FORM 10-QSB--QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended in Rel. No. 312905, eff. 4/26/93.)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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 small business issuer as specified in its charter)
California 94-2939418
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (864) 239-1000
Indicate by check mark whether the 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 .
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) CENTURY PROPERTIES GROWTH FUND XXII
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands)
June 30, 1996
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Cash and cash equivalents $ 1,788
Restricted cash 500
Other assets 1,411
Investment properties:
Land $ 14,396
Buildings and related personal property 114,310
128,706
Less accumulated depreciation (46,244) 82,462
Deferred financing costs, net 1,841
$ 88,002
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable and accrued expenses $ 2,416
Mortgages payables 73,405
Partners' Capital (Deficit):
Limited partners $ 19,523
General partners (7,342) 12,181
$ 88,002
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
b) CENTURY PROPERTIES GROWTH FUND XXII
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 4,778 $ 5,071 $ 9,627 $ 10,141
Other income 283 205 477 360
Total revenues 5,061 5,276 10,104 10,501
Expenses:
Operating 2,516 2,653 5,021 5,098
Interest 1,635 1,889 3,462 3,815
Depreciation 959 1,030 1,901 2,059
General and administrative 119 59 229 120
Total expenses 5,229 5,631 10,613 11,092
Loss before extraordinary
item (168) (355) (509) (591)
Extraordinary loss on
extinguishment of debt -- -- (481) --
Net loss $ (168) $ (355) $ (990) $ (591)
Net loss allocated to
general partners $ (20) $ (42) $ (117) $ (70)
Net loss allocated to
limited partners (148) (313) (873) (521)
Net loss $ (168) $ (355) $ (990) $ (591)
Net loss per limited
partnership unit:
Net loss before
extraordinary loss $ (1.79) $ (3.78) $ (5.42) $ (6.29)
Extraordinary loss -- -- (5.12) --
Net loss per limited
partnership unit $ (1.79) $ (3.78) $ (10.54) $ (6.29)
Distribution per limited
partership unit $ -- $ -- $ 30.75 $ --
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
c) CENTURY PROPERTIES GROWTH FUND XXII
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited General Limited
Partnership Partners' Partners' Total
Units Deficit Capital Capital
<S> <C> <C> <C> <C>
Partners' (deficit) capital at
December 31, 1995 82,848 $ (7,173) $ 22,945 $ 15,772
Net loss for the six
months ended June 30, 1996 -- (117) (873) (990)
Distributions to partners -- (52) (2,549) (2,601)
Partners' (deficit) capital at
June 30, 1996 82,848 $ (7,342) $ 19,523 $ 12,181
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d) CENTURY PROPERTIES GROWTH FUND XXII
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1996 1995
<S> <C> <C>
Operating activities:
Net loss $ (990) $ (591)
Adjustments to reconcile net loss to cash
provided by operating activities:
Depreciation 1,901 2,059
Amortization of mortgage costs 136 72
Extraordinary loss on refinancing 481 --
Change in account:
Other assets (93) (687)
Accounts payable and accrued expenses 1,068 857
Net cash provided by operating activities 2,503 1,710
Cash flows from investing activities:
Property improvements and replacements (312) (252)
Net cash used in investing activities (312) (252)
Cash flows from financing activities:
Mortgage principal payments (262) (313)
Repayment of mortgage notes payable (48,018) --
Proceeds from long-term borrowings 47,575 --
Loan costs (1,412) (13)
Debt extinguishment costs (402) --
Distributions paid to partners (2,601) --
Net cash used in financing activities (5,120) (326)
Net (decrease) increase in cash and cash equivalents (2,929) 1,132
Cash and cash equivalents at beginning of period 4,717 475
Cash and cash equivalents at end of period $ 1,788 $ 1,607
Supplemental information:
Interest paid $ 3,139 $ 3,492
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
e) CENTURY PROPERTIES GROWTH FUND XXII
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A - Basis of Presentation
The accompanying unaudited financial statements 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. In the opinion of Fox Capital Management Corporation
("FCMC" or the "Managing General Partner"), all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and six month periods ended June
30, 1996, are not necessarily indicative of the results that may be expected for
the fiscal year ended December 31, 1996. For further information, refer to the
financial statements and footnotes thereto included in the Partnership's annual
report on Form 10-K for the year ended December 31, 1995.
Certain reclassifications have been made to the 1995 information to conform
to the 1996 presentation.
