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 0-13418
Century Properties Growth Fund XXII
(Exact name of Registrant as specified in its charter)
California 94-2939418
(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 ___________________.
1 of 12
CENTURY PROPERTIES GROWTH FUND XXII - FORM 10-Q - JUNE 30, 1995
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets
June 30, December 31,
1995 1994
(Unaudited) (Audited)
Assets
Cash and cash equivalents $ 1,607,000 $ 475,000
Restricted cash 500,000 500,000
Other assets 1,549,000 862,000
Real Estate:
Real estate 140,113,000 139,861,000
Accumulated depreciation (46,044,000) (43,985,000)
------------- -------------
Real estate, net 94,069,000 95,876,000
Deferred financing costs, net 675,000 734,000
------------- -------------
Total assets $ 98,400,000 $ 98,447,000
============= =============
Liabilities and Partners' Equity
Notes payable $ 80,576,000 $ 80,889,000
Accrued expenses and other liabilities 2,218,000 1,361,000
------------- -------------
Total liabilities 82,794,000 82,250,000
------------- -------------
Commitments and Contingencies
Partners' Equity (Deficit):
General partner (7,243,000) (7,173,000)
Limited partners (82,848 units outstanding at
June 30, 1995 and December 31, 1994) 22,849,000 23,370,000
------------- -------------
Total partners' equity 15,606,000 16,197,000
------------- -------------
Total liabilities and partners' equity $ 98,400,000 $ 98,447,000
============= =============
See notes to consolidated financial statements.
2 of 12
CENTURY PROPERTIES GROWTH FUND XXII - FORM 10-Q - JUNE 30, 1995
Consolidated Statements of Operations (Unaudited)
For the Six Months Ended
June 30, 1995 June 30, 1994
Revenues:
Rental $ 10,253,000 $ 9,631,000
Interest income 53,000 37,000
------------ -------------
Total revenues 10,306,000 9,668,000
------------ -------------
Expenses:
Operating 4,901,000 4,841,000
Interest 3,815,000 3,712,000
Depreciation 2,059,000 2,052,000
General and administrative 122,000 315,000
------------ -------------
Total expenses 10,897,000 10,920,000
------------ -------------
Net loss $ (591,000) $ (1,252,000)
============ =============
Net loss per limited partnership unit $ (6) $ (13)
============ =============
See notes to consolidated financial statements.
3 of 12
CENTURY PROPERTIES GROWTH FUND XXII - FORM 10-Q - JUNE 30, 1995
Consolidated Statements of Operations (Unaudited)
For the Three Months Ended
June 30, 1995 June 30, 1994
Revenues:
Rental $ 5,154,000 $ 4,822,000
Interest income 31,000 15,000
------------- -------------
Total revenues 5,185,000 4,837,000
------------- -------------
Expenses:
Operating 2,553,000 2,464,000
Interest 1,898,000 1,838,000
Depreciation 1,030,000 1,030,000
General and administrative 59,000 168,000
------------- -------------
Total expenses 5,540,000 5,500,000
------------- -------------
Net loss $ (355,000) $ (663,000)
============= =============
Net loss per limited partnership unit $ (4) $ (7)
============= =============
See notes to consolidated financial statements.
4 of 12
CENTURY PROPERTIES GROWTH FUND XXII - FORM 10-Q - JUNE 30, 1995
Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended
June 30, 1995 June 30, 1994
Operating Activities:
Net loss $ (591,000) $(1,252,000)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 2,131,000 2,232,000
Deferred financing costs paid (13,000) (53,000)
Changes in operating assets and liabilities:
Other assets (687,000) (831,000)
Accrued expenses and other liabilities 857,000 170,000
------------- -------------
Net cash provided by operating activities 1,697,000 266,000
------------- -------------
Investing Activities:
Additions to real estate (252,000) (206,000)
Proceeds from cash investments -- 1,187,000
Restricted cash increase -- (2,000)
------------- -------------
Net cash (used in) provided by investing activities (252,000) 979,000
------------- -------------
Financing Activities:
Repayment of note on debt modification -- (805,000)
Notes payable principal payments (313,000) (377,000)
------------- -------------
Cash (used in) financing activities (313,000) (1,182,000)
------------- -------------
Increase in Cash and Cash Equivalents 1,132,000 63,000
Cash and Cash Equivalents at Beginning of Period 475,000 341,000
------------- -------------
Cash and Cash Equivalents at End of Period $ 1,607,000 $ 404,000
============= =============
Supplemental Disclosure of Cash Flow Information:
Interest paid in cash during the period $ 3,492,000 $ 3,465,000
============= =============
See notes to consolidated financial statements.
