SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
----------- -----------
Commission file number 0-11935
Century Properties Fund XIX
(Exact name of registrant as specified in its charter)
California 94-2887133
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5665 Northside Drive N.W., Ste. 370, Atlanta, Georgia 30328
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (404) 916-9090
N/A
Former name, former address and fiscal year, if changed since last report.
Indicate by check mark whether registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--------
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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1 of 11
CENTURY PROPERTIES FUND XIX - FORM 10-Q - MARCH 31, 1995
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets
March 31, December 31,
1995 1994
(Unaudited) (Audited)
Assets
Cash and cash equivalents $ 342,000 $ 218,000
Restricted cash 683,000 787,000
Deferred costs and other assets 1,912,000 1,643,000
Real Estate:
Real estate 94,168,000 94,106,000
Accumulated depreciation (32,334,000) (31,650,000)
Allowance for impairment of value (500,000) (500,000)
-------------- --------------
Real estate, net 61,334,000 61,956,000
-------------- --------------
Total assets $ 64,271,000 $ 64,604,000
============== ==============
Liabilities and Partners' Equity
Accrued expenses and other liabilities $ 1,321,000 $ 1,195,000
Notes payable 58,990,000 59,063,000
-------------- --------------
Total liabilities 60,311,000 60,258,000
-------------- --------------
Commitments and Contingencies
Partners' Equity (Deficit):
General partner (8,604,000) (8,558,000)
Limited partners (89,292 units outstanding at
March 31, 1995 and December 31, 1994) 12,564,000 12,904,000
-------------- --------------
Total partners' equity 3,960,000 4,346,000
-------------- --------------
Total liabilities and partners' equity $ 64,271,000 $ 64,604,000
============== ==============
See notes to consolidated financial statements.
2 of 11
CENTURY PROPERTIES FUND XIX - FORM 10-Q - MARCH 31, 1995
Consolidated Statements of Operations (Unaudited)
For the Three Months Ended
March 31, 1995 March 31, 1994
Revenues:
Rental $ 3,568,000 $ 3,417,000
Interest 17,000 13,000
Loss on sale of property - (149,000)
-------------- --------------
Total revenues 3,585,000 3,281,000
-------------- --------------
Expenses:
Operating 1,661,000 1,563,000
Interest 1,577,000 1,381,000
Depreciation 684,000 685,000
General and administrative 49,000 137,000
-------------- --------------
Total expenses 3,971,000 3,766,000
-------------- --------------
Net loss $ (386,000) $ (485,000)
============== ==============
Net loss per limited partnership unit $ (4) $ (5)
============== ==============
See notes to consolidated financial statements.
3 of 11
CENTURY PROPERTIES FUND XIX - FORM 10-Q - MARCH 31, 1995
Consolidated Statements of Cash Flows (Unaudited)
For the Three Months Ended
March 31, 1995 March 31, 1994
Operating Activities:
Net loss $ (386,000) $ (485,000)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 787,000 779,000
Loss on sale of property - 149,000
Changes in operating assets and liabilities:
Receivables and other assets (373,000) (228,000)
Accrued expenses and other liabilities 127,000 170,000
------------- --------------
Net cash provided by operating activities 155,000 385,000
------------- --------------
Investing Activities:
Additions to rental properties (62,000) (72,000)
Decrease in restricted cash 104,000 -
Property sales expenses paid - (3,000)
Proceeds on sale of property - 2,450,000
------------- --------------
Net cash provided by investing activities 42,000 2,375,000
------------- --------------
Financing Activities:
Repayment of notes payable to affiliate of the
general partner - (370,000)
Notes payable principal payments (73,000) (125,000)
Repayment of note payable on sale of rental
property - (1,965,000)
------------- --------------
Cash (used in) financing activities (73,000) (2,460,000)
------------- --------------
Increase in Cash and Cash Equivalents 124,000 300,000
Cash and Cash Equivalents at Beginning of Period 218,000 119,000
------------- --------------
Cash and Cash Equivalents at End of Period $ 342,000 $ 419,000
============= ==============
Supplemental Disclosure of Cash Flow Information:
Interest paid in cash during the period $ 1,428,000 $ 1,345,000
============= ==============
See notes to consolidated financial statements.
