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 0-13418
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 .
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CENTURY PROPERTIES GROWTH FUND XXII - 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 $ 1,282,000 $ 475,000
Restricted cash 500,000 500,000
Other assets 1,281,000 862,000
Real Estate:
Real estate 139,955,000 139,861,000
Accumulated depreciation (45,014,000) (43,985,000)
-------------- --------------
Real estate, net 94,941,000 95,876,000
Deferred financing costs, net 684,000 734,000
-------------- --------------
Total assets $ 98,688,000 $ 98,447,000
============== ==============
Liabilities and Partners' Equity
Notes payable $ 80,733,000 $ 80,889,000
Accrued expenses and other liabilities 1,994,000 1,361,000
-------------- --------------
Total liabilities 82,727,000 82,250,000
-------------- --------------
Commitments and Contingencies
Partners' equity (deficit):
General partner (7,201,000) (7,173,000)
Limited partners (82,848 units outstanding at
March 31, 1995 and December 31, 1994) 23,162,000 23,370,000
-------------- --------------
Total partners' equity 15,961,000 16,197,000
-------------- --------------
Total liabilities and partners' equity $ 98,688,000 $ 98,447,000
============== ==============
See notes to consolidated financial statements.
2 of 11
CENTURY PROPERTIES GROWTH FUND XXII - FORM 10-Q - MARCH 31, 1995
Consolidated Statements of Operations (Unaudited)
For the Three Months Ended
March 31, 1995 March 31, 1994
Revenues:
Rental $ 5,099,000 $ 4,809,000
Interest income 22,000 22,000
-------------- --------------
Total revenues 5,121,000 4,831,000
-------------- --------------
Expenses:
Operating 2,348,000 2,377,000
Interest 1,917,000 1,874,000
Depreciation 1,029,000 1,022,000
General and administrative 63,000 147,000
-------------- --------------
Total expenses 5,357,000 5,420,000
-------------- --------------
Net loss $ (236,000) $ (589,000)
============== ==============
Net loss per limited partnership unit $ (3) $ (6)
============== ==============
See notes to consolidated financial statements.
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CENTURY PROPERTIES GROWTH FUND XXII - 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 $ (236,000) $ (589,000)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 1,079,000 1,113,000
Deferred financing costs paid - (54,000)
Changes in operating assets and liabilities:
Other assets (419,000) (192,000)
Accrued expenses and other liabilities 633,000 15,000
-------------- --------------
Net cash provided by operating activities 1,057,000 293,000
-------------- --------------
Investing Activities:
Additions to real estate (94,000) (82,000)
Proceeds from maturity of cash investments - 1,187,000
Restricted cash increase - (36,000)
-------------- --------------
Cash (used in) provided by investing activities (94,000) 1,069,000
-------------- --------------
Financing Activities:
Repayment of note on debt modification - (805,000)
Notes payable principal payments (156,000) (138,000)
-------------- --------------
Cash (used in) financing activities (156,000) (943,000)
-------------- --------------
Increase in Cash and Cash Equivalents 807,000 419,000
Cash and Cash Equivalents at Beginning of Period 475,000 341,000
-------------- --------------
Cash and Cash Equivalents at End of Period $ 1,282,000 $ 760,000
============== ==============
Supplemental Disclosure of Cash Flow Information:
Interest paid in cash during the period $ 1,634,000 $ 1,784,000
============== ==============
See notes to consolidated financial statements.
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CENTURY PROPERTIES GROWTH FUND XXII - 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.
At March 31, 1995, the Partnership had approximately $1,264,000 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 reimbursement of administrative
expenses amounting to $36,000 and $41,000 during the three months ended March
31, 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 three months ended March 31, 1995 and 1994, NPI, Inc. received $254,000
and $69,000, respectively. These fees are included in operating expenses.
3. Contract For the Sale of a Property
On March 24, 1995, the Partnership responded to an unsolicited offer from an
unaffiliated third party to sell the Monterey Village Apartments property for
approximately $10,700,000. The sale is subject to the purchaser obtaining
financing and completing its due diligence review. If the sale is consummated,
the Partnership would receive net proceeds of approximately $3,000,000 and
recognize a gain on the sale.
5 of 11
CENTURY PROPERTIES GROWTH FUND XXII - 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 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
generated positive cash flow from operations during the three months ended March
31, 1995. As of May 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 is
expected 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
$807,000 increase at March 31, 1995, as compared to December 31, 1994.
