FORM 10-QSB--Quarterly or Transitional Report Under Section
13 or 15(d) Of the Securities Exchange Act of 1934
Quarterly or Transitional Report
United States 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 0-11934
CENTURY PROPERTIES FUND XVIII
(Exact name of small business issuer as specified in its charter)
California 94-2834149
(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 XVIII
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, 2000
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and cash equivalents $ 615
Receivables and deposits 117
Restricted escrows 209
Other assets 315
Investment properties:
Land $ 7,296
Buildings and related personal property 20,922
28,218
Less accumulated depreciation (11,592) 16,626
$ 17,882
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 45
Tenant security deposit liabilities 78
Accrued property taxes 238
Other liabilities 192
Mortgage notes payable 19,127
Partners' (Deficit) Capital
General partner $ (6,269)
Limited partners (75,000 units issued and
outstanding) 4,471 (1,798)
$ 17,882
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
b)
CENTURY PROPERTIES FUND XVIII
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 $ 1,232 $ 1,202 $ 2,425 $ 2,409
Other income 82 57 141 122
Total revenues 1,314 1,259 2,566 2,531
Expenses:
Operating 410 395 813 779
General and administrative 73 94 129 149
Depreciation 202 186 398 353
Interest 349 352 697 701
Property tax 119 114 230 232
Total expenses 1,153 1,141 2,267 2,214
Net income $ 161 $ 118 $ 299 $ 317
Net income allocated to
general partner $ 16 $ 11 $ 30 $ 31
Net income allocated to
limited partners 145 107 269 286
$ 161 $ 118 $ 299 $ 317
Net income per limited
partnership unit $ 1.93 $ 1.42 $ 3.59 $ 3.81
Distributions per limited
partnership unit $ -- $ -- $ 2.91 $ 9.91
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
c)
CENTURY PROPERTIES FUND XVIII
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 $(6,297) $ 4,420 $(1,877)
Distribution to partners -- (2) (218) (220)
Net income for the six months
ended June 30, 2000 -- 30 269 299
Partners' (deficit) capital
at June 30, 2000 75,000 $(6,269) $ 4,471 $(1,798)
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
d)
CENTURY PROPERTIES FUND XVIII
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 $ 299 $ 317
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 398 353
Amortization of loan costs 38 33
Change in accounts:
Receivables and deposits 337 143
Other assets (16) (14)
Accounts payable (17) (1)
Tenant security deposit liabilities 8 (12)
Accrued property taxes (128) (119)
Other liabilities (41) 13
Net cash provided by operating activities 878 713
Cash flows from investing activities:
Property improvements and replacements (354) (242)
Net (deposits to) withdrawals from restricted escrows (55) 76
Net cash used in investing activities (409) (166)
Cash flows from financing activities:
Distributions to partners (220) (750)
Payments on mortgage notes payable (96) (106)
Net cash used in financing activities (316) (856)
Net increase (decrease) in cash and cash equivalents 153 (309)
Cash and cash equivalents at beginning of period 462 1,477
Cash and cash equivalents at end of period $ 615 $ 1,168
Supplemental disclosure of cash flow information:
Cash paid for interest $ 548 $ 668
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
e)
CENTURY PROPERTIES FUND XVIII
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Century
Properties Fund XVIII (the "Partnership" or "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. The Partnership's general partner is Fox Partners. The
general partners of Fox Partners are Fox Capital Management Corporation ("FCMC"
or the "Managing General Partner"), Fox Realty Investors ("FRI") and Fox
Partners 82. The Managing General Partner, as well as the managing general
partner of FRI, are affiliates of Apartment Investment and Management Company
("AIMCO"), a publicly traded real estate investment trust (see "Note B -
Transfer of Control"). In the opinion of the Managing 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 year
ended December 31, 1999.
Principles of Consolidation
The Partnership's financial statements include the accounts of the Partnership
and its wholly-owned partnership, Oak Run LP, the entity which holds title to
Oak Run Apartments.