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CENTURY PROPERTIES FUND XIX - FORM 10-Q - MARCH 31, 1995
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. General
The accompanying consolidated financial statements, footnotes and
discussions should be read in conjunction with the consolidated financial
statements, related footnotes and discussions contained in the Partnership's
Annual Report for the year ended December 31, 1994.
The financial information contained herein is unaudited. In the opinion
of management, however, 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.
At March 31, 1995, the Partnership had approximately $342,000 invested in
overnight repurchase agreements earning approximately 6% per annum.
The results of operations for the three months ended March 31, 1995 and
1994 are not necessarily indicative of the results to be expected for the full
year.
2. Transactions with Related Parties
(a) An affiliate of NPI, Inc. received reimbursements of administrative
expenses amounting to $36,000 and $27,000 during the three months ended March
31, 1995 and 1994, respectively. These reimbursements are primarily included
in general and administrative expenses.
(b) An affiliate of NPI, Inc. is entitled to receive a management fee
equal to 5% of the annual gross receipts from certain properties it manages.
For the three months ended March 31, 1995 and 1994, affiliates of NPI, Inc.
received $167,000 and $55,000, respectively. These fees are included in
operating expenses.
3. Disposition of Rental Property
Plantation Forest Apartments located in Atlanta, Georgia, was sold on
February 8, 1994 for $2,450,000. After payment of the existing loan of
$1,965,000 and expenses of the sale, the proceeds to the Partnership were
approximately $482,000. The loss on sale was $149,000.
Net proceeds realized from the sale were partially used to fully repay
$370,000 of demand notes, including accrued interest, held by an affiliate of
the general partner.
5 of 11
CENTURY PROPERTIES FUND XIX - FORM 10-Q - MARCH 31, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
This item should be read in conjunction with the Consolidated Financial
Statements and other Items contained elsewhere in this Report.
Liquidity and Capital Resources
Registrant holds investments in and operates eight apartment complexes.
Registrant receives rental income from its properties and is responsible for
operating expenses, administrative expenses, capital improvements and debt
service payments. As of May 1, 1995, five of the thirteen properties
originally purchased by Registrant were sold or otherwise disposed. All of
Registrant's eight properties except for McMillan Apartments, generated
positive cash flow from operations during the three months ended March 31,
1995.
Registrant uses working capital reserves provided from any undistributed cash
flow from operations, sales and refinancing proceeds as its primary sources of
liquidity. There have been no distributions since 1987. Registrant is
prohibited from making any distributions from operations until the mortgages
encumbering McMillan Place Apartments are satisfied. Future distributions
from sales or refinancings are permitted and will be evaluated at such time.
The level of liquidity based upon cash and cash equivalents experienced a
$124,000 increase at March 31, 1995, as compared to December 31, 1994.
Registrant's $155,000 of cash provided by operating activities and $42,000 of
cash provided by investing activities were partially offset by $73,000 of
notes payable principal payments (financing activities). Cash provided by
investing activities resulted from a decrease of $104,000 in restricted cash
(primarily relating to the partial repayment of the mortgage encumbering
Registrant's Misty Woods property), which was partially offset by $62,000 of
improvements to rental properties. Registrant has no significant capital
expenditures planned for the year. 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 until June 1995, when the balloon payments encumbering the
Greenspoint and Sandspoint Apartments come due in the approximate amount of
$8,084,000 and $9,417,000, respectively. The ability to hold and operate
these properties is dependent on Registrant's ability to obtain refinancing or
debt modification as required. If Greenspoint and Sandspoint Apartments are
lost through foreclosure, Registrant would incur losses of approximately
$1,000,000 and $1,100,000, respectively. In addition, Registrant has
substantial balloon payments due in 1996, 1997, 1998 and 1999 in the amounts
of $5,083,000, $3,169,000, $19,920,000 and $12,971,000, 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.
Pursuant to the terms of a Settlement Agreement entered into in connection
with the Ruben and Andrews actions, DeForest Ventures I L.P. will make a
tender offer for an aggregate number of units of Registrant (including the
units purchased in the initial tender) constituting up to 49% of the total
number of units of Registrant at a price equal to the initial tender price
plus 15% less attorney's fees
6 of 11
CENTURY PROPERTIES FUND XIX - FORM 10-Q - MARCH 31, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Liquidity and Capital Resources (Continued)
and expenses. In addition, pursuant to the terms of the proposed settlement,
the Managing General Partner will agree to provide Registrant a credit line of
$150,000 per property, borrowings under which would bear interest at the
lesser of prime plus 1% or the rate permitted by the Partnership Agreement of
Registrant. A hearing for final approval of the settlement is scheduled for
May 19, 1995. See Part II - Other Information, "Item 1 - Legal Proceedings".
