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 June 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
incorporation or organization) Identification No.)
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 _____
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 __________________.
1 of 12
CENTURY PROPERTIES FUND XVIII - FORM 10-Q - JUNE 30, 1995
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets
June 30, December 31,
1995 1994
(Unaudited) (Audited)
Assets
Cash and cash equivalents $ 1,102,000 $ 972,000
Other assets 292,000 318,000
Real Estate:
Real estate 26,372,000 26,159,000
Accumulated depreciation (8,076,000) (7,760,000)
------------ ------------
Real Estate, net 18,296,000 18,399,000
Deferred financing costs, net 327,000 364,000
------------ ------------
Total assets $ 20,017,000 $ 20,053,000
============ ============
Liabilities and Partners' Equity
Notes payable $ 19,241,000 $ 19,303,000
Accrued expenses and other liabilities 424,000 453,000
------------ ------------
Total liabilities 19,665,000 19,756,000
------------ ------------
Commitments and Contingencies
Partners' Equity (Deficit):
General partner (6,420,000) (6,425,000)
Limited partners (75,000 units outstanding at
June 30, 1995 and December 31, 1994) 6,772,000 6,722,000
------------ ------------
Total partners' equity (deficit) 352,000 297,000
------------ ------------
Total liabilities and partners' equity $ 20,017,000 $ 20,053,000
============ ============
See notes to financial statements.
2 of 12
CENTURY PROPERTIES FUND XVIII - FORM 10-Q - JUNE 30, 1995
Statements of Operations (Unaudited)
For the Six Months Ended
June 30, 1995 June 30, 1994
Revenues:
Rental $2,182,000 $2,333,000
Interest income 27,000 17,000
Gain on sale of property -- 1,246,000
---------- ----------
Total revenues 2,209,000 3,596,000
---------- ----------
Expenses:
Operating 971,000 1,182,000
Interest 746,000 868,000
Depreciation 315,000 315,000
General and administrative 122,000 236,000
---------- ----------
Total expenses 2,154,000 2,601,000
---------- ----------
Net income $ 55,000 $ 995,000
========== ==========
Net income per limited partnership unit: $ 1 $ 12
========== ==========
See notes to financial statements.
3 of 12
CENTURY PROPERTIES FUND XVIII - FORM 10-Q - JUNE 30, 1995
Statements of Operations (Unaudited)
For the Three Months Ended
June 30, 1995 June 30, 1994
Revenues:
Rental $ 1,110,000 $ 1,011,000
Interest income 17,000 11,000
---------- ----------
Total revenues 1,127,000 1,022,000
---------- ----------
Expenses:
Operating 498,000 449,000
Interest 376,000 355,000
Depreciation 157,000 158,000
General and administrative 64,000 125,000
---------- ----------
Total expenses 1,095,000 1,087,000
Net income (loss) $ 32,000 $ (65,000)
=========== ===========
Net income (loss) per limited partnership unit: -- $ (1)
=========== ===========
See notes to financial statements.
4 of 12
CENTURY PROPERTIES FUND XVIII - FORM 10-Q - JUNE 30, 1995
Statements of Cash Flows (Unaudited)
For the Six Months Ended
June 30, 1995 June 30, 1994
Operating Activities:
Net income $ 55,000 $ 995,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 353,000 353,000
Gain on sale of property -- (1,246,000)
Changes in operating assets and liabilities:
Other assets 26,000 253,000
Accrued expenses and other liabilities (5,000) (314,000)
----------- -----------
Net cash provided by operating activities 429,000 41,000
----------- -----------
Investing Activities:
Rental properties additions (213,000) (50,000)
Net proceeds from sale of rental property -- 1,700,000
Property sale expenses -- (210,000)
----------- -----------
Net cash (used in) provided by investing
activities (213,000) 1,440,000
----------- -----------
Financing Activities:
Repayment of notes payable to affiliate of
the general partner -- (608,000)
Notes payable principal payments (86,000) (145,000)
----------- -----------
Net cash (used in) financing activities (86,000) (753,000)
----------- -----------
Increase in Cash and Cash Equivalents 130,000 728,000
Cash and Cash Equivalents at Beginning of Period 972,000 363,000
----------- -----------
Cash and Cash Equivalents at End of Period $ 1,102,000 $ 1,091,000
=========== ===========
Supplemental Disclosure of Cash Flow Information:
Interest paid in cash during the period $ 684,000 $ 1,181,000
=========== ===========
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 $ 24,000 $ --
=========== ===========
See notes to financial statements.