5 of 12
CENTURY PROPERTIES GROWTH FUND XXII - FORM 10-Q - JUNE 30, 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. Certain accounts have been reclassified
to conform to the current period.
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.
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 reimbursement of administrative
expenses amounting to $72,000 and $112,000 during the six months ended June 30,
1995 and 1994, respectively. These reimbursements are included in general and
administrative expenses.
(b) An affiliate of NPI, Inc. is entitled to receive a management fee equal
to 5% of annual gross receipts from certain properties it manages. For the six
months ended June 30, 1995 and 1994, NPI, Inc. received $510,000 and $320,000,
respectively. These fees are included in operating expenses.
3. 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 2,396 limited partnership units of the Partnership.
6 of 12
CENTURY PROPERTIES GROWTH FUND XXII - 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 Consolidated Financial
Statements and other Items contained elsewhere in this Report.
Liquidity and Capital Resources
Registrant holds investments in and operates residential real estate
properties. The properties are located in Arizona, Georgia, Texas, Kansas,
South Carolina, California, Illinois and Virginia. Registrant receives rental
income from its properties and is responsible for operating expenses,
administrative expenses, capital improvements and debt service payments. All
of Registrant's properties, except its Cooper's Pointe Apartments property,
generated positive cash flow from operations during the six months ended June
30, 1995. Cooper's Pointe Apartments experienced negative cash flow due to
significant non recurring exterior repairs and maintenance expense during this
period. As of August 1, 1995, one of the eleven properties originally
purchased by Registrant was lost through foreclosure.
Registrant uses working capital reserves from any undistributed cash flow from
operations and refinancing proceeds as its primary source of liquidity. There
have been no distributions since 1988. Although cash flow from operations has
improved significantly and is expected to continue to improve during the next
twelve months, 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
$1,132,000 increase at June 30, 1995, as compared to December 31, 1994.
Registrant's $1,697,000 of net cash from operating activities was partially
offset by $252,000 of cash used for improvements to real estate (investing
activities) and $313,000 of cash used in note payable principal payments
(financing activities). Registrant commenced a substantial exterior
renovation project on its Plantation Creek Apartment complex during the first
quarter of 1995, which the Managing General Partner believes will enable the
property to better compete in the current market. Approximately $120,000 of a
$250,000 total cost has been spent to date. The cash required to complete the
renovation will be funded from cash flow and working capital reserves. 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 being invested in a money market account, United
States Treasury bills or in 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 debt service payments (excluding the balloon payments) in
1995 and the foreseeable future.
On March 24, 1995, Registrant responded to an unsolicited offer from an
unaffiliated third party to sell the Monterey Village Apartments property for
$10,500,000. The sale is scheduled to close in late August 1995. If the sale
is consummated, Registrant would receive net proceeds of approximately
$3,000,000 and recognize a gain on the sale. If this sale is consummated, it
is anticipated that Registrant will make a distribution of all or a portion of
these proceeds.
7 of 12
CENTURY PROPERTIES GROWTH FUND XXII - 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)
Registrant has a balloon payment of $10,452,000 on Four Winds Apartment
complex due September 1995. Registrant is currently reviewing offers for
replacement financing. If, however, the loan is not refinanced or extended,
or the property is not sold, Registrant could lose this property through
foreclosure. In that case, Registrant would incur a loss of approximately
$600,000. In addition, there are balloon payments totaling approximately
$23,565,000 due in 1996. Registrant will attempt to extend the due dates of
these loans or find replacement financing.
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 2,396 units of Registrant which, when added to the units acquired
during the First Tender Offer, represents approximately 20.5% 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.
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, all of 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 bail out 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
existing 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 revenues
will generally exceed increases in expenses during the remainder of 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.
8 of 12
CENTURY PROPERTIES GROWTH FUND XXII - FORM 10-Q - JUNE 30, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Six Months Ended June 30, 1995 vs. June 30, 1994
Operating results improved by $661,000 for the six months ended June 30, 1995,
as compared to 1994, due to an increase in revenues of $638,000 and a decrease
in expenses of $23,000.
Revenues increased by $638,000 for the six months ended June 30, 1995, as
compared to 1994, due to increases in rental revenues of $622,000 and interest
income of $16,000. Rental income increased due to increases in rental rates
at all of Registrant's properties and improved (or stable) occupancy at all
Registrant's properties, except Plantation Creek Apartments. Interest income
increased primarily due to an increase in interest rates.
Expenses decreased by $23,000 for the six months ended June 30, 1995, as
compared to 1994, due to a decrease in general and administrative expenses of
$193,000, which was substantially offset by increases in operating expenses of
$60,000, interest expense of $103,000 and depreciation expense of $7,000.