Note B - Transactions with Affiliated Parties
Century Properties Growth Fund XXII (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 payments to affiliates for services and as reimbursement
of certain expenses incurred by affiliates on behalf of the Partnership.
The following transactions with affiliates of Insignia Financial Group,
Inc.("Insignia"), National Property Investors, Inc.("NPI, Inc."), and affiliates
of NPI, Inc. were charged to expense in 1996 and 1995:
<TABLE>
<CAPTION>
For the Six Months Ended
June 30,
1996 1995
<S> <C> <C>
Property management fees (included in operating
expenses) $501,000 $510,000
Reimbursement for services of affiliates (included
in general and administrative expenses) 125,000 80,000
</TABLE>
For the period from January 19, 1996, to June 30, 1996, the Partnership
insured its properties under a master policy through an agency and insurer
unaffiliated with the Managing General Partner. An affiliate of the Managing
General Partner acquired, in the acquisition of a business, certain financial
obligations from an insurance agency which was later acquired by the agent who
placed the current year's master policy. The current agent assumed the
financial obligations to the affiliate of the Managing General Partner who
received payments on these obligations from the agent. The amount
of the Partnership's insurance premiums accruing to the benefit of the affiliate
of the Managing General Partner by virtue of the agent's obligations is not
significant.
Additionally, in connection with the refinancing of Wood Creek, Four Winds,
and Plantation Creek (see "Note C"), Insignia Mortgage & Investment Company, an
affiliate of the Managing General Partner of the Partnership, received $192,000
in January 1996.
Fox Partners IV, a California general partnership, is the general partner of
the Partnership. The general partners of Fox Partners IV are: FCMC, a
California corporation, Fox Realty Investors ("FRI"), a California general
partnership, and Fox Associates 84, a California general partnership.
Pursuant to a series of transactions which closed during the first half of
1996, affiliates of Insignia acquired (i) control of NPI Equity Investments II,
Inc., the managing general partner of FRI, and (ii) all of the issued and
outstanding shares of stock of FCMC. In connection with these transactions,
affiliates of Insignia appointed new officers and directors of NPI Equity
Investments II, Inc. and FCMC.
Note C - Refinancing and Extraordinary Loss
On January 17, 1996, the Partnership refinanced the mortgages encumbering
Wood Creek, Four Winds, and Plantation Creek. The new mortgages carry a stated
interest rate of 7.93% and are amortized over 30 years with balloon payments due
on February 1, 2006. On June 14, 1996, the Partnership refinanced the mortgage
encumbering Autumn Run. The new mortgage carries a stated interest rate of 8%
through July 1, 1996, and a rate equal to 2.50% plus the LIB0 Rate thereafter.
The new mortgage matures October 1, 1996. Loan costs are being amortized over
the lives of the loans.
The refinancing of Wood Creek replaced indebtedness of $12,500,000 with a new
mortgage in the amount of $12,900,000. Total capitalized loan costs were
$318,000. The early extinguishment of debt resulted in an extraordinary loss of
$350,000, arising from prepayment penalties and the write-off of unamortized
loan costs. Wood Creek was also required to pay a release price of $1,500,000
which was used to paydown the mortgage on Promontory Point.
The refinancing of Four Winds replaced indebtedness of $10,410,000 with a new
mortgage in the amount of $9,675,000. Total capitalized loan costs were
$296,000.
The refinancing of Plantation Creek replaced indebtedness of $13,045,000 with
a new mortgage in the amount of $15,900,000. Total capitalized loan costs were
$413,000. The early extinguishment of debt resulted in an extraordinary loss of
$131,000, arising from prepayment penalties and the write-off of unamortized
loan costs.
The refinancing of Autumn Run replaced indebtedness of $10,563,000 with a new
mortgage in the amount of $9,100,000. Total capitalized loan costs were
$108,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of nine apartment complexes.
The following table sets forth the average occupancy of the properties for the
six months ended June 30, 1996 and 1995:
Average
Occupancy
Property 1996 1995
Cooper's Pointe Apartments
North Charleston, South Carolina 98% 93%
Copper Mill Apartments
Richmond, Virginia 95% 97%
Four Winds Apartments
Overland Park, Kansas 97% 97%
Autumn Run Apartments
Naperville, Illinois 91% 96%
Plantation Creek Apartments
Atlanta, Georgia 97% 95%
Wood Creek Apartments
Mesa, Arizona 96% 97%
Promontory Point Apartments
Austin, Texas 89% 98%
Hampton Greens Apartments
Dallas, Texas 95% 98%
Stoney Creek Apartments
Dallas, Texas 92% 95%
The Managing General Partner attributes the increase in occupancy at Cooper's
Pointe to strong marketing efforts by the property management personnel. The
decrease in occupancy at Autumn Run is attributable to residents buying homes
and relocating due to job transfers. The decrease in occupancy at Promontory
Point is attributable to residents buying homes. In addition, new growth in
Austin is taking place in the south area of town and this property is located in
the north area.
