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 September 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___
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
CENTURY PROPERTIES GROWTH FUND XXII
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 2000
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and cash equivalents $ 2,644
Receivables and deposits 1,961
Restricted escrows 666
Other assets 1,397
Investment properties:
Land $ 14,396
Buildings and related personal property 123,261
137,657
Less accumulated depreciation (64,118) 73,539
$ 80,207
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 544
Tenant security deposit liabilities 409
Accrued property taxes 1,509
Other liabilities 723
Mortgage notes payable 71,883
Partners' (Deficit) Capital
General partner $ (8,077)
Limited partners (82,848 units issued and
outstanding) 13,216 5,139
$ 80,207
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
b)
CENTURY PROPERTIES GROWTH FUND XXII
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
Revenues: (Restated) (Restated)
<S> <C> <C> <C> <C>
Rental income $ 5,457 $ 5,397 $16,424 $16,063
Other income 432 299 1,045 825
Total revenues 5,889 5,696 17,469 16,888
Expenses:
Operating 1,996 1,956 5,648 5,549
General and administrative 96 91 270 302
Depreciation 1,192 1,077 3,558 3,266
Interest 1,456 1,469 4,369 4,421
Property taxes 540 427 1,562 1,370
Total expenses 5,280 5,020 15,407 14,908
Income before cumulative effect
of change in accounting
principle 609 676 2,062 1,980
Cumulative effect on prior
years of a change in accounting
principle -- -- -- 632
Net income $ 609 $ 676 $ 2,062 $ 2,612
Net income allocated to general
partner $ 72 $ 80 $ 243 $ 308
Net income allocated to limited
partners 537 596 1,819 2,304
Net income $ 609 $ 676 $ 2,062 $ 2,612
Per limited partnership unit:
Income before cumulative effect $ 6.48 $ 7.19 $ 21.95 $ 21.08
Cumulative effect on prior
years of a change in
accounting principal -- -- -- 6.73
Net income $ 6.48 $ 7.19 $ 21.95 $ 27.81
Distributions per limited
partnership unit $ 2.79 $ 19.00 $ 38.50 $ 72.23
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
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 nine months
ended September 30, 2000 -- 243 1,819 2,062
Distributions to partners -- (427) (3,190) (3,617)
Partners' (deficit) capital at
September 30, 2000 82,848 $(8,077) $13,216 $ 5,139
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
d)
CENTURY PROPERTIES GROWTH FUND XXII
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
2000 1999
Cash flows from operating activities: (Restated)
<S> <C> <C>
Net income $ 2,062 $ 2,612
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 3,558 3,266
Loss on sale of equipment 21 --
Amortization of loan costs 148 159
Cumulative effect of a change in accounting principle -- (632)
Change in accounts:
Receivables and deposits (1,248) 293
Other assets (57) (8)
Accounts payable (20) 15
Tenant security deposit liabilities 52 10
Accrued property taxes 190 11
Other liabilities (212) 34
Net cash provided by operating activities 4,494 5,760
Cash flows from investing activities:
Proceeds received from sale of equipment 227 --
Net withdrawals from (deposits to) restricted escrows 315 (258)
Property improvements and replacements (1,871) (1,933)
Net cash used in investing activities (1,329) (2,191)
Cash flows from financing activities:
Mortgage principal payments (557) (518)
Distributions to partners (3,617) (6,785)
Net cash used in financing activities (4,174) (7,303)
Net decrease in cash and cash equivalents (1,009) (3,734)
Cash and cash equivalents at beginning of period 3,653 6,684
Cash and cash equivalents at end of period $ 2,644 $ 2,950
Supplemental disclosure of cash flow information:
Cash paid for interest $ 4,222 $ 4,262
Supplemental disclosure of non-cash flow information:
Property improvements and replacements included in
accounts payable $ 248 $ --
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
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 nine month
periods ended September 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 nine months ended September 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 September 30, 1999 by approximately
$12,000 ($0.13 per limited partnership unit) and decreased income before the
cumulative effect of the accounting change for the nine months ended September
30, 1999 by approximately $4,000 ($0.04 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 nine month periods ended September 30, 2000 and 1999:
2000 1999
(in thousands)
Property management fees (included in operating expenses) $880 $848
Reimbursement for services of affiliates (included in
operating and general and administrative expenses
and investment properties) 131 132
Partnership management incentive allocation (included in
general partner distribution) 362 679
During the nine months ended September 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
$880,000 and $848,000 for the nine months ended September 30, 2000 and 1999,
respectively.