General and administrative expenses declined due to the reduction in asset
management costs effective July 1, 1994. Operating expenses increased due to
increases in maintenance and rent-up expenses at Registrant's Cooper's Pointe,
Four Winds, Promontory Point, Wood Creek and Hampton Greens Apartments, which
were partially offset by decreases in maintenance and rent-up expenses at
Registrant's Autumn Run, Copper Mill, Monterey Village and Stoney Creek
Apartments. Interest expense increased due to an increase in the variable
rate mortgage securing Registrant's Hampton Greens, Promontory Point, Stoney
Creek and Wood Creek Apartments properties. Depreciation expense remained
relatively constant.
Three Months Ended June 30, 1995 vs. June 30, 1994
Operating results improved by $308,000 for the three months ended June 30,
1995, as compared to 1994, due to increases in revenues of $348,000 and in
expenses of $40,000.
Revenues increased by $348,000 for the three months ended June 30, 1995, as
compared to 1994, due to increases in rental revenues of $332,000 and interest
income of $16,000. Rental income increased due to increases in rental rates
at all of Registrant's properties and improved occupancy at all Registrant's
properties, except Plantation Creek, Cooper's Pointe and Cooper Mill
Apartments. Interest income increased primarily due to an increase in
interest rates.
Expenses increased by $40,000 for the three months ended June 30, 1995, as
compared to 1994, due to increases in operating expenses of $89,000 and
interest expense of $60,000 which were partially offset by a decline in
general and administrative expense of $109,000. Operating expenses increased
due to increases in maintenance and rent-up expenses at Registrant's Cooper's
Pointe, Four Winds, Promontory Point, Wood Creek, Plantation Creek and Hampton
Greens Apartments, which were partially offset by decreases in maintenance and
rent-up expenses at Registrant's Autumn Run, Copper Mill, Monterey Village and
Stoney Creek Apartments. Interest expense increased due to an increase in the
variable rate mortgage securing Registrant's Hampton Greens, Promontory Point,
Stoney Creek and Wood Creek Apartments properties. General and administrative
expenses declined due to the reduction in asset management costs effective
July 1, 1994. Depreciation expense remained constant.
9 of 12
CENTURY PROPERTIES GROWTH FUND XXII - FORM 10-Q - JUNE 30, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
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 GROWTH FUND XXII
OCCUPANCY SUMMARY
Average
Occupancy Rate (%)
-----------------------------
Six Months Three Months
Ended Ended
Number of Date of June 30, June 30,
Name and Location Units Purchase 1995 1994 1995 1994
- ----------------- --------- -------- ---- ---- ---- ----
Wood Creek Apartments 432 05/84 97 97 96 95
Mesa, Arizona
Plantation Creek Apartments 484 06/84 95 97 95 97
Atlanta, Georgia
Stoney Creek Apartments 364 06/85 95 92 95 91
Dallas, Texas
Four Winds Apartments 350 09/85 97 94 97 93
Overland Park, Kansas
Promontory Point Apartments 252 10/85 98 95 97 93
Austin, Texas
Cooper's Pointe Apartments 192 11/85 93 93 93 96
Charleston, South Carolina
Hampton Greens Apartments 309 12/85 98 95 98 95
Dallas, Texas
Monterey Village Apartments 224 04/86 96 90 96 92
Rancho Cucamonga, California
Autumn Run Apartments 320 06/86 96 96 96 95
Naperville, Illinois
Copper Mill Apartments 192 09/86 97 96 97 98
Richmond, Virginia
10 of 12
CENTURY PROPERTIES GROWTH FUND XXII - 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.
No report on Form 8-K was required to be filed during the period.
11 of 12
CENTURY PROPERTIES GROWTH FUND XXII - 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 GROWTH FUND XXII
By: FOX PARTNERS IV
Its General Partner
By: FOX CAPITAL MANAGEMENT CORPORATION
A General Partner
/S/ ARTHUR N. QUELER
Secretary/Treasurer and Director
(Principal Financial Officer)
12 of 12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Century
Properties Growth Fund XXII and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 2,107,000<F1>
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 140,113,000
<DEPRECIATION> (46,044,000)
<TOTAL-ASSETS> 98,400,000
<CURRENT-LIABILITIES> 0
<BONDS> 80,576,000
<COMMON> 0
0
0
<OTHER-SE> 15,606,000
<TOTAL-LIABILITY-AND-EQUITY> 98,400,000
<SALES> 0
<TOTAL-REVENUES> 10,253,000
<CGS> 0
<TOTAL-COSTS> 6,960,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,815,000
<INCOME-PRETAX> (591,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (591,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (591,000)
<EPS-PRIMARY> (6)
<EPS-DILUTED> (6)
<FN>
<F1> Includes restricted cash of $500,000.
</FN>
</TABLE>