If the settlement receives final Court approval, it is expected that the
tender offer will commence on or about June 19, 1995. The Managing General
Partner believes that the settlement will not have an adverse effect on
Registrant.
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, it is anticipated at this time that the
remaining properties will be held longer than originally expected. The
ability to hold and operate these properties is dependent on Registrant's
ability to obtain refinancing or debt modification as required.
Real Estate Market
The national real estate market has suffered from the effects of the real
estate recession including, but not limited to, a downward trend in market
values of existing residential properties. In addition, the bailout of the
savings and loan associations and sales of foreclosed properties by auction
reduced market values and caused a further restriction on the ability to
obtain credit. As a result, Registrant's ability to refinance or sell its
properties may be restricted. These factors caused a decline in market
property values and serve to reduce market rental rates and/or sales prices.
Compounding these difficulties have been relatively low interest rates, which
encourage existing and potential tenants to purchase homes. In addition,
there has been a significant decline nationally in new household formation.
Despite the above, the rental market appears to be experiencing a gradual
strengthening and management anticipates that increases in revenue will
generally exceed increases in expenses during 1995. Furthermore, management
believes that the emergence of new institutional purchasers, including real
estate investment trusts and insurance companies, should create a more
favorable market value for Registrant's properties in the future.
Results of Operations
Three Months Ended March 31, 1995 vs. March 31, 1994
Operating results improved by $99,000 for the three months ended March 31,
1995, as compared to 1994, due to an increase in revenues of $304,000, which
was partially offset by an increase in expenses of $205,000.
Revenues increased by $304,000 for the three months ended March 31, 1995, as
compared to 1994, due to improved operations and the loss on the disposition
of Plantation Forest Apartments during the 1994 period. With respect to the
remaining properties, rental income increased by $209,000 primarily due
7 of 11
CENTURY PROPERTIES FUND XIX - FORM 10-Q - MARCH 31, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Three Months Ended March 31, 1995 vs. March 31, 1994 (Continued)
to an increase in rental rates and occupancy at Misty Woods Apartments,
McMillan Place Apartments and Sunrunner Apartments. The $4,000 increase in
interest income is primarily due to an increase in interest rates.
With respect to the remaining properties, expenses increased by $363,000 due
to increases in operating expenses of $124,000, interest expense of $228,000
and depreciation expense of $11,000. Operating expenses increased primarily
due to an under accrual of real estate taxes in the prior period, an insurance
adjustment and an increase in repairs and maintenance expenses. The increase
in interest expense is primarily attributable to increased variable interest
rates on mortgages encumbering the Wood Lake, Wood Ridge, Plantation Crossing,
Greenspoint and Sandspoint Apartments. Depreciation expense increased due to
the effect of real estate improvements. General and administrative expenses
decreased by $88,000 due to a decrease in asset management costs.
Properties
A description of the properties in which Registrant has an ownership interest
in the period covered by this Report, along with the occupancy data, follows:
CENTURY PROPERTIES FUND XIX
OCCUPANCY SUMMARY
For the Quarters Ended March 31, 1995 and 1994
Number Average
of Date of Occupancy Rate (%)
Name and Location Units Purchase 1995 1994
- ----------------- ----- -------- ---- ----
Wood Lake Apartments 220 12/83 96 95
Atlanta, Georgia
Greenspoint Apartments 336 02/84 97 98
Phoenix, Arizona
Sandspoint Apartments 432 02/84 95 96
Phoenix, Arizona
Wood Ridge Apartments 280 04/84 94 95
Atlanta, Georgia
Plantation Crossing Apartments 180 06/84 96 98
Atlanta, Georgia
Plantation Forest Apartments (1) 64 06/84 - 99
Atlanta, Georgia
Sunrunner Apartments 200 07/84 95 92
St. Petersburg, Florida
8 of 11
CENTURY PROPERTIES FUND XIX - FORM 10-Q - MARCH 31, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Properties (Continued)
Number Average
of Date of Occupancy Rate (%)
Name and Location Units Purchase 1995 1994
- ----------------- ----- -------- ---- ----
McMillan Place Apartments 402 06/85 97 95
Dallas, Texas
Misty Woods Apartments 228 06/85 98 90
Charlotte, North Carolina
(1) Property was sold in February 1994. 1994 average occupancy rate covers
period through date of sale.