5 of 12
CENTURY PROPERTIES FUND XVIII - FORM 10-Q - JUNE 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 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.
June 30, 1995, the Partnership had approximately $1,076,000 invested in
overnight repurchase agreements earning approximately 6% per annum.
The results of operations for the six and three months ended June 30,
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 $72,000 and $96,000, during the six
months ended June 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 six months ended June 30, 1995 and 1994, affiliates of
NPI, Inc. received $100,000 and $65,000, 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 six months ended June 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.
4. Legal Proceedings
On May 19, 1995 final approval was given by the Court to a settlement
agreement relating to the tender offer litigation. As required by the
terms of the settlement agreement, DeForest Ventures I L.P. ("DeForest")
commenced a second tender offer (the "Second Tender Offer") on June 2,
1995 for units of limited partnership in the Partnership. Pursuant to
the Second Tender Offer, DeForest acquired an additional 3,667 limited
partnership units of the Partnership.
6 of 12
CENTURY PROPERTIES FUND XVIII - FORM 10-Q - JUNE 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. As of August 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 during the second 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 near future.
The level of liquidity based upon cash and cash equivalents experienced
a $130,000 increase at June 30, 1995, as compared to December 31, 1994.
Registrant's $429,000 of cash provided by operating activities was only
partially offset by $213,000 of improvements to real estate (investing
activities) and $86,000 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 either 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.
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 Managing General Partner believes that the tender
will not have a significant impact on future operations or liquidity of
Registrant (see Part II, Item 1, Litigation). 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. Based on present plans, management does not
anticipate the need to borrow in the near future.
7 of 12
CENTURY PROPERTIES FUND XVIII - FORM 10-Q - JUNE 30, 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
Six Months Ended June 30, 1995 vs. June 30, 1994
Operating results declined by $940,000 for the six months ended June 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. With respect to the remaining properties,
operating results improved by $83,000.
Revenues declined by $1,387,000 for the six months ended June 30, 1995,
as compared to 1994, due to the previously mentioned property
disposition. With respect to the remaining properties, rental revenue
increased by $196,000 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
$10,000 due to an increase in average working capital reserves available
for investment and the effect of higher interest rates.
Expenses decreased by $447,000 for the six months ended June 30, 1995,
as compared to 1994, primarily due to the disposition of Plantation
Ridge Apartments in February 1994. With respect to the remaining
properties, expenses increased by $113,000, due to an increase in
operating expenses of
8 of 12
CENTURY PROPERTIES FUND XVIII - FORM 10-Q - JUNE 30, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Six Months Ended June 30, 1995 vs. June 30, 1994 (Continued)
$54,000 and interest expense of $59,000. 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
relatively constant. General and administrative expenses declined by
$114,000 primarily due to a reduction in asset management costs.
Three Months Ended June 30, 1995 vs. June 30, 1994
Operating results improved by $97,000 for the three months ended June
30, 1995, as compared to 1994, due to an increase in revenues of
$105,000, which was only partially offset by an increase in expenses of
$8,000.
Revenues increased by $105,000 for the three months ended June 30, 1995,
as compared to 1994, due to increases in rental revenue of $99,000 and
interest income of $6,000. Rental revenue increased at both of
Registrant's properties due to an increase in rental rates and a slight
increase in occupancy. Interest income increased due to an increase in
average working capital reserves available for investment and the effect
of higher interest rates.
