SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________to ___________
Commission file number 0-11934
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 (770) 916-9090
N/A
Former name, former address and fiscal year, if changed since last report.
Indicate by check mark whether registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No_____
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 12, 13, or 15(d) of the Securities Exchange
Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes No _____
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the
latest practicable date __________________.
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CENTURY PROPERTIES FUND XVIII - FORM 10-Q - SEPTEMBER 30, 1995
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets
September 30, December 31,
1995 1994
Assets
Cash and cash equivalents $ 1,008,000 $ 972,000
Other assets 491,000 318,000
Real Estate:
Real estate 26,421,000 26,159,000
Accumulated depreciation (8,233,000) (7,760,000)
----------- -----------
Real Estate, net 18,188,000 18,399,000
Deferred financing costs, net 310,000 364,000
----------- -----------
Total assets $19,997,000 $20,053,000
=========== ===========
Liabilities and Partners' Equity
Notes payable $19,199,000 $19,303,000
Accrued expenses and other liabilities 476,000 453,000
----------- -----------
Total liabilities 19,675,000 19,756,000
----------- -----------
Commitments and Contingencies
Partners' Equity (Deficit):
General partner (6,423,000) (6,425,000)
Limited partners (75,000 units outstanding at
September 30, 1995 and December 31, 1994) 6,745,000 6,722,000
----------- -----------
Total partners' equity (deficit) 322,000 297,000
----------- -----------
Total liabilities and partners' equity $19,997,000 $20,053,000
=========== ===========
See notes to financial statements.
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CENTURY PROPERTIES FUND XVIII - FORM 10-Q - SEPTEMBER 30, 1995
Statements of Operations
For the Nine Months Ended
September 30, September 30,
1995 1994
Revenues:
Rental $3,292,000 $3,384,000
Interest and other 44,000 28,000
Gain on sale of property - 1,246,000
----------- -----------
Total revenues 3,336,000 4,658,000
----------- -----------
Expenses:
Operating 1,553,000 1,684,000
Interest 1,118,000 1,203,000
Depreciation 473,000 473,000
General and administrative 167,000 290,000
----------- -----------
Total expenses 3,311,000 3,650,000
----------- -----------
Net income $ 25,000 $1,008,000
=========== ===========
Net income per limited partnership unit $ 0.30 $ 12.09
=========== ===========
See notes to financial statements.
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CENTURY PROPERTIES FUND XVIII - FORM 10-Q - SEPTEMBER 30, 1995
Statements of Operations
For the Three Months Ended
September 30, September 30,
1995 1994
Revenues:
Rental $1,110,000 $1,051,000
Interest and other 17,000 11,000
----------- -----------
Total revenues 1,127,000 1,062,000
----------- -----------
Expenses:
Operating 582,000 502,000
Interest 372,000 335,000
Depreciation 158,000 158,000
General and administrative 45,000 54,000
----------- -----------
Total expenses 1,157,000 1,049,000
----------- -----------
Net (loss) income $ (30,000) $ 13,000
=========== ===========
Net (loss) income per limited partnership unit $ (0.36) $ 0.16
=========== ===========
See notes to financial statements.
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CENTURY PROPERTIES FUND XVIII - FORM 10-Q - SEPTEMBER 30, 1995
Statements of Cash Flows
For the Nine Months Ended
September 30, September 30,
1995 1994
Operating Activities:
Net income $ 25,000 $1,008,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 527,000 533,000
Gain on sale of property - (1,246,000)
Changes in operating assets and liabilities:
Other assets (173,000) 106,000
Accrued expenses and other liabilities 52,000 (252,000)
----------- -----------
Net cash provided by operating activities 431,000 149,000
----------- -----------
Investing Activities:
Additions to rental properties (262,000) (194,000)
Net proceeds from sale of rental properties - 1,700,000
Property sales expenses - (210,000)
----------- -----------
Net cash (used in) provided by investing activities (262,000) 1,296,000
----------- -----------
Financing Activities:
Repayment of notes payable to affiliate of
the general partner - (608,000)
Notes payable principal payments (133,000) (190,000)
----------- -----------
Net cash (used in) financing activities (133,000) (798,000)
----------- -----------
Increase in Cash and Cash Equivalents 36,000 647,000
Cash and Cash Equivalents at Beginning of Period 972,000 363,000
----------- -----------
Cash and Cash Equivalents at End of Period $1,008,000 $1,010,000
=========== ===========
Supplemental Disclosure of Cash Flow Information:
Interest paid in cash during the period $ 975,000 $1,507,000
=========== ===========
Supplemental Disclosure of Non-Cash Financing
and Investing Activities:
Increase in notes payable due to
debt modification $ - $1,084,000
=========== ===========
Accrued interest added to notes payable balance $ 29,000 $ -
=========== ===========
Mortgage assumed during 1994 on property
sale - See Note 3.
See notes to financial statements.
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CENTURY PROPERTIES FUND XVIII - FORM 10-Q - SEPTEMBER 30, 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. Certain
accounts have been reclassified in order to conform to the current
period.
