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 March 31, 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
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
CENTURY PROPERTIES FUND XVIII
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 2000
<TABLE>
<CAPTION>
Assets
<S> <C> <C>
Cash and cash equivalents $ 380
Receivables and deposits 76
Restricted escrows 181
Other assets 350
Investment properties:
Land $ 7,296
Buildings and related personal property 20,756
28,052
Less accumulated depreciation (11,390) 16,662
$ 17,649
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 41
Other liabilities 194
Accrued property taxes 120
Tenant security deposit liabilities 69
Mortgage notes payable 19,184
Partners' (Deficit) Capital
General partner $ (6,285)
Limited partners (75,000 units issued and
outstanding) 4,326 (1,959)
$ 17,649
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
b)
CENTURY PROPERTIES FUND XVIII
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
2000 1999
Revenues:
Rental income $ 1,193 $ 1,207
Other income 59 65
Total revenues 1,252 1,272
Expenses:
Operating 403 384
General and administrative 56 55
Depreciation 196 167
Interest 348 349
Property tax 111 118
Total expenses 1,114 1,073
Net income $ 138 $ 199
Net income allocated to general partner (9.9%) $ 14 $ 20
Net income allocated to limited partners (90.1%) 124 179
$ 138 $ 199
Net income per limited partnership unit $ 1.65 $ 2.39
Distributions per limited partnership unit $ 2.91 $ 9.91
See Accompanying Notes to Consolidated Financial Statements
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 three months
ended March 31, 2000 -- 14 124 138
Partners' (deficit) capital
at March 31, 2000 75,000 $(6,285) $ 4,326 $(1,959)
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d)
CENTURY PROPERTIES FUND XVIII
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
Cash flows from operating activities:
<S> <C> <C>
Net income $ 138 $ 199
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 196 167
Amortization of loan costs 19 14
Change in accounts:
Receivables and deposits 378 263
Other assets (32) 7
Accounts payable (21) --
Other liabilities (39) 3
Accrued property taxes (246) (234)
Tenant security deposit liabilities (1) (5)
Net cash provided by operating activities 392 414
Cash flows from investing activities:
Property improvements and replacements (188) (68)
Net (deposits to) withdrawals from restricted escrows (27) 104
Net cash (used in) provided by investing activities (215) 36
Cash flows from financing activities:
Distributions to partners (220) (750)
Payments on mortgage notes payable (39) (52)
Net cash used in financing activities (259) (802)
Net decrease in cash and cash equivalents (82) (352)
Cash and cash equivalents at beginning of period 462 1,477
Cash and cash equivalents at end of period $ 380 $ 1,125
Supplemental disclosure of cash flow information:
Cash paid for interest $ 218 $ 335
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
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. 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 month period ended March 31, 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, a publicly traded real estate investment trust, 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 three months ended March 31,
2000 and 1999:
2000 1999
(in thousands)
Property management fees (included in operating expenses) $ 64 $ 63
Reimbursement for services of affiliates (included in
operating and general and administrative expenses
and investment properties) 30 31
During the three months ended March 31, 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 $64,000 and $63,000 for the
three months ended March 31, 2000 and 1999, respectively.
An affiliate of the Managing General Partner received reimbursement of
accountable administrative expenses amounting to approximately $30,000 and
$31,000 for the three months ended March 31, 2000 and 1999, respectively.
AIMCO and its affiliates currently own 37,314 limited partnership units in the
Partnership representing 49.752% 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 49.752% of the outstanding units, AIMCO is in a position to
significantly 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 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 months ended March 31, 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.
