3. Disposition of Rental Property
In February 1994, the Partnership sold Plantation Ridge Apartments,
located in Marietta, Georgia for $15,353,000. The existing loans of
$13,653,000 were assumed by the buyer at the time of sale. After assumption
of the existing loans and costs of the sale of $210,000, proceeds to the
Partnership were $1,490,000. At the date of sale, the carrying amount of real
estate was $13,897,000. For financial statement purposes, the Partnership
recorded a $1,246,000 gain on sale of property during 1994.
5 of 10
CENTURY PROPERTIES FUND XVIII - FORM 10-Q - MARCH 31, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
This item should be read in conjunction with the Financial Statements and
other Items contained elsewhere in this Report.
Liquidity and Capital Resources
Registrant's remaining real estate properties consist of two residential
apartment complexes located in Utah and Texas, which are currently leased to
tenants subject to leases of up to one year. Registrant receives rental
income from its properties and is responsible for operating expenses,
administrative expenses, capital improvements and debt service payments. As
of March 1, 1995, ten of the twelve properties originally purchased by
Registrant were sold or otherwise disposed.
Registrant uses working capital reserves provided from any undistributed cash
flow from operations, refinancing proceeds and sales proceeds as its primary
source of liquidity. Cash distributions from operations remained suspended in
the first quarter of 1995. In order to preserve working capital reserves
required for necessary capital improvements to properties and potential debt
modifications, it is not currently anticipated that Registrant will make any
distributions from operations in the near future.
The level of liquidity based upon cash and cash equivalents experienced a
$62,000 increase at March 31, 1995, as compared to December 31, 1994.
Registrant's $208,000 of cash provided by operating activities was only
partially offset by $113,000 of additions to real estate (investing
activities) and $33,000 of mortgage principal payments (financing activities).
Additions to real estate consisted of exterior renovations at Registrant's Oak
Run Apartments property. Registrant has no plans for significant capital
improvements at any of its properties during 1995. All other increases
(decreases) in certain assets and liabilities are the result of the timing of
receipt and payment of various operating activities.
Working capital reserves are invested in a money market account or repurchase
agreements secured by United States Treasury obligations. The Managing
General Partner believes that, if market conditions remain relatively stable,
cash flow from operations, when combined with working capital reserves, will
be sufficient to fund required capital improvements and regular debt service
payments in 1995 and the foreseeable future. Registrant has substantial
balloon payments due in 1999 and 2000 of approximately $7,869,000 and
$6,489,000. Although management is confident that these mortgages can be
replaced, if the mortgages are not extended or refinanced, or the properties
are not sold, the properties could be lost through foreclosure.
Pursuant to the terms of a Settlement Agreement entered into in connection
with the Ruben and Andrews actions, DeForest Ventures I L.P. will make a
tender offer for an aggregate number of units of Registrant (including the
units purchased in the initial tender) constituting up to 49% of the total
number of units of Registrant at a price equal to the initial tender price
plus 15% less attorney's fees and expenses. In addition, pursuant to the
terms of the proposed settlement, the Managing General Partner will agree to
provide Registrant a credit line of $150,000 per property, borrowings under
which would bear interest at the lesser of prime plus 1% or the rate permitted
by the Partnership Agreement of Registrant. A hearing for final approval of
the settlement is scheduled for May 19, 1995. See Part II - Other
Information, "Item 1 - Legal Proceedings". If the settlement receives final
Court approval, it is expected that the tender offer will commence on or about
June 19, 1995. The Managing General Partner believes that the settlement will
not have an adverse effect on Registrant.
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CENTURY PROPERTIES FUND XVIII - FORM 10-Q - MARCH 31, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Liquidity and Capital Resources (Continued)
At this time, it appears that the investment objective of capital growth will
not be attained and that investors will not receive a return of all of their
invested capital. The extent to which invested capital is returned to
investors is dependent upon the performance of Registrant's properties and the
markets in which such properties are located and on the sales price of the
remaining properties. In this regard, the remaining properties have been held
longer than originally expected. The ability to hold and operate these
properties is dependent on Registrant's ability to obtain refinancing or debt
modification as required.
Real Estate Market
The national real estate market has suffered from the effects of the real
estate recession including, but not limited to, a downward trend in market
values of existing residential properties. In addition, the bailout of the
savings and loan associations and sales of foreclosed properties by auction
reduced market values and caused a further restriction on the ability to
obtain credit. As a result, Registrant's ability to refinance or sell its
properties may be restricted. These factors caused a decline in market
property values and serve to reduce market rental rates and/or sales prices.
Compounding these difficulties have been relatively low interest rates, which
encourage existing and potential tenants to purchase homes. In addition,
there has been a significant decline nationally in new household formation.
Despite the above, the rental market appears to be experiencing a gradual
strengthening and management anticipates that increases in revenue will
generally exceed increases in expenses during 1995. Furthermore, management
believes that the emergence of new institutional purchasers, including real
estate investment trusts and insurance companies, should create a more
favorable market value for Registrant's properties in the future.
Results of Operations
Three Months Ended March 31, 1995 vs. March 31, 1994
Operating results declined by $1,037,000 for the three months ended March 31,
1995, as compared to 1994. The decrease in operating results is due to the
$1,246,000 gain on the disposition of Plantation Ridge Apartments recognized
in February 1994.
Revenues declined by $1,492,000 for the three months ended March 31, 1995, as
compared to 1994, due to the previously mentioned property disposition. With
respect to the remaining properties, rental revenue increased by $97,000 due
to an increase in rental rates at both of Registrant's remaining properties,
coupled with an increase in occupancy at Registrant's Oak Run Apartments.
