FORM 10-KSB-ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15 (D)
FORM 10-KSB
(Mark One)
[X]ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 0-13418
CENTURY PROPERTIES GROWTH FUND XXII
(Name of small business issuer in its charter)
California 94-2939418
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (864) 239-1000
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Limited Partnership Units
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of Registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. X
State issuer's revenues for its most recent fiscal year. $20,997,000
State the aggregate market value of the voting partnership interest held by non-
affiliates computed by reference to the price at which the partnership interests
were sold, or the average bid and asked prices of such partnership interests, as
of a specified date within the past 60 days. Market value information for the
Registrant's partnership interests is not available. Should a trading market
develop for these interests, it is the Managing General Partner's belief that
the aggregate market value of the voting partnership interests would not exceed
$25 million.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Century Properties Growth Fund XXII (the "Partnership" or the "Registrant") was
organized in August 1984, as a California limited partnership under the Uniform
Limited Partnership Act of the California Corporations Code. Fox Partners IV, a
California general partnership, is the general partner of the Partnership. The
general partners of Fox Partners IV are Fox Capital Management Corporation
("FCMC" or the "Managing General Partner"), a California corporation, Fox Realty
Investors ("FRI"), a California general partnership, and Fox Partners 84, a
California general partnership.
The Partnership's Registration Statement, filed pursuant to the Securities Act
of 1933 (No. 2-89285), was declared effective by the Securities and Exchange
Commission on September 25, 1984. The Partnership marketed its securities
pursuant to its Prospectus dated September 25, 1984, and thereafter supplemented
(hereinafter the "Prospectus"). This Prospectus was filed with the Securities
and Exchange Commission pursuant to Rule 424 (b) of the Securities Act of 1933.
The principal business of the Partnership is and has been to acquire, hold for
investment and ultimately sell income-producing multi-family residential
properties.
Beginning in September 1984 through June 1986, the Partnership offered
$120,000,000 in Limited Partnership units and sold units having an initial cost
of $82,848,000. The net proceeds of this offering were used to acquire eleven
income-producing real properties. The Partnership's original property portfolio
was geographically diversified with properties acquired in eight states. The
Partnership's acquisition activities were completed in September 1986 and since
then the principal activity of the Partnership has been managing its portfolio.
One property was acquired by the lender through foreclosure in 1992. One
property was sold in 1995.
The Managing General Partner of the Partnership intends to maximize the
operating results and, ultimately, the net realizable value of each of the
Partnership's properties in order to achieve the best possible return for the
investors. Such results may best be achieved through property sales,
refinancings, debt restructurings or relinquishment of the assets. The
Partnership intends to evaluate each of its holdings periodically to determine
the most appropriate strategy for each of the assets.
The Partnership has no full time employees. The Managing General Partner is
vested with full authority as to the general management and supervision of the
business and affairs of the Partnership. The non-managing general partners and
the limited partners have no right to participate in the management or conduct
of such business and affairs. NPI-AP Management L.P. ("NPI-AP"), an affiliate of
the Managing General Partner, provides day-to-day management services for the
Partnership's investment properties. See "Item 12. Certain Relationships and
Related Transactions" for discussion of transactions with affiliated parties.
The business in which the Partnership is engaged is highly competitive, and the
Partnership is not a significant factor in its industry. Each of its apartment
properties is located in or near a major urban area and, accordingly, competes
for rentals not only with similar apartment properties in its immediate area but
with hundreds of similar apartment properties throughout the urban area,
including properties owned and/or managed by affiliates of the Partnership.
Such competition is primarily on the basis of location, rents, services and
amenities. In addition, the Partnership competes with significant numbers of
individuals and organizations (including similar partnerships, real estate
investment trusts and financial institutions) with respect to the sale of
improved real properties, primarily on the basis of the prices and terms of such
transactions.
There have been, and it is possible there may be other, Federal, state and local
legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.
The Partnership monitors its properties for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain cases
environmental testing has been performed, which resulted in no material adverse
conditions or liabilities. In no case has the Partnership received notice that
it is a potentially responsible party with respect to an environmental clean up
site.
Change in Control
Pursuant to a series of transactions which closed during 1996, affiliates of
Insignia Financial Group, Inc. ("Insignia") acquired all of the issued and
outstanding shares of stock of FCMC, NPI Equity Investment II, Inc. ("NPI
Equity"), the managing general partner of FRI, and National Property Investors,
Inc. ("NPI"). NPI was the sole shareholder of NPI Equity until December 31,
1996, at which time the stock of NPI Equity was acquired by Insignia Properties
Trust, an affiliate of Insignia. In connection with these transactions,
affiliates of Insignia appointed new officers and directors of NPI, NPI Equity
and FCMC. See "Item 9. Directors, Executive Officers, Promoters and Control
Persons, Compliance with Section 16(a) of the Exchange Act" for information on
the directors and executive officers of the Partnership.
Tender Offers
On January 19, 1996, DeForet Ventures I L.P., the entity which tendered for
units of the Partnership in 1994 and 1995, and certain of its affiliates sold
the units then held by them (17,023.5 units representing approximately 20% of
the total outstanding units at such time) to Insignia NPI L.L.C. ("Insignia
LLC"), an affiliate of Insignia. Insignia LLC subsequently transferred these
units to Insignia Properties L.P. ("IPLP"). As a result, IPLP could be in a
position to significantly influence all voting decisions with respect to the
Partnership. Under the Partnership Agreement, unitholders holding a majority of
the Units are entitled to take action with respect to a variety of matters.
When voting on matters, IPLP would in all likelihood vote the Units it acquired
in a manner favorable to the interest of the Managing General Partner because of
its affiliation with the Managing General Partner. However, IPLP has agreed for
the benefit of non-tendering unitholders, that it will vote its Units acquired
on January 19, 1996: (i) against any proposal to increase the fees and other
compensation payable by the Partnership to the Managing General Partner and any
of its affiliates; and (ii) with respect to any proposal made by the Managing
General Partner or any of its affiliates, in proportion to votes cast by other
unitholders. In addition to the foregoing units, on October 6, 1997, IPLP
acquired an additional 5,504 units pursuant to its August 28, 1997, tender
offer. See "Item 11. Security Ownership of Certain Beneficial Owners and
Management" for additional information with respect to this tender offer.
Pursuant to a Schedule 13-D filed by IPLP with the Securities and Exchange
Commission, IPLP currently holds 22,749.5 units representing approximately 27.5%
of the total outstanding units.