Affiliates of the Managing General Partner received reimbursement of accountable
administrative expenses amounting to approximately $131,000 and $132,000 for the
nine months ended September 30, 2000 and 1999, respectively. At September 30,
2000, approximately $14,000 was accrued and included in other liabilities.
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 $362,000 of Partnership management incentive
allocation was paid along with the distributions from operations made during the
nine months ended September 30, 2000. During the nine months ended September 30,
1999 approximately $679,000 of Partnership management incentive allocation was
paid along with the distributions from operations made during the nine months
ended September 30, 1999. The incentive allocation is accounted for as a
distribution to the general partner, in accordance with the terms of the
Partnership Agreement.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates currently own 43,395.50 limited
partnership units in the Partnership representing 52.38% 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, which would include without limitation, voting on certain amendments to
the Partnership Agreement and voting to remove the Managing General Partner. As
a result of its ownership of 52.38% of the outstanding units, AIMCO is in a
position to 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 nine months ended September 30, 2000, the Partnership distributed
approximately $3,617,000 (approximately $3,190,000 to the limited partners or
$38.50 per limited partnership unit) from operations. Subsequent to September
30, 2000, a distribution was declared and paid of approximately $1,332,000
(approximately $1,175,000 to limited partners or $14.18 per limited partnership
unit). During the nine months ended September 30, 1999, the Partnership
distributed approximately $6,785,000 (approximately $5,984,000 or $72.23 per
limited partnership unit) from operations.
Note E - Loss on Sale of Equipment
During the three months ended September 30, 2000, the Partnership sold its cable
equipment at Plantation Creek Apartments for approximately $227,000. At the time
of the sale, the cable equipment had a book value, net of accumulated
depreciation, of approximately $248,000 and the resulting loss on sale of
approximately $21,000 and has been included in operating expenses.
Note F - 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 nine months ended September 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 September 30, 2000 Residential Other Totals
Rental revenue $ 5,457 $ -- $ 5,457
Other income 430 2 432
Interest expense 1,456 -- 1,456
Depreciation 1,192 -- 1,192
General and administrative expense -- 96 96
Segment profit (loss) 703 (94) 609
Nine Months Ended September 30, 2000 Residential Other Totals
Rental revenue $16,424 $ -- $16,424
Other income 1,034 11 1,045
Interest expense 4,369 -- 4,369
Depreciation 3,558 -- 3,558
General and administrative expense -- 270 270
Segment profit (loss) 2,321 (259) 2,062
Total assets 79,915 292 80,207
Capital expenditures for investment
Properties 2,119 -- 2,119
Three Months Ended September 30, 1999 Residential Other Totals
(Restated)
Rental income $ 5,397 $ -- $ 5,397
Other income 296 3 299
Interest expense 1,469 -- 1,469
Depreciation 1,077 -- 1,077
General and administrative expense -- 91 91
Segment profit (loss) 764 (88) 676
Nine Months Ended September 30, 1999 Residential Other Totals
(Restated)
Rental income $16,063 $ -- $16,063
Other income 807 18 825
Interest expense 4,421 -- 4,421
Depreciation 3,266 -- 3,266
General and administrative expense -- 302 302
Cumulative effect of a change in
accounting principle 632 -- 632
Segment profit (loss) 2,896 (284) 2,612
Total assets 82,318 72 82,390
Capital expenditures for investment
properties 1,933 -- 1,933
Note G - 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 is considering applications for lead
counsel and has currently scheduled a hearing on the matter for November 20,
2000. 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.