Interest income increased by $4,000 due to an increase in average working
capital reserves available for investment and the effect of higher interest
rates.
Expenses decreased by $455,000 for the three months ended March 31, 1995, as
compared to 1994, due to the disposition of Plantation Ridge Apartments in
February 1994. With respect to the remaining properties, expenses increased
by $44,000 primarily due to an increase in interest expense of $38,000.
7 of 10
CENTURY PROPERTIES FUND XVIII - FORM 10-Q - MARCH 31, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Three Months Ended March 31, 1995 vs. March 31, 1994 (Continued)
Interest expense increased due to higher interest rates on the variable rate
mortgage encumbering Registrant's Oak Run Apartments property, which was only
slightly offset by the modification of Registrant's Overlook Point Apartments
at a lower interest rate in February 1994. Operating and depreciation expense
remained relatively constant. General and administrative expenses declined by
$53,000 due to a reduction in asset management costs.
Properties
A description of the properties in which Registrant has an ownership interest
for the period covered by this Report, along with occupancy data, follows:
CENTURY PROPERTIES FUND XVIII
OCCUPANCY SUMMARY
For the Quarters Ended March 31, 1995 and 1994
Average
Number of Date of Occupancy Rate (%)
Name and Location Units Purchase 1995 1994
- ----------------- ------ -------- ------------------
Overlook Point Apartments 304 07/83 95 96
Salt Lake City, Utah
Oak Run Apartments 420 11/83 99 94
Dallas, Texas
Plantation Ridge Apartments (1) 454 06/84 - 93
Marietta, Georgia
(1) Property was sold in February 1994. Average occupancy rate is for the
period January 1, 1994 through date of sale.
8 of 10
CENTURY PROPERTIES FUND XVIII - FORM 10-Q - MARCH 31, 1995
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Lawrence M. Whiteside, on behalf of himself and all other similarly
situated, v. Fox Capital Management Corporation, et al., Superior Court of the
State of California, San Mateo County, Case No. 390018 ("Whiteside").
Bonnie L. Ruben and Sidney Finkel, on behalf of themselves and all
others similarly situated, v. DeForest Ventures I L.P., et al., United States
District Court, Northern District of Georgia, Atlanta Division, Case No.
1-94-CV-2983-JEC ("Ruben").
Roger L. Vernon, individually and on behalf of all similarly situated
persons v. DeForest Ventures I L.P., et al., Circuit Court of Cook County,
County Departments, Chancery Division, State of Illinois, Case No. 94CH0100592
("Vernon").
James Andrews, et al., on behalf of themselves and all other similarly
situated v. Fox Capital Management Corporation, et al., United States District
Court, Northern District of Georgia, Atlanta Division, Case No.
1-94-CV-3351-JEC ("Andrews").
On March 16, 1995 the United States District Court for the Northern
District of Georgia, Atlanta Division, entered an order which granted
preliminary approval to a settlement agreement in the Ruben and Andrews
actions, conditionally certified two classes for purpose of settlement, and
authorized the parties to give notice to the classes of the terms of the
proposed settlement. Plaintiffs counsel in the Vernon and Whiteside action
have joined in the Settlement Agreement as well. The two certified classes
constitute all limited partners of Registrant and the eighteen other
affiliated partnerships who either tendered their units in connection with the
October tender offers or continue to hold their units in Registrant and the
other affiliated partnerships. Pursuant to the terms of the proposed
settlement, which are described in the notice sent to the class members in
March 1995, (and more fully described in the Amended Stipulation of Settlement
submitted to the court on March 14, 1995) all claims which either were made or
could have been asserted in any of the class actions would be dismissed with
prejudice and/or released. In consideration for the dismissal and/or release
of such claims, among other things, DeForest I would pay to each unit holder
who tendered their units in Registrant an amount equal to 15% of the original
tender offer price less attorney's fees and expenses. In addition, DeForest I
will commence a second tender offer for an aggregate number of units of
Registrant (including the units purchased in the initial tender) constituting
up to 49% of the total number of units of Registrant at a price equal to the
initial tender price plus 15% less attorney's fees and expenses. Furthermore,
under the terms of the proposed settlement, the Managing General Partner would
agree, among other things, to provide Registrant a credit line of $150,000 per
property which would bear interest at the lesser of prime rate plus 1% and the
rate permitted under the partnership agreement of Registrant. A hearing on
the final approval of the settlement is scheduled for May 19, 1995.
Item 6. Exhibits and Reports on Form 8-K.
There were no reports filed on Form 8-K for the three months ended March
31, 1995.
9 of 10
CENTURY PROPERTIES FUND XVIII - FORM 10-Q - MARCH 31, 1995
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CENTURY PROPERTIES FUND XVIII
By: FOX PARTNERS,
Its General Partner
By: FOX CAPITAL MANAGEMENT CORPORATION,
A General Partner
/S/ARTHUR N. QUELER
--------------------------------------
ARTHUR N. QUELER
Secretary/Treasurer and Director
(Principal Financial Officer)
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<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Century
Properties Fund XVIII and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,034,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 26,272,000
<DEPRECIATION> (7,918,000)
<TOTAL-ASSETS> 19,913,000
<CURRENT-LIABILITIES> 0
<BONDS> 19,282,000
<COMMON> 0
0
0
<OTHER-SE> 320,000
<TOTAL-LIABILITY-AND-EQUITY> 19,913,000
<SALES> 0
<TOTAL-REVENUES> 1,072,000
<CGS> 0
<TOTAL-COSTS> 631,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 370,000
<INCOME-PRETAX> 23,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 23,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> 23,000
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