The Partnership's net loss for the three and six month periods ended June 30,
1996, was approximately $168,000 and $990,000. The Partnership reported losses
of approximately $355,000 and $591,000 for the corresponding periods of 1995.
The increase in the net loss for the six month period is primarily attributable
to the loss on early extinguishment of debt in 1996 due to the refinancing of
Wood Creek and Plantation Creek as discussed in "Item 1, Note C - Refinancing
and Extraordinary Loss." Also contributing to the increase in net loss is an
increase in general and administrative expense and a decrease in rental revenue.
The increase in general and administrative expense is due to an increase in the
reimbursement for services of affiliates related to the transition of the
Partnership administration function during the six months ended June 30, 1996.
These cost reimbursements are expected to decrease for the remainder of the
year. General and administrative expenses also increased during the six months
ended June 30, 1996, due to additional professional fees, including audit and
legal. The decrease in rental revenue is due to the sale of Monterey Village
Apartments in August 1995. This decrease in rental revenue was partially offset
by increased rental rates at several of the Partnership's properties.
Offsetting the above changes is an increase in other income and a decrease in
interest expense. The increase in other income is due to the additional cash
invested prior to the first quarter distribution to the partners from proceeds
from the sale of Monterey Village. The decrease in interest expense is due to
the refinancings as discussed in "Item 1, Note C - Refinancing and Extraordinary
Loss."
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 rentals 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.
At June 30, 1996, the Partnership had unrestricted cash of $1,788,000 as
compared to $1,607,000 at June 30, 1995. Net cash provided by operating
activities increased primarily as a result of the change in accounts receivable
due to the timing of receipts and the change in escrow funds due to the new
financing agreements. The increase in cash used in investing activities is due
to an increase in property replacements. The increase in cash used in financing
activities is due to the Partnership obtaining new financing on four of its
properties in 1996. In addition, the Partnership paid a distribution of
approximately $2,601,000 to its partners in the first quarter of 1996.
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. 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 property to adequately maintain the physical assets
and other operating needs of the Partnership. Such assets are currently thought
to be sufficient for any near-term needs of the Partnership. The mortgage
indebtedness of $73,405,000 is amortized over varying periods with balloon
payments ranging from October 1, 1996, to February 1, 2006. The Partnership is
attempting to obtain new financing for Autumn Run which has debt maturing
October 1, 1996. Future cash distributions will depend on the levels of cash
generated from operations, a property sale, and the availability of cash
reserves. No cash distributions were paid in 1995. During the first three
months of 1996, the Partnership distributed $2,549,000 to the limited partners
and $52,000 to the general partners from the proceeds received from the sale of
the Partnership's Monterey Village property. At this time, it appears that the
original investment objective of capital growth will not be attained and that
investors will not receive a return of all of their invested capital.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
b) Reports on Form 8-K: None filed during the quarter ended June 30, 1996.
SIGNATURE
In accordance with the requirement of the Exchange Act, the Registrant 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,
Managing General Partner
By: /s/William H. Jarrard, Jr.
William H. Jarrard, Jr.
President and Director
By: /s/Ronald Uretta
Ronald Uretta
Principal Financial Officer
and Principal Accounting Officer
Date: August 14, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Century
Properties Growth Fund XXII 1996 Second Quarter 10-QSB and is qualified in its
entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000740156
<NAME> CENTURY PROPERTIES GROWTH FUND XXII
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,788
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 128,706
<DEPRECIATION> (46,244)
<TOTAL-ASSETS> 88,002
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 73,405
0
0
<COMMON> 0
<OTHER-SE> 12,181
<TOTAL-LIABILITY-AND-EQUITY> 88,002
<SALES> 0
<TOTAL-REVENUES> 10,104
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 10,613
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,462
<INCOME-PRETAX> (509)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> (481)
<CHANGES> 0
<NET-INCOME> (990)
<EPS-PRIMARY> (10.54)<F2>
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