ITEM 2. DESCRIPTION OF PROPERTIES:
The following table sets forth the Partnership's investment in properties:
<TABLE>
<CAPTION>
Date of
Property Purchase Type of Ownership Use
<S> <C> <C> <C>
Wood Creek Apartments 5/84 Fee ownership subject to Apartment-
Mesa, Arizona first mortgage 432 units
Plantation Creek 6/84 Fee ownership subject to Apartment-
Apartments first mortgage 484 units
Atlanta, Georgia
Stoney Creek Apartments 6/85 Fee ownership subject to Apartment-
Dallas, Texas first mortgage 364 units
Four Winds Apartments 9/85 Fee ownership subject to Apartment-
Overland, Kansas first mortgage 350 units
Promontory Point 10/85 Fee ownership subject to Apartment-
Apartments first mortgage 252 units
Austin, Texas
Cooper's Pointe Apartments 11/85 Fee ownership subject to Apartment-
Charleston, South first mortgage 192 units
Carolina
Hampton Greens Apartments 12/85 Fee ownership subject to Apartment-
Dallas, Texas first mortgage 309 units
Autumn Run Apartments 6/86 Fee ownership subject to Apartment-
Naperville, Illinois first mortgage 320 units
Copper Mill Apartments 9/86 Fee ownership subject to Apartment-
Richmond, Virginia first mortgage 192 units
</TABLE>
SCHEDULE OF PROPERTIES (IN THOUSANDS):
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
Wood Creek $ 16,165 $ 6,793 5-30 yrs. SL $ 4,466
Plantation Creek 25,664 10,821 5-30 yrs. SL 7,522
Stoney Creek 14,171 5,879 5-30 yrs. SL 5,313
Four Winds 16,456 6,009 5-30 yrs. SL 6,163
Promontory Point 11,755 4,641 5-30 yrs. SL 4,757
Cooper's Pointe 7,451 3,190 5-30 yrs. SL 2,393
Hampton Greens 12,201 4,705 5-30 yrs. SL 4,979
Autumn Run 17,690 6,606 5-30 yrs. SL 6,970
Copper Mill 9,427 3,446 5-30 yrs. SL 5,456
Total $130,980 $ 52,090 $ 48,019
See "Note A" to the financial statements included in "Item 7. Financial
Statements" for a description of the Partnership's depreciation policy.
SCHEDULE OF MORTGAGES (IN THOUSANDS):
Principal Principal
Balance At Balance
December 31, Interest Period Maturity Due At
Property 1997 Rate Amortized Date Maturity
Wood Creek $ 12,693 7.93% 30 yrs 2/2006 $ 11,319
Plantation Creek 15,644 7.93% 30 yrs 2/2006 13,952
Stoney Creek 6,930 7.88% 30 yrs 1/2006 6,180
Four Winds 9,520 7.93% 30 yrs 2/2006 8,489
Promontory Point 2,840 (1) (2) 12/1999 2,840
Cooper's Pointe 4,178 7.88% 30 yrs 1/2006 3,725
Hampton Greens 5,702 7.88% 30 yrs 1/2006 5,084
Autumn Run 9,100 7.33% (2) 11/2003 9,100
Copper Mill 5,996 7.88% 30 yrs 1/2006 5,347
Total $ 72,603
(1) Libor plus three and three-quarters percent.
(2) Interest only payments.
The mortgage notes payable are nonrecourse and are secured by pledge of the
Partnership's rental properties and by pledge of revenues from the respective
rental properties. Certain of the notes include prepayment penalties if repaid
prior to maturity.
SCHEDULE OF RENTAL RATES AND OCCUPANCY:
Average Annual Average
Rental Rates Occupancy
Property 1997 1996 1997 1996
Wood Creek $7,149/unit $6,853/unit 93% 95%
Plantation Creek 8,731/unit 8,526/unit 93% 96%
Stoney Creek 6,069/unit 5,873/unit 93% 93%
Four Winds 7,251/unit 6,843/unit 95% 96%
Promontory Point 7,174/unit 7,047/unit 90% 92%
Cooper's Pointe 6,540/unit 6,222/unit 97% 98%
Hampton Greens 5,862/unit 5,727/unit 91% 94%
Autumn Run 8,998/unit 8,790/unit 94% 93%
Copper Mill 8,624/unit 8,182/unit 94% 93%
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. All of the properties of the Partnership are subject to
competition from other apartment complexes in the area. The Managing General
Partner believes that all of the properties are adequately insured. All of the
lease terms are for one year or less. No individual tenant occupies 10% or more
of the available rentable space.
Real estate taxes (in thousands) and rates in 1997 for each property were:
1997 1997
Billing Rate
Wood Creek $ 163 1.28
Plantation Creek 209 3.87
Stoney Creek 228 2.56
Four Winds 165 1.21
Promontory Point 198 2.62
Cooper's Pointe 90 1.55
Hampton Greens 212 2.56
Autumn Run 309 6.51
Copper Mill 73 0.94
ITEM 3. LEGAL PROCEEDINGS
In August 1997, an Insignia affiliate (the "Purchaser") commenced tender offers
for limited partner interests in six real estate limited partnerships including
the Partnership (collectively, the "Tender Partnerships"), in which various
Insignia affiliates act as general partner. On September 5, 1997, a
partnership, claiming to be a holder of limited partnership units in one of the
Tender Partnerships, filed a complaint with respect to a putative class action
in the Court of Chancery in the State of Delaware in and for New Castle County
(the "City Partnerships complaint") challenging the actions of the defendants
(including Insignia and certain Insignia affiliates) in connection with the
tender offers. Neither the Partnership nor the Managing General Partner were
named as defendants in the action. The City Partnerships complaint alleges
that, among other things, the defendants have intentionally mismanaged the
Tender Partnerships and coerced the limited partners into selling their units
pursuant to the tender offers for substantially lower prices than the units are
worth. The plaintiffs also allege that the defendants breached an alleged duty
to provide an independent analysis of the fair market value of the limited
partnership units, failed to appoint a disinterested committee to review the
tender offer and did not adequately consider other alternatives available to the
limited partners.