<PAGE>
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 nine months ended September 30, 2000 and 1999:
Average Occupancy
Property 2000 1999
Cooper's Pointe Apartments 95% 96%
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% 96%
Atlanta, Georgia
Wood Creek Apartments 94% 94%
Mesa, Arizona
Promontory Point Apartments 96% 96%
Austin, Texas
Hampton Greens Apartments 96% 97%
Dallas, Texas
Stoney Creek Apartments 96% 97%
Dallas, Texas
Results of Operations
The Partnership's net income for the nine months ended September 30, 2000 was
approximately $2,062,000 as compared to approximately $2,612,000 (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 nine months ended September 30,
1999. Income before the cumulative effect of a change in accounting principle
was approximately $2,062,000 and $1,980,000 (as restated) for the nine months
ended September 30, 2000 and 1999, respectively. The Partnership's net income
for the three months ended September 30, 2000 was approximately $609,000
compared to approximately $676,000 (as restated) for the comparable period in
1999. The increase in income before the cumulative effect for the nine months
ended September 30, 2000 is primarily due to an increase in total revenues which
was partially offset by an increase in total expenses. The decrease in income
for the three months ended September 30, 2000 is primarily due to an increase in
total expenses which was partially offset by an increase in total revenue.
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 investment properties which more than offset the slight decrease
in occupancy at six of the Partnership's nine investment properties. The
increase in other income is primarily due to increases in auxiliary services at
the Partnership's investment properties.
The increase in total expenses for the three and nine months ended September 30,
2000, is primarily due to increases in depreciation, property tax, and operating
expenses partially offset by a decrease in interest expense and, for the
comparable nine month periods, general and administrative expense. 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 is due to an increase in assessed values at all
properties except Woodcreek and Cooper Mill Apartments. The increase in
operating expense is primarily due to increases in the general expenses of all
the Partnership's investment properties. Interest expense decreased due to
scheduled principal payment which reduced the carrying balance of the debt
encumbering the property. The decrease in general and administrative expense for
the nine months ended September 30, 2000 is primarily due to a decrease in legal
expense, as the result of a legal settlement during the first quarter of 1999.
Included in general and administrative expenses for the nine months ended
September 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 nine months ended September 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 September 30, 1999 by approximately
$12,000 ($0.13 per limited partnership unit) and decreased income before the
cumulative effect of the accounting change for the nine months ended September
30, 1999 by approximately $4,000 ($0.04 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 September 30, 2000, the Partnership had cash and cash equivalents of
approximately $2,644,000 as compared to approximately $2,950,000 at September
30, 1999. For the nine months ended September 30, 2000, cash and cash
equivalents decreased approximately $1,009,000 from the Partnership's year ended
December 31, 1999. The decrease in cash and cash equivalents is due to
approximately $4,174,000 of cash used in financing activities and approximately
$1,329,000 of cash used in investing activities, which was partially offset by
approximately $4,494,000 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 partially offset by net withdrawals from
restricted escrows maintained by the mortgage lenders and proceeds received on
the sale of equipment. The Partnership invests its working capital reserves in
money market accounts.
During the three months ended September 30, 2000, the Partnership sold its cable
equipment at Plantation Creek Apartments for approximately $227,000. At the time
of the sale, the cable equipment had a book value, net of accumulated
depreciation, of approximately $248,000 and the resulting loss on sale of
approximately $21,000 and has been included in operating expenses.
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 Apartments
Approximately $190,000 has been budgeted for capital improvements during 2000 at
Cooper's Pointe Apartments consisting primarily of interior decoration,
appliance replacements, exterior painting, and floor covering replacements. The
Partnership completed approximately $136,000 in capital expenditures at Cooper's
Pointe Apartments as of September 30, 2000, consisting primarily of floor
covering replacements, exterior painting, and appliance replacements. These
improvements were funded from operating cash flow and replacement reserves.
