FORM 10-QSB--QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(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 March 31, 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
CONSOLDIATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 1996
Assets
Cash and cash equivalents $ 2,711
Restricted cash 500
Other assets 1,295
Investment properties:
Land $ 14,396
Buildings and related personal property 114,084
128,480
Less accumulated depreciation (45,284) 83,196
Deferred financing costs, net 1,809
$ 89,511
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable and accrued expenses $ 2,157
Mortgages payables 75,005
Partners' Capital (Deficit):
Limited partners' (82,848 units outstanding) $ 19,671
General partners' (7,322) 12,349
$ 89,511
See Accompanying Notes to Consolidated Financial Statements
b) CENTURY PROPERTIES GROWTH FUND XXII
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
1996 1995
Revenues:
Rental $ 5,012 $ 5,203
Interest income 31 22
Total revenues 5,043 5,225
Expenses:
Operating 2,505 2,445
Interest 1,827 1,926
Depreciation 942 1,029
General and administrative 110 61
Total expenses 5,384 5,461
Loss before extraordinary item (341) (236)
Extraordinary loss on extinguishment of debt (481) --
Net loss $ (822) $ (236)
Net loss allocated to general partners $ (97) $ (28)
Net loss allocated to limited partners (725) (208)
Net loss $ (822) $ (236)
Net loss per limited partnership unit:
Net loss before extraordinary loss $ (3.63) $ (2.51)
Extraordinary loss (5.12) --
Net loss per limited partnership unit $ (8.75) $ (2.51)
Distribution per limited partnership unit $ 30.75 $ --
See Accompanying Notes to Consolidated Financial Statements
c) CENTURY PROPERTIES GROWTH FUND XXII
CONSOLIDATED STATEMENTS 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' capital (deficit) at
December 31, 1995 82,848 $ (7,173) $ 22,945 $ 15,772
Net loss for the three
months ended March 31, 1996 -- (97) (725) (822)
Distributions to partners -- (52) (2,549) (2,601)
Partners' capital (deficit) at
March 31, 1996 82,848 $ (7,322) $ 19,671 $ 12,349
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d) CENTURY PROPERTIES GROWTH FUND XXII
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
Operating activities:
Net loss $ (822) $ (236)
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation 942 1,029
Amortization of mortgage costs 44 50
Extraordinary loss on refinancing 481 --
Change in account:
Other assets 24 (419)
Accounts payable and accrued expenses 810 633
Net cash provided by operating activities 1,479 1,057
Cash flows from investing activities:
Property improvements and replacements (86) (94)
Net cash used in investing activities (86) (94)
Cash flows from financing activities:
Mortgage principal repayments (127) (156)
Repayment of mortgage notes payable (37,455) --
Proceeds from long-term borrowings 38,475 --
Loan costs (1,289) --
Debt extinguishment costs (402) --
Distributions paid to partners (2,601) --
Net cash used in financing activities (3,399) (156)
Net (decrease) increase in cash and cash equivalents (2,006) 807
Cash and cash equivalents at beginning of period 4,717 475
Cash and cash equivalents at end of period $ 2,711 $ 1,282
Supplemental information:
Interest paid $ 1,794 $ 1,634
<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 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,
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 reclassification 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 Three Months Ended
March 31,
1996 1995
<S> <C> <C>
Property management fees (included in operating
expenses) $249,000 $254,000
Reimbursement for services of affiliates (included
in general and administrative expenses) 81,000 36,000
</TABLE>
For the period from January 19, 1996, to March 31, 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
("IMIC"), an affiliate of the Managing General Partner of the Partnership,
received $192,000.
Fox Partners IV, a California general partnership, is the general partner of the
Registrant. The general partners of Fox Partners IV are Fox Capital Management
Corporation (the "Managing General Partner") a California corporation, Fox
Realty Investors ("FRI"), a California general partnership, and Fox Associates
84, a California general partnership.
On December 6, 1993, the shareholders of the Managing General Partner entered
into a Voting Trust Agreement with NPI Equity Investments II, Inc. ("NPI
Equity") pursuant to which NPI Equity was granted the right to vote 100% of the
outstanding stock of the Managing General Partner. In addition, NPI Equity
became the managing partner of FRI. As a result, NPI Equity indirectly became
responsible for the operation and management of the business and affairs of the
Registrant and the other investment partnerships originally sponsored by the
Managing General Partner and/or FRI.