On September 8, 1997, persons claiming to be holders of limited partnership
units in the Tender Partnerships filed a complaint with respect to a putative
class action and derivative suit in the Superior Court for the State of
California for the County of San Mateo (the "Kline complaint") challenging the
actions of the defendants (including Insignia, certain Insignia affiliates and
the Tender Partnerships) in connection with the tender offers. The Kline
complaint alleges that, among other things, the defendants have intentionally
mismanaged the Tender Partnerships and that, as a result of the tender offers,
the Purchaser will acquire effective voting control over the Tender Partnerships
at substantially lower prices than the units are worth. On September 24, 1997,
the court denied the plaintiffs' application for a temporary restraining order
and their request for preliminary injunctive relief preventing the completion of
the tender offers.
On September 10, 1997, persons claiming to be holders of limited partnership
units in the Tender Partnerships filed a complaint with respect to a putative
class action and derivative suit in the Superior Court for the State of
California for the County of Alameda (the "Heller complaint") challenging the
actions of the defendants (including Insignia, certain Insignia affiliates and
the Tender Partnerships) in connection with the tender offers. The Heller
complaint alleges that, among other things, the defendants have intentionally
mismanaged the Tender Partnerships and that, as a result of the tender offers,
the Purchaser will acquire effective voting control of the Tender
Partnerships at substantially lower prices than the units are worth. The
Plaintiffs also allege that the defendants breached an alleged duty to retain an
independent advisor to consider alternatives to the tender offers.
The Managing General Partner and Insignia believe that the allegations contained
in the City Partnerships, Kline and Heller complaints are without merit and has
been advised that the plaintiffs in each of these actions intend to discontinue
the actions.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The unit holders of the Partnership did not vote on any matter during the fiscal
year covered by this report.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
No established public trading market for the limited partnership units exists,
nor is any expected to develop.
The Partnership distributed approximately $2,549,000 ($30.76 per limited
partnership unit) to the limited partners and approximately $52,000 to the
general partner in 1996 from the proceeds received from the sale of the
Partnership's Monterrey Village property. There were no distributions made in
1997. The Managing General Partner anticipating making a distribution during
the second half of 1998.
As of December 31, 1997, the approximate number of holders of the 82,848 limited
partnership units outstanding was 5,471.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This item should be read in conjunction with the consolidated financial
statements and other items contained elsewhere in this report.
Results of Operations
The Partnership's net income for the year ended December 31, 1997, was
approximately $391,000 versus a net loss of approximately $1,539,000 for the
year ended December 31, 1996. The increase in net income in 1997 as compared to
1996 is partially attributable to the extraordinary loss on early extinguishment
of debt in 1996 from the refinancing of Plantation Creek and Wood Creek (see
discussion below). Also contributing to the increase in net income is increases
in rental and other income and decreases in operating and interest expense in
1997 as compared to 1996. The increase in rental income is primarily
attributable to an increase in rental rates at all of the Partnership's
properties, which exceeded the overall decrease in occupancy at the properties.
The increase in other income is primarily attributable to an increase in
corporate unit income at several of the Partnership's properties. The decrease
in interest expense is due to a lower interest rate on the refinanced mortgages
encumbering Autumn Run, Wood Creek, and Four Winds, which occurred in 1996, as
well as a pay-down of $1,500,000 on the mortgage encumbering Promontory Point.
The decrease in operating expense is primarily due to decrease in major repairs
and maintenance. Included in operating expenses for the year ended December 31,
1997, is approximately $798,000 of major repairs and maintenance comprised
primarily of exterior painting, landscaping, and exterior building repairs.
Included in operating expenses for the year ended December 31, 1996, is
approximately $1,097,000 of major repairs and maintenance comprised primarily of
gutter repairs, exterior building repairs, parking lot repairs, landscaping, and
exterior painting.
During the third quarter of 1997, Promontory Point suffered roof damage from a
storm with high winds. During the fourth quarter, the Partnership incurred
approximately $28,000 in costs to repair the roofs of which approximately
$15,000 will be reimbursed by the insurance provider.
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 rents 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.
Capital Resources and Liquidity
At December 31, 1997, the Partnership had unrestricted cash and cash equivalents
of $3,345,000 as compared to $1,111,000 at December 31, 1996. Unrestricted cash
and cash equivalents increased $2,234,000 during the twelve month period ended
December 31, 1997. Unrestricted cash and cash equivalents decreased $3,606,000
during the twelve month period ended December 31, 1996. Net cash provided by
operating activities increased primarily as a result of an increase in rental
income and other income as discussed above, and a decrease in cash paid for
interest. Also contributing to the increase was the timing of funding escrow
deposit accounts for property taxes. Net cash used in investing activities
decreased due to decreases in property improvements and replacements and a
decrease in net deposits to restricted escrows. Net cash used in financing
activities decreased due to costs incurred by the Partnership in obtaining new
financing on four of its properties during 1996. In addition, the Partnership
paid a distribution of approximately $2,601,000 to its partners during 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.
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 November 15, 1996, the Partnership refinanced the
mortgage encumbering Autumn Run. The new mortgage carries a stated interest
rate of 7.33%. The new mortgage matures November 1, 2003. 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 in 1996, 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. In
connection with the refinancing, the Partnership was required to transfer Wood
Creek to a newly formed subsidiary, Wood Creek CPGF 22, L.P.
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. In connection with the refinancing, the Partnership was required to
transfer Four Winds to a newly formed subsidiary, Four Winds CPGF 22, L.P.
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 in 1996, arising from prepayment penalties and the write-off of
unamortized loan costs. In connection with the refinancing, the Partnership was
required to transfer Plantation Creek to a newly formed subsidiary, Plantation
Creek CPGF 22, L.P.
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 through
December 31, 1996, were approximately $180,000. Additional loan costs of
approximately $17,000 were paid during 1997.
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 properties 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 approximately $72,603,000 is amortized over varying
periods with balloon payments ranging from December 1999 to February 2006.
During 1996, the Partnership distributed approximately $2,549,000 ($30.76 per
limited partnership unit) to the limited partners and approximately $52,000 to
the general partner from the proceeds received from the sale of the
Partnership's Monterey Village property. No cash distributions were made in
1997. The Managing General Partner anticipates making a distribution during the
second half of 1998.
Year 2000
The Partnership is dependent upon the Managing General Partner and Insignia for
management and administrative services. Insignia has completed an assessment
and will have to modify or replace portions of its software so that its computer
systems will function properly with respect to dates in the year 2000 and
thereafter (the "Year 2000 Issue"). The project is estimated to be completed
not later than December 31, 1998, which is prior to any anticipated impact on
its operating systems. The Managing General Partner believes that with
modifications to existing software and conversions to new software, the Year
2000 Issue will not pose significant operational problems for its computer
systems. However, if such modifications and conversions are not made, or are
not completed timely, the Year 2000 Issue could have a material impact on the
operations of the Partnership.