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 AIMCO, with AIMCO being the surviving corporation (the "Insignia
Merger"). As a result, AIMCO acquired 100% ownership interest in the Managing
General Partner. The Managing General Partner does not believe that this
transaction has had or will have a material effect on the affairs and operations
of the Partnership.
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 (i) payments to
affiliates for services and (ii) 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) $130 $127
Reimbursement for services of affiliates (included in
operating and general and administrative expenses
and investment properties) 68 63
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 both of the
Registrant's properties for providing property management services. The
Registrant paid to such affiliates approximately $130,000 and $127,000 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 $68,000 and
$63,000 for the six months ended June 30, 2000 and 1999, respectively.
AIMCO and its affiliates currently own 37,503 limited partnership units in the
Partnership representing 50.004% of the outstanding units. A number of these
units were acquired pursuant to tender offers made by AIMCO or its affiliates.
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. 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 50.004% 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.
Note D - 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, consisting
of two apartment complexes, one of which is located in Salt Lake City, Utah and
the other in Dallas, Texas. 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 segment:
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 months 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 expenses not allocated
to the reportable segment.
Three Months Ended June 30, 2000 Residential Other Totals
Rental income $ 1,232 $ -- $ 1,232
Other income 82 -- 82
Interest expense 349 -- 349
Depreciation 202 -- 202
General and administrative expense -- 73 73
Segment profit (loss) 234 (73) 161
Three Months Ended June 30, 1999 Residential Other Totals
Rental income $ 1,202 $ -- $ 1,202
Other income 50 7 57
Interest expense 352 -- 352
Depreciation 186 -- 186
General and administrative expense -- 94 94
Segment profit (loss) 205 (87) 118
Six Months Ended June 30, 2000 Residential Other Totals
Rental income $ 2,425 $ -- $ 2,425
Other income 141 -- 141
Interest expense 697 -- 697
Depreciation 398 -- 398
General and administrative expense -- 129 129
Segment profit (loss) 428 (129) 299
Total assets 17,832 50 17,882
Capital expenditures for investment
properties 354 -- 354
Six Months Ended June 30, 1999 Residential Other Totals
Rental income $ 2,409 $ -- $ 2,409
Other income 106 16 122
Interest expense 701 -- 701
Depreciation 353 -- 353
General and administrative expense -- 149 149
Segment profit (loss) 450 (133) 317
Total assets 17,999 635 18,634
Capital expenditures for investment
properties 242 -- 242
<PAGE>
Note E - 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
operation. 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 two 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
Oak Run Apartments 93% 92%
Dallas, Texas
Overlook Point Apartments 95% 96%
Salt Lake City, Utah
Results of Operations
The Partnership's net income for the six months ended June 30, 2000 was
approximately $299,000 as compared to approximately $317,000 for the same period
in 1999. The Partnership's net income for the three months ended June 30, 2000
was approximately $161,000 as compared to approximately $118,000 for the same
period in 1999. The decrease in net income for the six months ended June 30,
2000 from the corresponding period in 1999 was due to an increase in total
expenses, which was partially offset by an increase in total revenues. Net
income for the three months ended June 30, 2000 increased over the corresponding
period in 1999 due to an increase in total revenues, which was partially offset
by an increase in total expenses. Total revenues for the three and six month
periods ended June 30, 2000 increased due to an increase in rental and other
income. The increase in rental income is attributable to an increase in average
rental rates primarily at Oak Run Apartments. The increase in other income is
attributable to an increase in cable television fees received from tenants and
late charges and was partially offset by decreases in lease cancellation fees
and interest income.