The financial information contained herein is unaudited. In the
opinion of management, all adjustments necessary for a fair
presentation of such financial information have been included. All
adjustments are of a normal recurring nature, except as disclosed
in Note 3 below.
The results of operations for the nine and three months ended
September 30, 1995 and 1994 are not necessarily indicative of the
results to be expected for the full year.
On August 17, 1995, the stockholders of National Property
Investors, Inc. ("NPI, Inc."), the sole shareholder of NPI Equity
Investments II, Inc. ("NPI Equity"), the entity which controls Fox
Capital Management Corporation, the managing general partner of the
Partnership's general partner, entered into an agreement to sell to
IFGP Corporation, an affiliate of Insignia Financial Group, Inc.
("Insignia"), all of the issued and outstanding stock of NPI, Inc.
The sale of the stock is subject to the satisfaction of certain
conditions and is scheduled to close in January 1996.
2. Transactions with Related Parties
(a) An affiliate of NPI, Inc. received reimbursements of
administrative expenses amounting to $108,000 and $132,000,
during the nine months ended September 30, 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 nine months ended September 30,
1995 and 1994, affiliates of NPI, Inc. received $156,000 and
$116,000, 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 nine months ended
September 30, 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.
6 of 13
CENTURY PROPERTIES FUND XVIII - FORM 10-Q - SEPTEMBER 30, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
This item should be read in conjunction with the 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.
Both of Registrant's remaining properties generated positive cash flow for
the nine months ended September 30, 1995. As of November 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. For the long term, it is anticipated that
cash from operations will remain Registrant's primary source of liquidity.
Cash distributions from operations remained suspended during the third
quarter of 1995. In order to preserve working capital reserves required
for future capital improvements to properties and potential debt
modifications, it is not currently anticipated that Registrant will make
any distributions from operations in the foreseeable future.
The level of liquidity based upon cash and cash equivalents experienced a
$36,000 increase at September 30, 1995, as compared to December 31, 1994.
Registrant's $431,000 of cash provided by operating activities was only
partially offset by $262,000 of improvements to real estate (investing
activities) and $133,000 of mortgage principal payments (financing
activities). Additions to real estate consisted of exterior renovations at
Registrant's Oak Run Apartments property and parking lot improvements at
Registrant's Overlook Point Apartments property. Registrant has no plans
for significant capital improvements at either of its properties during
1995 and the foreseeable future. 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, respectively. 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.
As required by the terms of the settlement of the actions brought against,
among others, DeForest Ventures I L.P. ("DeForest") relating to the tender
offer made by DeForest in October 1994 (the "First Tender Offer") for units
of limited partnership interest in Registrant and certain affiliated
partnerships, DeForest commenced a second tender offer (the "Second Tender
Offer") on June 2, 1995 for units of limited partnership interest in
Registrant. Pursuant to the Second Tender Offer, DeForest acquired an
additional 3,667 units of Registrant which, when added to the units
acquired during the First Tender Offer, represents approximately 28.5% of the
total number of outstanding units of Registrant. The
7 of 13
CENTURY PROPERTIES FUND XVIII - FORM 10-Q - SEPTEMBER 30, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Liquidity and Capital Resources (Continued)
Managing General Partner believes that the tender will not have a
significant impact on future operations or liquidity of Registrant.
Also in connection with the settlement, an affiliate of the Managing
General Partner has made available to Registrant a credit line of up to
$150,000 per property owned by Registrant. At the present time, Registrant
has no outstanding amounts due under this line of credit. Based on present
plans, management does not anticipate the need to borrow in the near
future. Other than cash and cash equivalents the line of credit is
Registrant's only unused source of liquidity.
On August 17, 1995, Insignia Financial Group, Inc. and certain of its
affiliates (collectively, "Insignia") entered into agreements pursuant to
which (i) the stockholders of NPI, Inc., the sole shareholder of NPI
Equity, agreed to sell to Insignia all of the issued and outstanding stock
of NPI, Inc., (ii) DeForest agreed to sell its units of Registrant to
Insignia and (iii) Insignia would acquire all of the interests in NPI-AP
Management, L.P., the property manager at Registrant's properties. The
consummation of these transactions is subject to the satisfaction of
certain conditions (including, third party consents and other conditions
not within the control of the parties to the agreement) and is scheduled to
close in January 1996. Upon closing, it is expected that Insignia will
elect new officers and directors of NPI Equity.
Insignia is a fully integrated real estate service company specializing in
the ownership and operation of securitized real estate assets. According
to Commercial Property News and the National Multi-Housing Council, since
1992 Insignia has been the largest property manager in the United States.
The Managing General Partner does not believe these transactions will have
a significant effect on Registrant's liquidity or results of operation.