Registrant's $1,057,000 of net cash from operating activities was partially
offset by $94,000 of cash used for improvements to real estate (investing
activities) and $156,000 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. The cash required to
complete the renovation will come 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
approximately $10,700,000. The sale is subject to the purchaser obtaining
financing and completing its due diligence review. 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.
Registrant has a balloon payment of $10,452,000 on Four Winds Apartment
complex due September 1995. Registrant will attempt to extend the due date of
this loan or find 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.
6 of 11
CENTURY PROPERTIES GROWTH FUND XXII - 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)
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 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, 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 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 $353,000 for the three months ended March 31,
1995, as compared to 1994, due to an increase in revenues of $290,000 and a
decrease in expenses of $63,000.
7 of 11
CENTURY PROPERTIES GROWTH FUND XXII - 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)
Rental income increased by $290,000 for the three months ended March 31, 1995,
as compared to 1994 primarily due to increases in rental rates at all of
Registrant's properties and improved (or stable) occupancy at all Registrant's
properties, except for Autumn Run and Plantation Creek Apartments. Interest
income remained constant.
Expenses decreased by $63,000 due to decreases in operating expenses of
$29,000 and general and administrative expenses of $84,000, which were only
partially offset by increases in interest expense of $43,000 and depreciation
expense of $7,000. Operating expenses decreased due to decreases in
maintenance and rent-up expenses at Registrant's Autumn Run, Cooper's Pointe,
Copper Mill, Monterey Village, Plantation Creek and Promontory Point
Apartments, which were partially offset by increases in maintenance and
rent-up expenses at Registrant's Four Winds, Wood Creek, Hampton Greens and
Stoney Creek Apartments. General and administrative expenses declined due to
the reduction in asset management costs effective July 1, 1994. 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.
Properties
A description of the properties in which Registrant has an ownership interest
during the period covered by this report, along with occupancy data, follows:
CENTURY PROPERTIES GROWTH FUND XXII
OCCUPANCY SUMMARY
For the Quarters Ended March 31, 1995 and 1994
Average
Number Occupancy Rate (%)
of Date of March 31,
Name and Location Units Purchase 1995 1994
- ----------------- ----- -------- ------------------
Wood Creek Apartments 432 05/84 98 98
Mesa, Arizona
Plantation Creek Apartments 484 06/84 95 97
Atlanta, Georgia
Stoney Creek Apartments 364 06/85 96 93
Dallas, Texas
Four Winds Apartments 350 09/85 97 96
Overland Park, Kansas
Promontory Point Apartments 252 10/85 99 97
Austin, Texas
Cooper's Pointe Apartments 192 11/85 93 90
Charleston, South Carolina
8 of 11
CENTURY PROPERTIES GROWTH FUND XXII - FORM 10-Q - MARCH 31, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Properties (Continued)
Average
Number Occupancy Rate (%)
of Date of March 31,
Name and Location Units Purchase 1995 1994
- ----------------- ----- -------- ------------------
Hampton Greens Apartments 309 12/85 97 94
Dallas, Texas
Monterey Village Apartments 224 04/86 96 89
Rancho Cucamonga, California
Autumn Run Apartments 320 06/86 96 97
Naperville, Illinois
Copper Mill Apartments 192 09/86 97 94
Richmond, Virginia
9 of 11
CENTURY PROPERTIES GROWTH FUND XXII - 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 GROWTH FUND XXII - 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 GROWTH FUND XXII
By: FOX PARTNERS IV
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 Growth Fund XXII 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> 1,782,000 <F1>
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 139,955,000
<DEPRECIATION> (45,014,000)
<TOTAL-ASSETS> 98,688,000
<CURRENT-LIABILITIES> 0
<BONDS> 80,733,000
<COMMON> 0
0
0
<OTHER-SE> 15,961,000
<TOTAL-LIABILITY-AND-EQUITY> 98,688,000
<SALES> 0
<TOTAL-REVENUES> 5,099,000
<CGS> 0
<TOTAL-COSTS> 3,377,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,917,000
<INCOME-PRETAX> (236,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (236,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (236,000)
<EPS-PRIMARY> (3)
<EPS-DILUTED> (3)
<FN>
<F1> Includes restricted cash of $500,000.
</FN>
</TABLE>