Other
Certain items discussed in this annual report may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "Reform Act") and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements. Such
forward-looking statements speak only as of the date of this annual report. The
Partnership expressly disclaims any obligation or undertaking to release
publicly any updates of revisions to any forward-looking statements contained
herein to reflect any change in the Partnership's expectations with regard
thereto or any change in events, conditions or circumstances on which any such
statement is based.
ITEM 7. FINANCIAL STATEMENTS
CENTURY PROPERTIES GROWTH FUND XXII
LIST OF FINANCIAL STATEMENTS
Independent Auditors' Report
Consolidated Balance Sheet - December 31, 1997
Consolidated Statements of Operations - Years ended December 31, 1997
and 1996
Consolidated Statements of Changes in Partners' Capital (Deficit) - Years
ended December 31, 1997 and 1996
Consolidated Statements of Cash Flows - Years ended December 31, 1997
and 1996
Notes to Consolidated Financial Statements
Independent Auditors' Report
To the Partners
Century Properties Growth Fund XXII
Greenville, South Carolina
We have audited the accompanying consolidated balance sheet of Century
Properties Growth Fund XXII (a limited partnership)(the "Partnership") and its
subsidiaries as of December 31, 1997, and the related consolidated statements of
operations, changes in partners' capital and cash flows for each of the two
years in the period ended December 31, 1997. These consolidated financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Century
Properties Growth Fund XXII and its subsidiaries as of December 31, 1997, and
the results of its operations and its cash flows for each of the two years in
the period ended December 31, 1997, in conformity with generally accepted
accounting principles.
/s/Imowitz Koenig & Co., LLP
Certified Public Accountants
New York, New York
January 17, 1998
CENTURY PROPERTIES GROWTH FUND XXII
CONSOLIDATED BALANCE SHEET
December 31, 1997
(in thousands, except unit data)
Assets
Unrestricted cash and cash equivalents $ 3,345
Restricted cash 500
Receivables and deposits 1,419
Restricted escrows 950
Other assets 1,705
Investment properties (Notes A, C, and D):
Land $ 14,396
Buildings and related personal property 116,584
130,980
Less accumulated depreciation (52,090) 78,890
$ 86,809
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 194
Tenant security deposits payable 362
Accrued property taxes 928
Other liabilities 699
Mortgage notes payable (Note C) 72,603
Partners' Capital (Deficit)
General partner's $ (7,361)
Limited partners' (82,848 units issued
and outstanding) 19,384 12,023
$ 86,809
See Accompanying Notes to Consolidated Financial Statements
CENTURY PROPERTIES GROWTH FUND XXII
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended
December 31,
1997 1996
Revenues:
Rental income $ 19,786 $ 19,359
Other income 1,211 1,031
Total revenues 20,997 20,390
Expenses:
Operating 8,723 8,925
General and administrative 441 391
Depreciation 3,959 3,865
Interest 5,906 6,591
Property taxes 1,577 1,676
Total expenses 20,606 21,448
Income (loss) before extraordinary item 391 (1,058)
Extraordinary loss on early extinguishment
of debt (Note C) -- (481)
Net income (loss) $ 391 $ (1,539)
Net income (loss) allocated to general partner $ 46 $ (182)
Net income (loss) allocated to limited partners 345 (1,357)
$ 391 $ (1,539)
Net income (loss) per limited partnership unit:
Income (loss) before extraordinary item $ 4.16 $ (11.26)
Extraordinary loss -- (5.12)
Net income (loss) per limited partnership unit $ 4.16 $ (16.38)
Distribution per limited partnership unit $ -- $ 30.76
See Accompanying Notes to Consolidated Financial Statements
CENTURY PROPERTIES GROWTH FUND XXII
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 82,848 $ -- $ 82,848 $ 82,848
Partners' (deficit) capital at
December 31, 1995 82,848 $ (7,173) $ 22,945 $ 15,772
Distributions to partners -- (52) (2,549) (2,601)
Net loss for the year ended
December 31, 1996 -- (182) (1,357) (1,539)
Partners' (deficit) capital at
December 31, 1996 82,848 (7,407) 19,039 11,632
Net income for the year ended
December 31, 1997 -- 46 345 391
Partners' (deficit) capital at
December 31, 1997 82,848 $ (7,361) $ 19,384 $ 12,023
<FN>
See Accompanying Notes to Consolidated Financial Statements
</FN>
</TABLE>
CENTURY PROPERTIES GROWTH FUND XXII
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended
December 31,
1997 1996
Cash flows from operating activities:
Net income (loss) $ 391 $ (1,539)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation 3,959 3,865
Amortization of loan costs 209 303
Extraordinary loss on early extinguishment
of debt -- 481
Loss on disposal of property 89 52
Change in accounts:
Receivables and deposits 285 (911)
Other assets (61) (44)
Accounts payable (118) 202
Tenant security deposits payable (7) (21)
Accrued property taxes (263) 572
Other liabilities (1) 605
Net cash provided by operating activities 4,483 3,565
Cash flows from investing activities:
Net deposits to restricted escrows (280) (318)
Property improvements and replacements (1,391) (1,412)
Net cash used in investing activities (1,671) (1,730)
Cash flows from financing activities:
Mortgage principal payments (561) (504)
Repayment of mortgage notes payable -- (48,018)
Proceeds from long-term borrowings -- 47,575
Loan costs (17) (1,491)
Debt extinguishment costs -- (402)
Distributions paid to partners -- (2,601)
Net cash used in financing activities (578) (5,441)
Net increase (decrease) in unrestricted cash and
cash equivalents 2,234 (3,606)
Unrestricted cash and cash equivalents at
beginning of period 1,111 4,717
Unrestricted cash and cash equivalents at
end of period $ 3,345 $ 1,111
Supplemental disclosure of cash flow information:
Cash paid for interest $ 5,701 $ 5,886
See Accompanying Notes to Consolidated Financial Statements
CENTURY PROPERTIES GROWTH FUND XXII
Notes to Consolidated Financial Statements
December 31, 1997
NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization:
Century Properties Growth Fund XXII (the "Partnership") is a California limited
partnership organized in August 1984, to acquire and operate residential
apartment complexes. The Partnership's general partner is Fox Partners IV, a
California general partnership. The general partners of Fox Partners IV are Fox
Capital Management Corporation (the "Managing General Partner" or "FCMC"), a
California corporation, Fox Realty Investors ("FRI"), a California general
partnership, and Fox Associates 84, a California general partnership. The
capital contributions of $82,848,000 ($1,000 per unit) were made by the limited
partners.