At this time, it appears that the investment objective of capital growth
will not be attained and that investors will not receive a return of all of
their invested capital. The extent to which invested capital is returned
to investors is dependent upon the performance of Registrant's properties
and the markets in which such properties are located and on the sales price
of the remaining properties. In this regard, 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
8 of 13
CENTURY PROPERTIES FUND XVIII - FORM 10-Q - SEPTEMBER 30, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Real Estate Market (Continued)
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
Nine Months Ended September 30, 1995 vs. September 30, 1994
Operating results declined by $983,000 for the nine months ended September
30, 1995, as compared to 1994. The decline 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 $1,322,000 for the nine months ended September 30,
1995, as compared to 1994, primarily due to the previously mentioned
property disposition. With respect to the remaining properties, rental
revenue increased by $255,000 due to an increase in rental rates, coupled
with a slight increase in occupancy at both of Registrant's remaining
properties. Interest income increased by $16,000 due to an increase in
average working capital reserves available for investment and the effect of
higher interest rates.
Expenses decreased by $339,000 for the nine months ended September 30,
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 $230,000, due to an increase in operating expenses of
$134,000 and interest expense of $96,000. Operating expenses increased
primarily due to exterior painting at Registrant's Overlook Point
Apartments property. 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 Apartments at a lower interest rate in February 1994.
Depreciation expense remained constant. General and administrative
expenses declined by $123,000 primarily due to a reduction in asset
management costs effective July 1, 1994.
Three Months Ended September 30, 1995 vs. September 30, 1994
Operating results declined by $43,000 for the three months ended September
30, 1995, as compared to 1994, due to an increase in revenues of $65,000,
which was more than offset by an increase in expenses of $108,000.
Revenues increased by $65,000 for the three months ended September 30,
1995, as compared to 1994, primarily due to increases in rental revenue of
$59,000 and interest income of $6,000. Rental revenue increased at both of
Registrant's remaining properties due to an increase in rental rates.
Occupancy remained constant at both properties. Interest income increased
due to an increase in average working capital reserves available for
investment and the effect of higher interest rates.
9 of 13
CENTURY PROPERTIES FUND XVIII - FORM 10-Q - SEPTEMBER 30, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Three Months Ended September 30, 1995 vs. September 30, 1994 (Continued)
Expenses increased by $108,000 for the three months ended September 30,
1995, as compared to 1994, due to increases in operating expenses of
$80,000 and interest expense of $37,000, which was only partially offset by
a decrease in general and administrative expenses of $9,000. Operating
expenses increased primarily due to exterior painting at Registrant's
Overlook Point Apartments property. Interest expense increased due to
higher interest rates on the variable rate mortgage at Registrant's Oak Run
Apartments property. General and administrative expenses declined due to a
reduction in reimbursed expenses. Depreciation expense remained constant.
Properties
A description of the properties in which Registrant has an ownership
interest during the period covered by this Report, along with occupancy
data, follows:
CENTURY PROPERTIES FUND XVIII
OCCUPANCY SUMMARY
Average
Occupancy Rate (%)
-------------------------
Nine Months Three Months
Number Date Ended Ended
of of September 30, September 30,
Name and Location Units Purchase 1995 1994 1995 1994
- ----------------- ----- -------- ---- ---- ---- ----
Overlook Point Apartments 304 07/83 96 95 96 96
Salt Lake City, Utah
Oak Run Apartments 420 11/83 98 97 98 98
Dallas, Texas
10 of 13
CENTURY PROPERTIES FUND XVIII - FORM 10-Q - SEPTEMBER 30, 1995
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
2. NPI, Inc. Stock Purchase Agreement dated as of August 17,
1995 incorporated by reference to Exhibit 2 to
Registrant's Current Report on Form 8-K filed with the
Securities and Exchange Commission on August 24, 1995.
(b) Report on Form 8-K
On August 24, 1995, Registrant filed a Current Report on Form
8-K with the Securities and Exchange Commission with respect
to the sale of the stock of NPI, Inc. (Item 1, Change in
Control).
11 of 13
CENTURY PROPERTIES FUND XVIII - FORM 10-Q - SEPTEMBER 30, 1995
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CENTURY PROPERTIES FUND XVIII
By: FOX PARTNERS,
Its General Partner
By: FOX CAPITAL MANAGEMENT CORPORATION,
A General Partner
/S/ ARTHUR N. QUELER
--------------------------------------
Secretary/Treasurer and Director
(Principal Financial Officer)
12 of 13
CENTURY PROPERTIES FUND XVIII - FORM 10-Q - SEPTEMBER 30, 1995
EXHIBIT INDEX
Exhibit Page No.
2. NPI, Inc. Stock Purchase Agreement *
dated August 17, 1995
* Incorporated by reference to Exhibit 2 to Registrant's Current Report on
Form 8-K filed with the Securities and Exchange Commission on August 24,
1995.
13 of 13
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<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>
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<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,008,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 26,421,000
<DEPRECIATION> (8,233,000)
<TOTAL-ASSETS> 19,997,000
<CURRENT-LIABILITIES> 0
<BONDS> 19,199,000
<COMMON> 0
0
0
<OTHER-SE> 322,000
<TOTAL-LIABILITY-AND-EQUITY> 19,997,000
<SALES> 0
<TOTAL-REVENUES> 3,292,000
<CGS> 0
<TOTAL-COSTS> 2,026,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,118,000
<INCOME-PRETAX> 25,000
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<INCOME-CONTINUING> 25,000
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