Expenses increased by $8,000 for the three months ended June 30, 1995,
as compared to 1994, due to increases in operating expenses of $49,000
and interest expense of $21,000, which was only partially offset by
decreases in depreciation expense of $1,000 and general and
administrative expenses of $61,000. Interest expense increased due to
higher interest rates on the variable rate mortgage encumbering
Registrant's Oak Run Apartments property. General and administrative
expenses declined primarily due to a reduction in asset management
costs. Depreciation expense remained relatively constant.
Properties
A description of the properties in which Registrant had an ownership
interest during the period covered by this Report, along with occupancy
data, follows:
CENTURY PROPERTIES FUND XVIII
OCCUPANCY SUMMARY
Average
Occupancy Rate (%)
------------------------
Six Months Three Months
Number Date Ended Ended
of of June 30, June 30,
Name and Location Units Purchase 1995 1994 1995 1994
- ----------------- ----- -------- ---- ---- ---- ----
Overlook Point Apartments 304 07/83 95 95 96 95
Salt Lake City, Utah
9 of 12
CENTURY PROPERTIES FUND XVIII - FORM 10-Q - JUNE 30, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Properties (Continued)
Average
Occupancy Rate (%)
------------------------
Six Months Three Months
Number Date Ended Ended
of of June 30, June 30,
Name and Location Units Purchase 1995 1994 1995 1994
- ----------------- ----- -------- ---- ---- ---- ----
Oak Run Apartments 420 11/83 99 96 99 97
Dallas, Texas
Plantation Ridge Apartments (1) 454 06/84 -- 93 -- --
Marietta, Georgia
(1) Property was sold in February 1994. Average occupancy rate for 1994 is
for the period January 1994 through date of sale.
10 of 12
CENTURY PROPERTIES FUND XVIII - FORM 10-Q - JUNE 30, 1995
PART II - OTHER INFORMATION
Item 1. Litigation
Lawrence M. Whiteside, on behalf of himself and all others
similarly situated, v. Fox Capital Management Corporation et
al., Superior Court of the State of California, San Mateo
County, Case No. 390018.
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.
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.
James Andrews, et al., on behalf of themselves and all others
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.
On May 19, 1995, the Court gave final approval to the settlement
agreement entered into, in March 1995, by the plaintiffs and the
defendants in the above actions. Pursuant to the Court's order,
all claims made by the plaintiffs were dismissed with prejudice
subject to the defendants compliance with the settlement
agreement. As required by the settlement agreement, DeForest
Ventures I L.P. ("DeForest") and DeForest Ventures II L.P.
commenced a tender offer for units of limited partnership
interest in Registrant as well as 18 other affiliated
partnerships on June 2, 1995 and implemented the other
provisions of the settlement agreement. See Part I, Item 2,
"Management's Discussion and Analysis of Financial Condition."
Item 6. Exhibits and Reports on Form 8-K.
There were no reports filed on Form 8-K for the three months
ended June 30, 1995.
11 of 12
CENTURY PROPERTIES FUND XVIII - FORM 10-Q - JUNE 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
________________________________
ARTHUR N. QUELER
Secretary/Treasurer and Director
(Principal Financial Officer)
12 of 12
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The schedule contains summary financial information extracted from
Century Properties Fund XVIII and is qualified in its entirety by
reference to such financial statements.
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,102,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
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<PP&E> 26,372,000
<DEPRECIATION> (8,076,000)
<TOTAL-ASSETS> 20,017,000
<CURRENT-LIABILITIES> 0
<BONDS> 19,241,000
<COMMON> 0
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<OTHER-SE> 352,000
<TOTAL-LIABILITY-AND-EQUITY> 20,017,000
<SALES> 0
<TOTAL-REVENUES> 2,182,000
<CGS> 0
<TOTAL-COSTS> 1,286,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 746,000
<INCOME-PRETAX> 55,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 55,000
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