9 of 11
CENTURY PROPERTIES FUND XIX - FORM 10-Q - MARCH 31, 1995
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Lawrence M. Whiteside, on behalf of himself and all other similarly situated, v.
Fox Capital Management Corporation, et al., Superior Court of the State of
California, San Mateo County, Case No. 390018 ("Whiteside").
Bonnie L. Ruben and Sidney Finkel, on behalf of themselves and all others
similarly situated, v. DeForest Ventures I L.P., et al., United States District
Court, Northern District of Georgia, Atlanta Division, Case No. 1-94-CV-2983-JEC
("Ruben").
Roger L. Vernon, individually and on behalf of all similarly situated persons v.
DeForest Ventures I L.P., et al., Circuit Court of Cook County, County
Departments, Chancery Division, State of Illinois, Case No. 94CH0100592
("Vernon").
James Andrews, et al., on behalf of themselves and all other similarly situated
v. Fox Capital Management Corporation, et al., United States District Court,
Northern District of Georgia, Atlanta Division, Case No. 1-94-CV-3351-JEC
("Andrews").
On March 16, 1995 the United States District Court for the Northern District of
Georgia, Atlanta Division, entered an order which granted preliminary approval
to a settlement agreement in the Ruben and Andrews actions, conditionally
certified two classes for purpose of settlement, and authorized the parties to
give notice to the classes of the terms of the proposed settlement. Plaintiffs
counsel in the Vernon and Whiteside action have joined in the Settlement
Agreement as well. The two certified classes constitute all limited partners of
Registrant and the eighteen other affiliated partnerships who either tendered
their units in connection with the October tender offers or continue to hold
their units in Registrant and the other affiliated partnerships. Pursuant to
the terms of the proposed settlement, which are described in the notice sent to
the class members in March 1995, (and more fully described in the Amended
Stipulation of Settlement submitted to the court on March 14, 1995) all claims
which either were made or could have been asserted in any of the class actions
would be dismissed with prejudice and/or released. In consideration for the
dismissal and/or release of such claims, among other things, DeForest I would
pay to each unit holder who tendered their units in Registrant an amount equal
to 15% of the original tender offer price less attorney's fees and expenses. In
addition, DeForest I will commence a second tender offer for an aggregate number
of units of Registrant (including the units purchased in the initial tender)
constituting up to 49% of the total number of units of Registrant at a price
equal to the initial tender price plus 15% less attorney's fees and expenses.
Furthermore, under the terms of the proposed settlement, the Managing General
Partner would agree, among other things, to provide Registrant a credit line of
$150,000 per property which would bear interest at the lesser of prime rate plus
1% and the rate permitted under the partnership agreement of Registrant. A
hearing on the final approval of the settlement is scheduled for May 19, 1995.
Item 6. Exhibits and Reports on Form 8-K.
No report on Form 8-K was required to be filed during the period.
10 of 11
CENTURY PROPERTIES FUND XIX - FORM 10-Q - MARCH 31, 1995
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CENTURY PROPERTIES FUND XIX
By: FOX PARTNERS II,
Its General Partner
By: FOX CAPITAL MANAGEMENT CORPORATION,
A General Partner
/S/ARTHUR N. QUELER
---------------------------------------
ARTHUR N. QUELER
Secretary/Treasurer and Director
(Principal Financial Officer)
11 of 11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Century
Properties Fund XIX and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,025,000 <F1>
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 94,168,000
<DEPRECIATION> (32,834,000) <F2>
<TOTAL-ASSETS> 64,271,000
<CURRENT-LIABILITIES> 0
<BONDS> 58,990,000
<COMMON> 0
0
0
<OTHER-SE> 3,960,000
<TOTAL-LIABILITY-AND-EQUITY> 64,271,000
<SALES> 0
<TOTAL-REVENUES> 3,568,000
<CGS> 0
<TOTAL-COSTS> 2,345,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,577,000
<INCOME-PRETAX> (386,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (386,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (386,000)
<EPS-PRIMARY> (4)
<EPS-DILUTED> (4)
<FN>
<F1> Cash includes restricted cash of $683,000.
<F2> Depreciation includes a $500,000 allowance for impairment of value.
</FN>
</TABLE>