Consolidation:
The Partnership's financial statements include the accounts of Wood Creek CPGF
22, L.P., Plantation Creek CPGF 22, L.P., Stoney Creek CPGF 22, L.P., Four Winds
CPGF 22, L.P., Cooper's Point CPGF 22, L.P., Hampton Greens CPGF 22, L.P.,
Century Stoney Greens, L.P. and Copper Mill CPGF 22, L.P. of which the
Partnership owns a 100% interest in each of these Partnerships. The Partnership
has the ability to control the major operating and financial policies of these
partnerships. All intercompany transactions have been eliminated.
Cash and Cash Equivalents:
The Partnership considers all highly liquid investments with a maturity, when
purchased, of three months or less to be cash equivalents. At certain times,
the amount of cash deposited at a bank may exceed the limit on insured deposits.
Security Deposits:
The Partnership requires security deposits from lessees for the duration of the
lease and such deposits are included in receivables and deposits. The security
deposits are refunded when the tenant vacates, provided the tenant has not
damaged its space, and is current on its rental payments.
Investment Properties:
Investment properties are stated at cost. Acquisition fees are capitalized as a
cost of real estate. In accordance with Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of", the Partnership records impairment
losses on long-lived assets used in operations when events and circumstances
indicate that the assets might be impaired and the undiscounted cash flows
estimated to be generated by those assets are less than the carrying amounts of
those assets.
Depreciation:
Depreciation is calculated by the straight-line method over the estimated lives
of the rental properties and related personal property ranging from 5 to 30
years.
Loan Costs:
Loan costs are capitalized and are amortized on a straight-line basis as
interest expense over the lives of the related loans, or expensed, if financing
is not obtained. At December 31, 1997, loan costs totaling approximately
$1,972,000 were included in other assets. At December 31, 1997, accumulated
amortization of loan costs totaled approximately $413,000.
Fair Value of Financial Instruments:
SFAS No. 107, "Disclosures about Fair Value of Financial Instruments", as
amended by SFAS No. 119, "Disclosures about Derivative Financial Instruments and
Fair Value of Financial Instruments", requires disclosure of fair value
information about financial instruments, whether or not recognized in the
balance sheet, for which it is practicable to estimate fair value. Fair value is
defined in the SFAS as the amount at which the instruments could be exchanged in
a current transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes that the carrying amount of its
financial instruments (except for long term debt) approximates their fair value
due to the short term maturity of these instruments. The fair value of the
Partnership's long term debt, after discounting the scheduled loan payments to
maturity, approximates its carrying balance.
Leases:
The Partnership generally leases apartment units for twelve-month terms or less.
The Partnership recognizes income as earned on its leases.
Advertising Costs:
Advertising costs of approximately $367,000 in 1997 and $375,000 in 1996 were
charged to expense as incurred and are included in operating expenses.
Use of Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the consolidated financial statements and
accompanying notes. Actual results could differ from those estimates.
Income Taxes:
Taxable income or loss of the Partnership is reported in the income tax returns
of its partners. Accordingly, no provision for income taxes is made in the
consolidated financial statements of the Partnership.
Allocation of Income, Loss, and Distributions:
Net income, net loss, and distributions of cash of the Partnership are allocated
between the general partner and the limited partners in accordance with the
provisions of the Partnership agreement.
Reclassifications:
Certain reclassifications have been made to the 1996 balances to conform to the
1997 presentation.
NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES
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.
Pursuant to a series of transactions which closed during 1996, affiliates of
Insignia Financial Group, Inc. ("Insignia") acquired all of the issued and
outstanding shares of stock of FCMC, NPI Equity Investments II, Inc. ("NPI
Equity"), the managing general partner of FRI, and National Property Investors,
Inc. ("NPI"). NPI was the sole stockholder of NPI Equity until December 31,
1996, at which time the stock of NPI Equity was acquired by Insignia Properties
Trust, an affiliate of Insignia. In connection with these transactions,
affiliates of Insignia appointed new officers and directors of NPI Equity and
FCMC.
The following transactions with affiliates of Insignia, NPI, and affiliates of
NPI were incurred during the years ended December 31, 1997 and 1996 (in
thousands):
1997 1996
Property management fees (included in operating
expenses) $ 1,044 $ 1,010
Reimbursement for services of affiliates, including
$76,000 and $29,000 of construction services
reimbursements in 1997 and 1996, respectively
(included in investment properties, general and
administrative expenses and operating expenses) 239 182
Additionally, in connection with the refinancing of Wood Creek, Four Winds, and
Plantation Creek (see "Note C"), an affiliate of the Managing General Partner
received a brokerage fee of $192,000 in January 1996. In connection with the
refinancing of Autumn Run in November 1996, an affiliate of the Managing General
Partner received $14,000. These amounts are included in other assets and are
being amortized over the life of the loans.
For the period from January 19, 1996, to August 31, 1997, 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 master policy. The 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.
On August 28, 1997, an Insignia affiliate (the "Purchaser") commenced tender
offers for limited partnership interests in six real estate limited partnerships
(including the Partnership) in which various Insignia affiliates act as general
partner. The Purchaser offered to purchase up to 25,000 of the outstanding
units of limited partnership interest in the Partnership, at $275.00 per Unit,
net to the seller in cash, upon the terms and subject to the conditions set
forth in the Offer to Purchase dated August 28, 1997 (the "Offer to Purchase").
As a result of the tender offer, such Insignia affiliate purchased 5,504 of the
outstanding limited partnership units of the Partnership.
In September 1997, the Partnership, along with the Managing General Partner,
Insignia and certain Insignia affiliates, was named as a defendant in two
separate actions regarding alleged mismanagement of the Partnership and coercion
of the limited partners into selling their units pursuant to the tender offers
for substantially lower prices than the units are worth. The Managing General
Partner believes that these allegations are without merit and has been informed
that the plaintiffs in each of these actions intend to discontinue the action.
In accordance with the Partnership Agreement, the general partner received a
partnership management incentive allocation equal to ten percent of net and
taxable income and losses and cash distributions. The general partner was also
allocated its two percent continuing interest in the Partnership's net and
taxable income and losses and cash distributions after the above allocation of
the partnership management incentive.
NOTE C - MORTGAGE NOTES PAYABLE
The principle terms of mortgage notes payable are as follows (in thousands):
Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Including Interest Maturity Due At
Property 1997 Interest Rate Date Maturity
Wood Creek $ 12,693 $ 94 7.93% 2/2006 $ 11,319
Plantation Creek 15,644 116 7.93% 2/2006 13,952
Stoney Creek 6,930 51 7.88% 1/2006 6,180
Four Winds 9,520 71 7.93% 2/2006 8,489
Promontory Point 2,840 23 (1) (2) 12/1999 2,840
Cooper's Pointe 4,178 31 7.88% 1/2006 3,725
Hampton Greens 5,702 42 7.88% 1/2006 5,084
Autumn Run 9,100 56 (1) 7.33% 11/2003 9,100
Copper Mill 5,996 44 7.88% 1/2006 5,347
$ 72,603 $ 528
(1) Interest only monthly payments.
(2) Libor plus three and three-quarters percent.
The mortgage notes payable are nonrecourse and are secured by pledge of the
Partnership's rental properties and by pledge of revenues from the respective
rental properties. Certain of the notes include prepayment penalties if repaid
prior to maturity.
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 November 15, 1996, the Partnership refinanced the
mortgage encumbering Autumn Run. The new mortgage carries a stated interest
rate of 7.33%. The new mortgage matures November 1, 2003. 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 in 1996, 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. In
connection with the refinancing, the Partnership was required to transfer Wood
Creek to a newly formed subsidiary, Wood Creek CPGF 22, L.P.
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. In connection with the refinancing, the Partnership was required to
transfer Four Winds to a newly formed subsidiary, Four Winds CPGF 22, L.P.
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 in 1996, arising from prepayment penalties and the write-off of
unamortized loan costs. In connection with the refinancing, the Partnership was
required to transfer Plantation Creek to a newly formed subsidiary, Plantation
Creek CPGF 22, L.P.
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 during the
twelve months ended December 31, 1996, were approximately $180,000. Additional
loan costs of approximately $17,000 were paid during the twelve months ended
December 31, 1997.
Scheduled principal payments of the mortgage notes payable subsequent to
December 31, 1997, are as follows (in thousands):
1998 $ 607
1999 3,497
2000 711
2001 770
2002 833
Thereafter 66,185
$ 72,603
NOTE D - INVESTMENT PROPERTIES AND ACCUMULATED DEPRECIATION
(in thousands)
<TABLE>
<CAPTION>
Initial Cost
To Partnership
Net Cost
Buildings Capitalized
and Related (Removed)
Personal Subsequent to
Description Encumbrances Land Property Acquisition
SUBSIDIARIES:
<S> <C> <C> <C> <C>
Wood Creek $ 12,693 $ 2,130 $ 13,440 $ 595
Plantation Creek 15,644 2,653 20,827 2,184
Stoney Creek 6,930 1,803 12,509 (141)
Four Winds 9,520 1,363 14,288 805
Promontory Point 2,840 1,690 10,129 (64)
Cooper's Pointe 4,178 513 6,696 242
Hampton Greens 5,702 2,086 9,474 641
Copper Mill 5,996 933 8,061 433
63,503 13,171 95,424 4,695
PARTNERSHIP:
Autumn Run 9,100 1,462 14,957 1,271
Total $ 72,603 $ 14,633 $ 110,381 $ 5,966
</TABLE>
<TABLE>
<CAPTION>
Gross Amount at Which Carried
At December 31, 1997
Buildings Accumu- Deprec-
And Related lated Year of iable
Personal Depre- Construc- Life-
Description Land Property Total ciation tion Years
SUBSIDIARIES:
<S> <C> <C> <C> <C> <C> <C>
Wood Creek $ 2,117 $ 14,048 $ 16,165 $ 6,793 1985 5-30
Plantation Creek 2,655 23,009 25,664 10,821 1978 5-30
Stoney Creek 1,689 12,482 14,171 5,879 1983 5-30
Four Winds 1,357 15,099 16,456 6,009 1987 5-30
Promontory Point 1,595 10,160 11,755 4,641 1984 5-30
Cooper's Pointe 510 6,941 7,451 3,190 1986 5-30
Hampton Greens 2,086 10,115 12,201 4,705 1986 5-30
Copper Mill 929 8,498 9,427 3,446 1987 5-30
12,938 100,352 113,290 45,484
PARTNERSHIP:
Autumn Run 1,458 16,232 17,690 6,606 1987 5-30
Total $14,396 $116,584 $130,980 $ 52,090
</TABLE>
(in thousands)
Reconciliation of Investment Properties and Accumulated Depreciation:
December 31,
1997 1996
Investment Properties
Balance at beginning of year $129,725 $128,394
Disposal of property (136) (81)
Property improvements 1,391 1,412
Balance at end of year $130,980 $129,725
Accumulated Depreciation
Balance at beginning of year $ 48,178 $ 44,342
Disposal of property (47) (29)
Additions charged to expense 3,959 3,865
Balance at end of year $ 52,090 $ 48,178
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1997 and 1996, is $130,266,000 and $128,845,000, respectively. The
accumulated depreciation taken for Federal income tax purposes at December 31,
1997 and 1996, is $82,247,000 and $77,493,000, respectively.
NOTE E - DISTRIBUTIONS
In January, 1996, the Partnership distributed approximately $2,549,000
($30.76 per limited partnership unit) to the limited partners and approximately
$52,000 to the general partner from proceeds from the sale of Monterey Village
Apartments in August 1995.
NOTE F - INCOME TAXES
The differences between the method of accounting for income tax reporting and
the accrual method of accounting used in the consolidated financial statements
are as follows (in thousands, except unit data):
1997 1996
Net income (loss) as reported $ 391 $ (1,539)
Differences resulted from:
Depreciation (789) (842)
Construction period interest 30 35
Prepaid rent (9) 70
Other 16 58
Federal tax loss $ (361) $ (2,218)
Federal taxable loss per limited
partnership unit $ (4) $ (26)
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):
1997
Net assets as reported $ 12,023
Differences resulted from:
Deferred sales commissions and
organization costs 12,427
Depreciation (29,910)
Interest expense 352
Payments credited to property and
improvements 2,014
Construction period interest amortization (3,498)
Other 188
Net liabilities - Federal tax basis $ (6,404)
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no disagreements with Imowitz Koenig & Co., LLP regarding the 1997 or
1996 audits of the Partnership's financial statements.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Century Properties Growth Fund XXII (the "Partnership") has no officers or
directors. Fox Capital Management Corporation, the managing general partner of
the Partnership's general partner ("FCMC" or the "Managing General Partner"),
manages and controls substantially all of the Partnership's affairs and has
general responsibility and ultimate authority in all matters affecting its
business.
The names, ages and positions held by executive officers and directors of the
Managing General Partner, as of January 29, 1998, are as follows:
Name Age Position
William H. Jarrard, Jr. 51 President and Director
Ronald Uretta 41 Vice President and
Treasurer
Martha L. Long 38 Controller
Robert D. Long, Jr. 30 Vice President
Daniel M. LeBey 32 Vice President and
Secretary
Kelley M. Buechler 40 Assistant Secretary
William H. Jarrard, Jr. has been President and Director of the Managing General
Partner since June 1996. He has acted as Senior Vice President of Insignia
Properties Trust ("IPT"), parent of the Managing General Partner, since May
1997. Mr. Jarrard previously acted as Managing Director - Partnership
Administration of Insignia Financial Group, Inc. ("Insignia") from January 1991
through September 1997 and served as Managing Director - Partnership
Administration and Asset Management of Insignia from July 1994 until January
1996.
Ronald Uretta has been Vice President and Treasurer of the Managing General
Partner since June 1996 and Insignia's Treasurer since January 1992. Since
August 1996, he has also served as Insignia's Chief Operating Officer. He has
also served as Insignia's Secretary from January 1992 to June 1996 and as
Insignia's Chief Financial Officer from January 1992 to August 1996.
Martha L. Long has been Controller of the Managing General Partner since
December 1996 and Senior Vice President - Finance and Controller of Insignia
since January 1997. In June 1994, Ms. Long joined Insignia as its Controller,
and was promoted to Senior Vice President - Finance in January 1997. Prior to
that time, she was Senior Vice President and Controller of the First Savings
Bank, in Greenville, SC.
Robert D. Long, Jr. has been Vice President of the Managing General Partner
since January 2, 1998. Mr. Long joined Metropolitan Asset Enhancement, L.P.
("MAE"), an affiliate of Insignia, in September 1993. Since 1994 he has acted
as Vice President and Chief Accounting Officer of the MAE subsidiaries. Mr.
Long was an accountant for Insignia until joining MAE in 1993. Prior to joining
Insignia, Mr. Long was an auditor for the State of Tennessee and was associated
with the accounting firm of Harsman Lewis and Associates.
Daniel M. LeBey has been Vice President and Secretary of the Managing General
Partner since January 29, 1998, and Insignia's Assistant Secretary since April
30, 1997. Since July 1996 he has also served as Insignia's Associate General
Counsel. From September 1992 until June 1996, Mr. LeBey was an attorney with
the law firm of Alston & Bird LLP, Atlanta, Georgia.
Kelley M. Buechler has been Assistant Secretary of the Managing General Partner
since June 1996 and Assistant Secretary of Insignia since 1991.
No family relationships exist among any of the officers or directors of the
Managing General Partner.
ITEM 10. EXECUTIVE COMPENSATION
No direct form of compensation or remuneration was paid by the Partnership to
any officer or director of the Managing General Partner. The Partnership has no
plan, nor does the Partnership presently propose a plan, which will result in
any remuneration being paid to any officer or director upon termination of
employment. However, reimbursements and other payments have been made to the
Partnership's Managing General Partner and its affiliates, as described in "Item
12. Certain Relationships and Related Transactions" below.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding limited partnership
units of the Partnership owned by each person who is known by the Partnership to
own beneficially or exercise voting or dispositive control over more than 5% of
the Partnership's limited partnership units, by each of the Managing General
Partner's directors and by all directors and executive officers of the Managing
General Partner as a group as of January 1, 1998.
Name and address of Amount and nature of
Beneficial Owner Beneficial Owner % of Class
Insignia Properties L.P. 22,749.5 27.5%
One Insignia Financial Plaza
Greenville, SC 29602
All directors and
executive officers as
a group (6 persons) -- --
There are no arrangements known to the Partnership, the operation of which may,
at a subsequent date, result in a change in control of the Partnership.
On August 28, 1997, Insignia Properties L.P., an Insignia affiliate (the
"Purchaser" or "IPLP"), commenced tender offers for limited partnership
interests in six real estate limited partnerships (including the Partnership) in
which various Insignia affiliates act as general partner. The Purchaser offered
to purchase up to 25,000 of the outstanding units of limited partnership
interest in the Partnership, at $275.00 per Unit, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated August 28, 1997 (the "Offer to Purchase") and the related Assignment of
Partnership Interest attached as Exhibits (a)(1) and (a)(2), respectively, to
the Tender Offer Statement on Schedule 14D-1 originally filed with the
Securities and Exchange Commission on August 28, 1997. Because of the existing
and potential future conflicts of interest (described in the Partnership's
Statements on Schedule 14D-9 filed with the Securities and Exchange Commission),
neither the Partnership nor the Managing General Partner expressed any opinion
as to the Offer to Purchase and made no recommendation as to whether unit
holders should tender their units in response to the Offer to Purchase. In
addition, because of these conflicts of interest, including as a result of the
Purchaser's affiliation with various Insignia affiliates, the manner in which
the Purchaser votes its limited partner interests in the Partnership may not
always be consistent with the best interests of the other limited partners.
As a result of its ownership of 22,749.5 limited partnership units, IPLP could
be in a position to significantly influence all voting decisions with respect to
the Partnership. Under the Partnership Agreement, unitholders holding a
majority of the Units are entitled to take action with respect to a variety of
matters. When voting on matters, IPLP would in all likelihood vote the Units it
acquired in a manner favorable to the interest of the Managing General Partner
because of its affiliation with the Managing General Partner. However, IPLP has
agreed for the benefit of non-tendering unitholders, that it will vote its Units
acquired on January 19, 1996: (i) against any proposal to increase the fees and
other compensation payable by the Partnership to the Managing General Partner
and any of its affiliates; and (ii) with respect to any proposal made by the
Managing General Partner or any of its affiliates, in proportion to votes cast
by other unitholders. Except for the foregoing, no other limitations are
imposed on IPLP's right to vote each Unit acquired on January 19, 1996, or with
the August 28, 1997, tender offer.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
No transactions have occurred between the Partnership and any officer or
director of the Managing General Partner.
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.
Fox Partners IV, a California general partnership, is the general partner of the
Partnership. The general partners of Fox Partners IV are: FCMC, 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 1996, affiliates of
Insignia acquired all of the issued and outstanding shares of stock of FCMC, NPI
Equity Investments II, Inc. ("NPI Equity"), the managing general partner of FRI,
and National Property Investors, Inc. ("NPI"). NPI was the sole stockholder of
NPI Equity until December 31, 1996, at which time the stock of NPI Equity was
acquired by Insignia Properties Trust, an affiliate of Insignia. In connection
with these transactions, affiliates of Insignia appointed new officers and
directors of NPI Equity and FCMC.
The following transactions with affiliates of Insignia, NPI, and affiliates of
NPI were incurred during the years ended December 31, 1997 and 1996 (in
thousands):
1997 1996
Property management fees $ 1,044 $ 1,010
Reimbursement for services of affiliates, including
$76,000 and $29,000 of construction services
reimbursements in 1997 and 1996, respectively 239 182
Additionally, in connection with the refinancing of Wood Creek, Four Winds, and
Plantation Creek (see "Item 6. Capital Resources and Liquidity"), an affiliate
of the Managing General Partner received a brokerage fee of $192,000 in January
1996. In connection with the refinancing of Autumn Run in November 1996, an
affiliate of the Managing General Partner received $14,000.
For the period from January 19, 1996, to August 31, 1997, 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 master policy. The 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.
In accordance with the Partnership Agreement, the general partner received a
partnership management incentive allocation equal to ten percent of net and
taxable income and losses and cash distributions. The general partner was also
allocated its two percent continuing interest in the Partnership's net and
taxable income and losses and cash distributions after the above allocation of
the partnership management incentive.
At December 31, 1997, an affiliate of Insignia owned approximately 27.5% of the
limited partnership units of the Partnership, as discussed in "Item 11. Security
Ownership of Certain Beneficial Owner and Management" above.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) See Exhibit Index contained herein.
(b) Reports on Form 8-K filed during the fourth quarter of 1997: None.
SIGNATURES
In accordance with Section 13 or 15(d) 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
Date: March 11, 1998
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
Signature/Name Title Date
/s/William H. Jarrard, Jr. President and March 11, 1998
William H. Jarrard, Jr. Director
/s/Ronald Uretta Vice President and March 11, 1998
Ronald Uretta Treasurer
CENTURY PROPERTIES INCOME FUND XXII
EXHIBIT INDEX
Exhibit Number Description of Exhibit
2.1 NPI, Inc. Stock Purchase Agreement, dated as of
August 17, 1995, incorporated by reference to the
Partnership's Current Report on Form 8-K dated August
17, 1995.
2.2 Partnership Units Purchase Agreement dated as of
August 17, 1995, incorporated by reference to Exhibit
2.1 to Form 8-K filed by Insignia Financial Group,
Inc. ("Insignia") with the Securities and Exchange
Commission on September 1, 1995 .
2.3 Management Purchase Agreement dated as of August 17,
1995, incorporated by reference to Exhibit 2.2 to
Form 8-K filed by Insignia with the Securities and
Exchange Commission on September 1, 1995.
2.5 Master Indemnity Agreement dated as of August 17,
1995, incorporated by reference to Exhibit 2.5 to
Form 8-K filed by Insignia with the Securities and
Exchange Commission on September 1, 1995.
3.4 Agreement of Limited Partnership, incorporated by
reference to Exhibit A to the Prospectus of the
Partnership dated September 20, 1983, as amended on
June 13, 1989, and as thereafter supplemented
contained in the Partnership's Registration Statement
on Form S-11 (Reg. No. 2-79007).
10.1 Promissory Note dated December 27, 1994, from Century
Stoney Greens, L.P. to USL Capital Corporation
("USL") in the principal amount of $30,000,000
incorporated by reference to the Registrant's Form
10-K for the year ended December 31, 1994.
10.2 Form of Deed of Trust, Security Agreement, Assignment
of Leases and Rents, Fixture Filing and Financing
Statement by CSG to Howard E. Schreiber, Trustee for
the benefit of USL incorporated by reference to the
Registrant's Form 10-K for the year ended December
31, 1994.
10.3 Form of Promissory Note from the Registrant to Secore
Financial Corporation ("Secore") relating to the refinancing
of each of Cooper's Pointe, Copper Mill, Four Winds, Hampton
Greens, Plantation Creek, Stoney Creek, and Wood Creek
incorporated by reference to the Partnership's Annual Report
on Form 10-K for the year ended December 31, 1995.
10.4 Form of Mortgage/Deed of Trust and Security Agreement from
the Registrant to Secore relating to the refinancing of each
of Cooper's Pointe, Copper Mill, Four Winds, Hampton Greens,
Plantation Creek, Stoney Creek and Wood Creek incorporated
by reference to the Partnership's Annual Report on Form 10-K
for the year ended December 31, 1995.
10.5 Multifamily Note dated June 14, 1996, by and between the
Partnership and Lehman Brothers Holdings, Inc. for Autumn
Run incorporated by reference to the Partnership's Annual
Report on Form 10-KSB for the year ended December 31, 1996.
10.6 Multifamily Note dated November 1, 1996, by and between the
Partnership and Lehman Brothers Holdings, Inc. for Autumn
Run incorporated by reference to the Partnership's Annual
Report on Form 10-KSB for the year ended December 31, 1996.
27 Financial Data Schedule.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Century Properties Growth Fund XXII 1997 Year-End 10-KSB and is qualified
in its entirety by reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000740156
<NAME> Century Properties Fund XXII
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 3,345
<SECURITIES> 0
<RECEIVABLES> 1,419
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 130,980
<DEPRECIATION> 52,090
<TOTAL-ASSETS> 86,809
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 72,603
0
0
<COMMON> 0
<OTHER-SE> 12,023
<TOTAL-LIABILITY-AND-EQUITY> 86,809
<SALES> 0
<TOTAL-REVENUES> 20,997
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 14,700
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,906
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 391
<EPS-PRIMARY> 4.16<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