2000 Residential Other Totals
Rental income $ 1,193 $ -- $ 1,193
Other income 59 -- 59
Interest expense 348 -- 348
Depreciation 196 -- 196
General and administrative expense -- 56 56
Segment profit (loss) 194 (56) 138
Total assets 17,613 36 17,649
Capital expenditures for investment
properties 188 -- 188
1999 Residential Other Totals
Rental income $ 1,207 $ -- $1,207
Other income 56 9 65
Interest expense 349 -- 349
Depreciation 167 -- 167
General and administrative expense -- 55 55
Segment profit (loss) 245 (46) 199
Total assets 17,740 713 18,453
Capital expenditures for investment
properties 68 -- 68
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, the 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 by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Note B - Transfer of Control"). 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 own units as
of November 3, 1999. Preliminary approval of the settlement was obtained on
November 3, 1999 from the Superior Court of the State of California, County of
San Mateo, 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 class plaintiffs' counsel
to enter the settlement. On December 14, 1999, the Managing General Partner and
its affiliates terminated the proposed settlement. Certain plaintiffs have filed
a motion to disqualify some of the plaintiffs' counsel in the action. 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.
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 three
months ended March 31, 2000 and 1999
Average Occupancy
Property 2000 1999
Oak Run Apartments 92% 94%
Dallas, Texas
Overlook Point Apartments 93% 95%
Salt Lake City, Utah
Results of Operations
The Partnership's net income for the three months ended March 31, 2000 was
approximately $138,000 as compared to approximately $199,000 for the same period
in 1999. The decrease in net income was due a decrease in total revenues and an
increase in total expenses. Total revenues decreased primarily due to a decrease
in rental income. The decrease in rental income is attributable to a decrease in
average occupancy at both properties and an increase in rental concessions at
Oak Run Apartments.
Total expenses increased primarily due to increases in operating and
depreciation expense. Operating expense increased due to increases in
advertising expense at Overlook Point Apartments, various property expenses at
both properties and a slight increase in the 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.
All other expenses remained relatively constant for the comparable periods.
Included in general and administrative expense at both March 31, 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 March 31, 2000, the Partnership had cash and cash equivalents of
approximately $380,000 as compared to approximately $1,125,000 at March 31,
1999. Cash and cash equivalents decreased approximately $82,000 for the three
month period ended March 31, 2000 from the fiscal year end. The decrease in cash
and cash equivalents is due to approximately $259,000 of cash used in financing
activities and approximately $215,000 of cash used in investing activities,
which more than offset approximately $392,000 of cash provided by operating
activities. Cash used in financing activities consisted primarily of
distributions to partners, and to a lesser extent, payments of principal made on
the mortgages encumbering the Partnership's properties. Cash used in investing
activities consisted of capital improvements and replacements, and net deposits
to restricted escrows maintained by the mortgage lender. 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 March 31, 2000 the property has spent
approximately $38,000 in capital expenditures at the property consisting
primarily of appliance and floor covering replacements. These improvements were
funded from replacement reserves and operations.
Overlook Point Apartments: For 2000, the Partnership has budgeted approximately
$238,000 for capital improvements at Overlook Point Apartments consisting of
appliance, plumbing and flooring replacements. As of March 31, 2000 the property
has spent approximately $150,000 in capital expenditures at the property
consisting primarily of plumbing, appliance and floor covering replacements and
building improvements. 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 $19,184,000 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 three months ended March 31, 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 three months ended March 31, 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.
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, the 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 by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Item 1. Financial Statements, Note B - Transfer of Control"). 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 own units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Superior Court of the
State of California, County of San Mateo, 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
class plaintiffs' counsel to enter the settlement. On December 14, 1999, the
Managing General Partner and its affiliates terminated the proposed settlement.
Certain plaintiffs have filed a motion to disqualify some of the plaintiffs'
counsel in the action. 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 March 31, 2000.
SIGNATURES
In accordance with Section 13 or 15(d) 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: May 4, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Century
Properties Fund XVIII 2000 First Quarter 10-QSB and is qualified in its entirety
by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000704271
<NAME> Century Properties Fund XVIII
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 380
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 28,052
<DEPRECIATION> 11,390
<TOTAL-ASSETS> 17,649
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 19,184
0
0
<COMMON> 0
<OTHER-SE> (1,959)
<TOTAL-LIABILITY-AND-EQUITY> 17,649
<SALES> 0
<TOTAL-REVENUES> 1,252
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,114
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 348
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 138
<EPS-BASIC> 1.65 <F2>
<EPS-DILUTED> 0
<FN>
<F1> Registrant has an unclassified balance sheet. <F2> Multiplier is 1.
</FN>
</TABLE>