On August 17, 1995, the stockholders of NPI, Inc. entered into an agreement to
sell to IFGP Corporation, a Delaware corporation, an affiliate of Insignia, all
of the issued and outstanding common stock of NPI, Inc. for an aggregate
purchase price of $1,000,000. NPI, Inc. is the sole shareholder of the Managing
General Partner. The closing of the transactions contemplated by the above
mentioned agreement (the "Closing") occurred on January 19, 1996.
Upon the Closing, the officers and directors of NPI, Inc., NPI Equity, and the
Managing General Partner resigned and IFGP Corporation caused new officers and
directors of each of those entities to be elected.
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. 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.
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
three months ended March 31, 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 98% 97%
Autumn Run Apartments
Naperville, Illinois 94% 96%
Plantation Creek Apartments
Atlanta, Georgia 97% 95%
Wood Creek Apartments
Mesa, Arizona 97% 98%
Promontory Point Apartments
Austin, Texas 89% 99%
Hampton Greens Apartments
Dallas, Texas 95% 97%
Stoney Creek Apartments
Dallas, Texas 93% 96%
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 Promontory Point Apartments 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 months ended March 31, 1996, was
approximately $822,000 versus $236,000 for the same period of 1995. The
increase in the net loss 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 "Note C". 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
operation of two partnership administration offices during the three months
ended March 31, 1996, and the relocation of the office during the same time
period. These cost reimbursements are expected to decrease for the remainder
of the year as only one office will be open. 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. Operating expenses increased due to an increase in
expenses at Promontory Point and a casualty loss at Four Winds. The increase in
expenses at Promontory Point is related to the accrual of expenditures necessary
for methane gas testing. Methane gas was detected on this property and further
testing is necessary to determine the extent and concentration. The Managing
General Partner does not believe that this testing will have material findings
and no further contingencies are anticipated. The casualty loss at Four Winds
is due to a wind storm that caused damage to over 100 chimneys. Only a small
portion of this damage was covered by insurance. Offsetting this change is an
increase in interest income due to the additional cash invested prior to the
first quarter distribution to the partners for proceeds on the sale of Monterey
Village.
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 March 31, 1996, the Partnership had unrestricted cash of $2,711,000 as
compared to $1,282,000 at March 31, 1995. Net cash provided by operating
activities increased primarily as a result of the change in accounts receivable
due to the timing of receipts. Also contributing to the increase is the change
in accounts payable due the prepayment of rent and the accrual of expenses to
repair the chimneys at Four Winds. The decrease in cash used in investing
activities is due to a decrease in property replacements. The increase in cash
used in financing activities is due to the Partnership obtaining new financing
on three of its properties in 1996. In addition, the Partnership paid a
distribution of approximately $2,601,000 to the partners in the first quarter of
1996.
An affiliate of the Managing General Partner had 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 $75,005,000 is amortized over varying periods with balloon
payments ranging from June 1, 1996, to February 1, 2006. The Partnership is
attempting to obtain new financing for Autumn Run Apartments which has debt
maturing June 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 Apartments property. At this time, it
appears that the original investment objective of capital growth from inception
of the Registrant 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: A Form 8-K dated January 19, 1996, was filed
reporting the change in control of the Registrant.
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,
A 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: May, 14 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Century
Properties Growth Fund XXII 1996 First 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,711
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 128,480
<DEPRECIATION> 45,284
<TOTAL-ASSETS> 89,511
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 75,005
0
0
<COMMON> 0
<OTHER-SE> 12,349
<TOTAL-LIABILITY-AND-EQUITY> 89,511
<SALES> 0
<TOTAL-REVENUES> 5,043
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,384
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,827
<INCOME-PRETAX> (341)
<INCOME-TAX> 0
<INCOME-CONTINUING> (341)
<DISCONTINUED> 0
<EXTRAORDINARY> (481)
<CHANGES> 0
<NET-INCOME> (822)
<EPS-PRIMARY> (8.75)
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
</FN>
</TABLE>