Total expenses increased for the three and six month periods ended June 30, 2000
primarily due to an increase in operating and depreciation expenses, which was
partially offset by a decrease in general and administrative expense. Operating
expense increased due to increases in various property expenses including
salaries and related benefits, utilities and commissions. These increases were
offset slightly by decreases in repair and maintenance expenses and a decrease
in insurance premiums at Oak Run Apartments. The increase in depreciation
expense is primarily attributable to the increase in depreciable assets put into
service in the last twelve months. General and administrative expenses decreased
primarily due to a decrease in the Corporate Franchise Tax paid to the state of
Texas by Oak Run, LLC, a limited liability corporation wholly-owned by the
Partnership. In addition, legal costs decreased due to the settlement of the
Everest matter in the first quarter of 1999. All other expenses remained
relatively constant for the comparable periods.
Included in general and administrative expense at both June 30, 2000 and 1999
are management reimbursements to the Managing General Partner allowed under the
Partnership Agreement. In addition, costs associated with the quarterly and
annual communications with investors and regulatory agencies and the annual
audit required by the Partnership Agreement are also included.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment 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
$615,000 as compared to approximately $1,168,000 at June 30, 1999. Cash and cash
equivalents increased approximately $153,000 for the six month period ended June
30, 2000 from the Partnership's fiscal year end. The increase in cash and cash
equivalents is due primarily to approximately $878,000 of cash provided by
operating activities, which more than offset approximately $409,000 of cash used
in investing activities and approximately $316,000 of cash used in financing
activities. Cash used in investing activities consisted of capital improvements
and replacements and, to a lesser extent, net deposits to restricted escrows
maintained by the mortgage lender. Cash used in financing activities consisted
of distributions to the partners, and to a lesser extent, payments of principal
made on the mortgages encumbering the Partnership's properties. The Partnership
invests its working capital reserves in a money market account.
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. At the present time, 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 Registrant and to comply with Federal,
state, and local legal and regulatory requirements. Capital improvements planned
for each of the Registrant's properties are detailed below.
Oak Run Apartments: For 2000, the Partnership has budgeted approximately
$375,000 for capital improvements at Oak Run Apartments consisting of appliance,
plumbing and flooring replacements and interior decorations, parking lot and
structural improvements. As of June 30, 2000 the property has spent
approximately $106,000 in capital expenditures at the property consisting
primarily of appliances, water heaters, floor covering replacements, and
interior decoration. These improvements were funded from operations.
Overlook Point Apartments: For 2000, the Partnership has budgeted approximately
$265,000 for capital improvements at Overlook Point Apartments consisting of
appliance, plumbing and flooring replacements. As of June 30, 2000 the property
has spent approximately $248,000 in budgeted and unbudgeted capital expenditures
at the property consisting primarily of plumbing upgrades and appliance and
floor covering replacements. These improvements were funded primarily from
operations.
The additional capital expenditures planned will be incurred only to the extent
of cash available from operations and Partnership reserves. To the extent that
such budgeted capital improvements are completed, the Registrant's distributable
cash flow, if any, may be adversely affected at least in the short term.
The Registrant's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Registrant. The mortgage
indebtedness of approximately $19,127,000 is amortized over thirty years with
balloon payments of approximately $8,127,000 and $9,728,000 due on October 2004
and September 2005, respectively. 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 may risk losing such properties through foreclosure.
The Registrant made a cash distribution of approximately $220,000 from prior
cumulative undistributed sale and refinancing proceeds, of which approximately
$218,000 was paid to the limited partners ($2.91 per limited partnership unit)
during the six months ended June 30, 2000.
The Registrant made cash distributions of approximately $750,000 from prior
cumulative undistributed sale and refinancing proceeds, of which approximately
$743,000 was paid to limited partners ($9.91 per limited partnership unit)
during the six months ended June 30, 1999.
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 Registrant's distribution
policy is reviewed on a semi-annual basis. There can be no assurance, however,
that the Registrant will generate sufficient funds from operations after
required capital improvements expenditures to permit any additional
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:
None filed during the quarter ended June 30, 2000.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant 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
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:
