FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000
[ ] 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.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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, except unit data)
June 30, 2000
<TABLE>
<CAPTION>
Assets
<S> <C> <C>
Cash and cash equivalents $ 1,212
Receivables and deposits 1,826
Restricted escrows 1,105
Other assets 1,420
Investment properties:
Land $ 14,396
Buildings and related personal property 122,369
136,765
Less accumulated depreciation (62,926) 73,839
$ 79,402
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 331
Tenant security deposit liabilities 393
Accrued property taxes 1,128
Other liabilities 695
Mortgage notes payable 72,064
Partners' (Deficit) Capital
General partner $ (8,119)
Limited partners (82,848 units issued and
outstanding) 12,910 4,791
$ 79,402
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
b)
<TABLE>
<CAPTION>
CENTURY PROPERTIES GROWTH FUND XXII
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
Revenues: (restated) (restated)
<S> <C> <C> <C> <C>
Rental income $ 5,519 $ 5,344 $ 10,967 $ 10,666
Other income 359 254 613 526
Total revenues 5,878 5,598 11,580 11,192
Expenses:
Operating 1,852 1,728 3,652 3,593
General and administrative 85 119 174 211
Depreciation 1,195 1,111 2,366 2,189
Interest 1,459 1,474 2,913 2,952
Property taxes 483 470 1,022 943
Total expenses 5,074 4,902 10,127 9,888
Income before cumulative
effect of change in
accounting principle 804 696 1,453 1,304
Cumulative effect on prior
years of a change in
accounting principle -- -- -- 632
Net income $ 804 $ 696 $ 1,453 $ 1,936
Net income allocated
to general partner $ 94 $ 83 $ 171 $ 229
Net income allocated
to limited partners 710 613 1,282 1,707
$ 804 $ 696 $ 1,453 $ 1,936
Per limited partnership unit:
Income before cumulative
effect $ 8.57 $ 7.40 $ 15.47 $ 13.87
Cumulative effect of a change
in accounting principle -- -- -- 6.73
Net income $ 8.57 $ 7.40 $ 15.47 $ 20.60
Distribution per limited
partnership unit $ 24.01 $ -- $ 35.72 $ 53.23
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
c)
CENTURY PROPERTIES GROWTH FUND XXII
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(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, 1999 82,848 $(7,893) $14,587 $ 6,694
Net income for the six months
ended June 30, 2000 -- 171 1,282 1,453
Distributions to partners -- (397) (2,959) (3,356)
Partners' (deficit) capital at
June 30, 2000 82,848 $(8,119) $12,910 $ 4,791
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,
2000 1999
Cash flows from operating activities: (Restated)
<S> <C> <C>
Net income $ 1,453 $ 1,936
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 2,366 2,189
Amortization of loan costs 103 107
Cumulative effect of a change in accounting principle -- (632)
Change in accounts:
Receivables and deposits (1,113) 593
Other assets (54) 30
Accounts payable 15 (31)
Tenant security deposit liabilities 36 3
Accrued property taxes (191) (256)
Other liabilities (240) 87
Net cash provided by operating activities 2,375 4,026
Cash flows from investing activities:
Net deposits to restricted escrows (124) (99)
Property improvements and replacements (960) (1,029)
Net cash used in investing activities (1,084) (1,128)
Cash flows from financing activities:
Mortgage principal payments (376) (341)
Distributions to partners (3,356) (5,000)
Net cash used in financing activities (3,732) (5,341)
Net decrease in cash and cash equivalents (2,441) (2,443)
Cash and cash equivalents at beginning of period 3,653 6,684
Cash and cash equivalents at end of period $ 1,212 $ 4,241
Supplemental disclosure of cash flow information:
Cash paid for interest $ 2,810 $ 2,845
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
e)
CENTURY PROPERTIES GROWTH FUND XXII
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Century
Properties Growth Fund XXII (the "Partnership" or "Registrant") 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"), a California corporation, the
managing general partner of the Partnership's 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, 2000, are not necessarily indicative of the results that
may be expected for the fiscal year ending December 31, 2000. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Partnership's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1999.
Principles of Consolidation
The Partnership's consolidated 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., Coopers Point CPGF 22, L.P., Hampton Greens CPGF 22,
L.P., Century Stoney Greens, L.P. and Copper Mill CPGF 22, L.P., in which the
Partnership ultimately owns 100% interest in each of these partnerships. The
Partnership has the ability to control the major operating and financial
policies of these partnerships. All interpartnership transactions have been
eliminated.
Change in Accounting Principle
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping. The Partnership
believes that this accounting principle change is preferable because it provides
a better matching of expenses with the related benefit of the expenditures and
it is consistent with industry practice and the policies of the Managing General
Partner. This accounting change was first reported during the fourth quarter of
1999. Accordingly, net income for the three and six months ended June 30, 1999
has been restated to reflect the accounting change as if it were reported then.
This adjustment increased income before the cumulative effect of the accounting
change for the three months ended June 30, 1999 by approximately $33,000 ($0.35
per limited partnership unit) and decreased income before the cumulative effect
of the accounting change for the six months ended June 30, 1999 by approximately
$16,000 ($0.17 per limited partnership unit). The cumulative effect adjustment
of approximately $632,000 is the result of applying the aforementioned change in
accounting principle retroactively and is included in income for 1999. The
accounting principle change will not have an effect on cash flow, funds
available for distribution or fees payable to the Managing General Partner and
affiliates.
Note B - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment Investment and Management Company ("AIMCO"), a publicly
traded real estate investment trust, with AIMCO being the surviving corporation
(the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in
the Managing General Partner. The Managing General Partner does not believe that
this transaction has had or will have a material effect on the affairs and
operations of the Partnership.
Note C - 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 certain 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 the Managing General Partner were
incurred during the six month periods ended June 30, 2000 and 1999:
2000 1999
(in thousands)
Property management fees (included in operating expenses) $585 $561
Reimbursement for services of affiliates (included in
operating and general and administrative expenses
and investment properties) 86 82
Partnership management incentive allocation (included in
general partner distribution) 336 500
During the six months ended June 30, 2000 and 1999, affiliates of the Managing
General Partner were entitled to receive 5% of gross receipts from all of the
Partnership's properties as compensation for providing property management
services. The Partnership paid to such affiliates approximately $585,000 and
$561,000 for the six months ended June 30, 2000 and 1999, respectively.
Affiliates of the Managing General Partner received reimbursement of accountable
administrative expenses amounting to approximately $86,000 and $82,000 for the
six months ended June 30, 2000 and 1999, respectively.
Pursuant to the Partnership Agreement, for managing the affairs of the
Partnership, the Managing General Partner is entitled to receive a Partnership
management fee equal to 10% of the Partnership's adjusted cash from operations
as distributed. Approximately $336,000 of Partnership management incentive
allocation was paid along with the distributions from operations made during the
six months ended June 30, 2000. During the six months ended June 30, 1999,
approximately $500,000 of Partnership management incentive allocation was paid
along with the distributions from operations made during the six months ended
June 30, 1999. The incentive allocation is accounted for as a distribution to
the general partner, in accordance with the terms of the Partnership Agreement.
AIMCO and its affiliates currently own 40,757.50 limited partnership units in
the Partnership representing 49.196% of the outstanding units. A number of these
units were acquired pursuant to tender offers made by AIMCO or its affiliates.
It is possible that AIMCO or its affiliates will make one or more additional
offers to acquire additional limited partnership interests in the Partnership
for cash or in exchange for units in the operating partnership of AIMCO. Under
the Partnership Agreement, unitholders holding a majority of the Units are
entitled to take action with respect to a variety of matters. As a result of its
ownership of 49.196% of the outstanding units, AIMCO is in a position to
significantly influence all voting decisions with respect to the Registrant.
When voting on matters, AIMCO would in all likelihood vote the Units it acquired
in a manner favorable to the interest of the Managing General Partner because of
their affiliation with the Managing General Partner. However, with respect to
17,023.5 Units, such affiliates are required to vote such Units: (i) against any
increase in compensation payable to the Managing General Partner or to
affiliates; and (ii) on all other matters submitted by it or its affiliates, in
proportion to the votes cast by non-tendering unitholders. Except for the
foregoing, no other limitations are imposed on such affiliates' ability to
influence voting decisions with respect to the Partnership.
Note D - Distribution
During the six months ended June 30, 2000, the Partnership distributed
approximately $3,356,000 (approximately $2,959,000 to the limited partners or
$35.72 per limited partnership unit) from operations. Subsequent to the six
months ended June 30, 2000 a distribution was declared and paid in August 2000.
Approximately $262,000 was paid to partners (approximately $231,000 to limited
partners or $2.79 per limited partnership unit). During the six months ended
June 30, 1999, the Partnership distributed approximately $5,000,000
(approximately $4,410,000 or $53.23 per limited partnership unit) from
operations.
Note E - Segment Reporting
Description of the types of products and services from which the reportable
segment derives its revenues:
The Partnership has one reportable segment: residential properties. The
Partnership's residential property segment consists of nine apartment complexes
in the Southeast, Midwest and Southwest United States. The Partnership rents
apartment units to tenants for terms that are typically twelve months or less.
Measurement of segment profit or loss:
The Partnership evaluates performance based on segment profit (loss) before
depreciation. The accounting policies of the reportable segment are the same as
those of the Partnership as described in the Partnership's Annual Report on Form
10-KSB for the year ended December 31, 1999.
Factors management used to identify the enterprise's reportable segment:
The Partnership's reportable segment consists of investment properties that
offer similar products and services. Although each of the investment properties
are managed separately, they have been aggregated into one segment as they
provide services with similar types of products and customers.
Segment information for the three and six months ended June 30, 2000 and 1999,
is shown in the tables below (in thousands). The "Other" column includes
partnership administration related items and income and expense not allocated to
the reportable segments.
Three Months Ended June 30, 2000 Residential Other Totals
Rental revenue $ 5,519 $ -- $ 5,519
Other income 355 4 359
Interest expense 1,459 -- 1,459
Depreciation 1,195 -- 1,195
General and administrative expense -- 85 85
Segment profit (loss) 885 (81) 804
Six Months Ended June 30, 2000 Residential Other Totals
Rental revenue $10,967 $ -- $10,967
Other income 604 9 613
Interest expense 2,913 -- 2,913
Depreciation 2,366 -- 2,366
General and administrative expense -- 174 174
Segment profit (loss) 1,618 (165) 1,453
Total assets 79,098 304 79,402
Capital expenditures for investment
properties 960 -- 960
Three Months Ended June 30, 1999 Residential Other Totals
(Restated)
Rental income $ 5,344 $ -- $ 5,344
Other income 249 5 254
Interest expense 1,474 -- 1,474
Depreciation 1,111 -- 1,111
General and administrative expense -- 119 119
Segment profit (loss) 810 (114) 696
Six Months Ended June 30, 1999 Residential Other Totals
(Restated)
Rental income $10,666 $ -- $10,666
Other income 511 15 526
Interest expense 2,952 -- 2,952
Depreciation 2,189 -- 2,189
General and administrative expense -- 211 211
Cumulative effect of a change in
accounting principle 632 -- 632
Segment profit (loss) 2,132 (196) 1,936
Total assets 82,878 531 83,409
Capital expenditures for investment
properties 1,029 -- 1,029
Note F - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, its Managing General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition of interests in certain general partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities which were,
at one time, affiliates of Insignia; past tender offers by the Insignia
affiliates to acquire limited partnership units; the management of partnerships
by the Insignia affiliates; and the Insignia Merger. The plaintiffs seek
monetary damages and equitable relief, including judicial dissolution of the
Partnership. On June 25, 1998, the Managing General Partner filed a motion
seeking dismissal of the action. In lieu of responding to the motion, the
plaintiffs have filed an amended complaint. The Managing General Partner filed
demurrers to the amended complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to final court approval, on behalf of the Partnership
and all limited partners who owned units as of November 3, 1999. Preliminary
approval of the settlement was obtained on November 3, 1999 from the Court, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Managing General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case. The Court will entertain applications for lead
counsel which must be filed by August 4, 2000. The Court has scheduled a hearing
on August 21, 2000 to address the issue of appointing lead counsel. The Managing
General Partner does not anticipate that costs associated with this case will be
material to the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB and the other filings with the
Securities and Exchange Commission made by the Partnership from time to time.
The discussion of the Partnership's business and results of operations,
including forward-looking statements pertaining to such matters, does not take
into account the effects of any changes to the Registrant's business and results
of operations. Accordingly, actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.
The Partnership's investment properties consist of nine apartment complexes. The
following table sets forth the average occupancy for each of the properties for
the six months ended June 30, 2000 and 1999:
Average Occupancy
Property 2000 1999
Cooper's Pointe Apartments 95% 97%
North Charleston, South Carolina
Copper Mill Apartments 97% 96%
Richmond, Virginia
Four Winds Apartments 95% 96%
Overland Park, Kansas
Autumn Run Apartments 94% 95%
Naperville, Illinois
Plantation Creek Apartments 94% 95%
Atlanta, Georgia
Wood Creek Apartments 93% 94%
Mesa, Arizona
Promontory Point Apartments 96% 96%
Austin, Texas
Hampton Greens Apartments 96% 97%
Dallas, Texas
Stoney Creek Apartments 97% 97%
Dallas, Texas
Results of Operations
The Partnership's net income for the six months ended June 30, 2000 was
approximately $1,453,000 as compared to approximately $1,936,000 (as restated)
for the comparable period in 1999. The decrease in net income is primarily
attributable to the cumulative effect of a change in accounting principle of
approximately $632,000 recognized during the six months ended June 30, 1999.
Income before the cumulative effect of a change in accounting principle was
approximately $1,453,000 and $1,304,000 for the six months ended June 30, 2000
and 1999, respectively. The Partnership's net income for the three months ended
June 30, 2000 was approximately $804,000 compared to approximately $696,000 (as
restated) for the comparable period in 1999. The increase in income for the
three and six month periods ended June 30, 2000 is primarily due to an increase
in total revenues which was partially offset by an increase in total expenses.
The increase in total expenses for the three and six months ended June 30, 2000,
is primarily due to increases in operating, depreciation and property taxes
expenses partially offset by a decrease in general and administrative expense.
The increase in operating expenses is primarily due to an increase in insurance
premiums during the three months ended June 30, 2000, as well as general
increases in property and maintenance expenses at all of the Partnership's
investment properties. The increase in depreciation expense is due to new
depreciable assets being placed into service at the Partnership's properties
during the past twelve months. The increase in property tax expense is due to an
increase in assessed values at Plantation Creek, Stoney Creek, and Promontory
Point. The decrease in general and administrative expense is primarily due to a
decrease in legal expense, as the result of a legal settlement during the first
quarter of 1999, and a decrease in professional expenses related to the
administration of the Partnership. The increase in operating expense is due to
an increase in insurance rate premiums. The increase in total revenues is due to
an increase in rental and other income. Rental income increased due to increased
rental rates at all of the Partnership's properties which more than offset the
slight decrease in occupancy at six of the Partnership's nine investment
properties and an increase in concessions offered at five investment properties.
The increase in other income is primarily due to increases in laundry income at
Plantation Creek, cable television income at Autumn Run and Hampton Greens and
vending income and damage fees at Wood Creek.
Included in general and administrative expenses for the six months ended June
30, 2000 and 1999, are reimbursements to the Managing General Partner allowed
under the Partnership Agreement associated with its management of the
Partnership. In addition, costs associated with the quarterly and annual
communications with investors and regulatory agencies and the annual audit
required by the Partnership Agreement are also included.
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping. The Partnership
believes that this accounting principle change is preferable because it provides
a better matching of expenses with the related benefit of the expenditures and
it is consistent with industry practice and the policies of the Managing General
Partner. This accounting change was first reported during the fourth quarter of
1999. Accordingly, net income for the three and six months ended June 30, 1999
has been restated to reflect the accounting change as if it were reported then.
This adjustment increased income before the cumulative effect of the accounting
change for the three months ended June 30, 1999 by approximately $33,000 ($0.35
per limited partnership unit) and decreased income before the cumulative effect
of the accounting change for the six months ended June 30, 1999 by approximately
$16,000 ($0.17 per limited partnership unit). The cumulative effect adjustment
of approximately $632,000 is the result of applying the aforementioned change in
accounting principle retroactively and is included in income for 1999. The
accounting principle change will not have an effect on cash flow, funds
available for distribution or fees payable to the Managing General Partner and
affiliates.
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 June 30, 2000, the Partnership had cash and cash equivalents of approximately
$1,212,000 as compared to approximately $4,241,000 at June 30, 1999. For the six
months ended June 30, 2000, cash and cash equivalents decreased approximately
$2,441,000 from the Partnership's year ended December 31, 1999. The decrease in
cash and cash equivalents is due to approximately $3,732,000 of cash used in
financing activities and approximately $1,084,000 of cash used in investing
activities, which was partially offset by approximately $2,375,000 of cash
provided by operating activities. Cash used in financing activities consists of
principal payments made on the mortgages encumbering the Partnership's
investment properties and cash distributions made to the partners. Cash used in
investing activities consists of property improvements and replacements and net
deposits to restricted escrows maintained by the mortgage lenders. The
Partnership invests its working capital reserves in money market accounts.
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 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 and to
comply with Federal, state, and local legal and regulatory requirements. Capital
improvements planned for each of the Partnership's properties are detailed
below.
Cooper's Pointe
Approximately $190,000 has been budgeted for capital improvements during 2000 at
Cooper's Pointe consisting primarily of interior decoration, appliance
replacements, exterior painting, and floor covering replacements. The
Partnership completed approximately $81,000 in capital expenditures at Cooper's
Pointe Apartments as of June 30, 2000, consisting primarily of floor covering
replacements, exterior painting, and appliance replacements. These improvements
were funded from operating cash flow and replacement reserves. Additional
improvements may be considered and will depend on the physical condition of the
property as well as replacement reserves and anticipated cash flow generated by
the property.
Copper Mill
Approximately $107,000 has been budgeted for capital improvements during 2000 at
Copper Mill consisting primarily of carpet replacement, appliance replacements,
and structural improvements. The Partnership completed approximately $44,000 in
capital expenditures at Copper Mill Apartments as of June 30, 2000, consisting
primarily of floor covering replacements, building improvements, and appliance
replacement. These improvements were funded from replacement reserves and
operating cash flows. Additional improvements may be considered and will depend
on the physical condition of the property as well as replacement reserves and
anticipated cash flow generated by the property.
Four Winds
Approximately $224,000 has been budgeted for capital improvements during 2000 at
Four Winds consisting primarily of plumbing enhancements, floor covering
replacements, structural improvements, and air conditioning replacements. The
Partnership completed approximately $133,000 in capital expenditures at Four
Winds Apartments as of June 30, 2000, consisting primarily of floor covering
replacements, major landscaping, structural and other improvements, HVAC
condensing units, and appliance replacements. These improvements were funded
from operating cash flow, and replacement reserves. Additional improvements may
be considered and will depend on the physical condition of the property as well
as replacement reserves and anticipated cash flow generated by the property.
Autumn Run
Approximately $256,000 has been budgeted for capital improvements during 2000 at
Autumn Run consisting primarily of appliance replacements, floor covering
replacements, and structural improvements. The Partnership completed
approximately $138,000 in capital expenditures at Autumn Run Apartments as of
June 30, 2000, consisting primarily of plumbing improvements, floor covering
replacements, electrical upgrades, and appliance replacements. These
improvements were funded from operating cash flow and replacement reserves.
Additional improvements may be considered and will depend on the physical
condition of the property as well as replacement reserves and anticipated cash
flow generated by the property.
Plantation Creek
Approximately $794,000 has been budgeted for capital improvements during 2000 at
Plantation Creek consisting primarily of structural improvements, clubhouse
renovations, plumbing enhancements, carpet replacement, and appliance
replacements. The Partnership completed approximately $49,000 in capital
expenditures at Plantation Creek Apartments as of June 30, 2000, consisting
primarily of structural improvements, carpet replacements, submetering, and
appliance replacements. These improvements were funded from operating cash flow.
Additional improvements may be considered and will depend on the physical
condition of the property as well as replacement reserves and anticipated cash
flow generated by the property.
Wood Creek
The Partnership is currently modifying the 2000 capital improvement budget for
Wood Creek Apartments. The budget is anticipated to include amounts to cover the
following capital improvement needs at the property: floor covering
replacements, plumbing enhancements, air conditioning improvements, structural
improvements, and roof replacements. The Partnership completed approximately
$291,000 in capital expenditures at Wood Creek Apartments as of June 30, 2000,
consisting primarily of structural improvements, floor covering replacements,
interior and exterior building improvements, and plumbing fixtures. These
improvements were funded from operating cash flow. Additional improvements may
be considered and will depend on the physical condition of the property as well
as replacement reserves and anticipated cash flow generated by the property.
Promontory Point
Approximately $225,000 has been budgeted for capital improvements during 2000 at
Promontory Point consisting primarily of structural improvements, appliance
replacements, floor covering replacements, and air conditioning replacements.
The Partnership completed approximately $134,000 in capital expenditures at
Promontory Point Apartments as of June 30, 2000, consisting primarily of
structural improvements, floor covering replacements, appliance replacements,
parking lot improvements, pool improvements and structural and other
improvements. These improvements were funded from replacement reserves and
operating cash flow. Additional improvements may be considered and will depend
on the physical condition of the property as well as replacement reserves and
anticipated cash flow generated by the property.
Hampton Greens
Approximately $103,000 has been budgeted for capital improvements during 2000 at
Hampton Greens consisting primarily of floor covering replacements, appliance
replacements, interior decoration, air conditioning replacements, and counter
top replacements. The Partnership completed approximately $37,000 in capital
expenditures at Hampton Greens Apartments as of June 30, 2000, consisting
primarily of floor covering replacements, appliance replacements, and perimeter
fencing. These improvements were funded from operating cash flow. Additional
improvements may be considered and will depend on the physical condition of the
property as well as replacement reserves and anticipated cash flow generated by
the property.
Stoney Creek
Approximately $116,000 has been budgeted for capital improvements during 2000 at
Stoney Creek consisting primarily of floor covering replacements, interior
decoration, air conditioning unit replacements, and counter top replacements.
The Partnership completed approximately $53,000 in capital expenditures at
Stoney Creek Apartments as of June 30, 2000, consisting primarily of structural
improvements, floor covering replacements and appliance replacements. These
improvements were funded from operating cash flow. Additional improvements may
be considered and will depend on the physical condition of the property as well
as replacement reserves and anticipated cash flow generated by the property.
The additional capital expenditures will be incurred only if cash is available
from operations or from Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Partnership's distributable cash flow,
if any, may be adversely affected at least in the short term.
The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Partnership. The mortgage
indebtedness of approximately $72,064,000 is being amortized over varying
periods with balloon payments due over periods ranging from November 2003 to May
2008. The Managing General Partner will attempt to refinance such remaining
indebtedness and/or sell the properties prior to such maturity dates. If the
properties cannot be refinanced or sold for a sufficient amount, the Partnership
will risk losing such properties through foreclosure.
During the six months ended June 30, 2000, the Partnership distributed
approximately $3,356,000 (approximately $2,959,000 to the limited partners or
$35.72 per limited partnership unit) from operations. Subsequent to the six
months ended June 30, 2000, a distribution was declared and paid in August 2000.
Approximately $262,000 was paid to partners (approximately $231,000 to limited
partners or $2.79 per limited partnership unit). During the six months ended
June 30, 1999, the Partnership distributed approximately $5,000,000
(approximately $4,410,000 or $53.23 per limited partnership unit) from
operations. The Partnership's distribution policy is reviewed on a quarterly
basis. Future cash distributions will depend on the levels of cash generated
from operations, the availability of cash reserves, and the timing of debt
maturities, property sales, and/or refinancings. There can be no assurance,
however, that the Partnership will generate sufficient funds from operations
after required capital improvements to permit additional distributions to its
partners during the remainder of 2000 or subsequent periods.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, its Managing General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition of interests in certain general partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities which were,
at one time, affiliates of Insignia; past tender offers by the Insignia
affiliates to acquire limited partnership units; the management of partnerships
by the Insignia affiliates; and the Insignia Merger. The plaintiffs seek
monetary damages and equitable relief, including judicial dissolution of the
Partnership. On June 25, 1998, the Managing General Partner filed a motion
seeking dismissal of the action. In lieu of responding to the motion, the
plaintiffs have filed an amended complaint. The Managing General Partner filed
demurrers to the amended complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to final court approval, on behalf of the Partnership
and all limited partners who owned units as of November 3, 1999. Preliminary
approval of the settlement was obtained on November 3, 1999 from the Court, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Managing General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case. The Court will entertain applications for lead
counsel which must be filed by August 4, 2000. The Court has scheduled a hearing
on August 21, 2000 to address the issue of appointing lead counsel. The Managing
General Partner does not anticipate that costs associated with this case will be
material to the Partnership's overall operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
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, 2000.
SIGNATURES
In accordance with the requirements 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/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
and Controller
Date: August 11, 2000