Copper Mill Apartments
Approximately $107,000 has been budgeted for capital improvements during 2000 at
Copper Mill Apartments consisting primarily of carpet replacement, appliance
replacements, and structural improvements. The Partnership completed
approximately $92,000 in capital expenditures at Copper Mill Apartments as of
September 30, 2000, consisting primarily of floor covering replacements,
building improvements, and appliance replacement. These improvements were funded
from replacement reserves and operating cash flows.
Four Winds Apartments
Approximately $224,000 has been budgeted for capital improvements during 2000 at
Four Winds Apartments consisting primarily of plumbing enhancements, floor
covering replacements, structural improvements, and air conditioning
replacements. The Partnership completed approximately $472,000 of budgeted and
unbudgeted capital expenditures at Four Winds Apartments as of September 30,
2000, consisting primarily of floor covering replacements, major landscaping,
structural and other improvements, HVAC condensing units, plumbing enhancements,
and appliance replacements. These improvements were funded from operating cash
flow, and replacement reserves.
Autumn Run Apartments
Approximately $256,000 has been budgeted for capital improvements during 2000 at
Autumn Run Apartments consisting primarily of appliance replacements, floor
covering replacements, and structural improvements. The Partnership completed
approximately $198,000 in capital expenditures at Autumn Run Apartments as of
September 30, 2000, consisting primarily of structural and plumbing
improvements, floor covering replacements, electrical upgrades, and appliance
replacements. These improvements were funded from operating cash flow and
replacement reserves.
Plantation Creek Apartments
Approximately $794,000 has been budgeted for capital improvements during 2000 at
Plantation Creek Apartments consisting primarily of structural improvements,
clubhouse renovations, plumbing enhancements, carpet replacement, and appliance
replacements. The Partnership completed approximately $442,000 in capital
expenditures at Plantation Creek Apartments as of September 30, 2000, consisting
primarily of structural improvements, carpet replacements, submetering, and
appliance replacements. These improvements were funded from operating cash flow.
Wood Creek Apartments
Approximately $202,000 has been budgeted for capital improvements during 2000 at
Wood Creek Apartments consisting primarily of appliance and floor covering
replacements, plumbing enhancements, air conditioning improvements, structural
improvements, and roof replacements. The Partnership completed approximately
$412,000 of budgeted and unbudgeted capital expenditures at Wood Creek
Apartments as of September 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.
Promontory Point Apartments
Approximately $225,000 has been budgeted for capital improvements during 2000 at
Promontory Point Apartments consisting primarily of structural improvements,
appliance replacements, floor covering replacements, and air conditioning
replacements. The Partnership completed approximately $224,000 of budgeted and
unbudgeted capital expenditures at Promontory Point Apartments as of September
30, 2000, consisting primarily of plumbing improvements, floor covering
replacements, appliance replacements, pool improvements/structural and other
improvements. These improvements were funded from replacement reserves and
operating cash flow.
Hampton Greens Apartments
Approximately $103,000 has been budgeted for capital improvements during 2000 at
Hampton Greens Apartments consisting primarily of floor covering replacements,
appliance replacements, interior decoration, air conditioning replacements, and
counter top replacements. The Partnership completed approximately $64,000 in
capital expenditures at Hampton Greens Apartments as of September 30, 2000,
consisting primarily of floor covering replacements, appliance replacements, and
perimeter fencing. These improvements were funded from operating cash flow.
Stoney Creek Apartments
Approximately $116,000 has been budgeted for capital improvements during 2000 at
Stoney Creek Apartments consisting primarily of floor covering replacements,
interior decoration, air conditioning unit replacements and counter top
replacements. The Partnership completed approximately $79,000 in capital
expenditures at Stoney Creek Apartments as of September 30, 2000, consisting
primarily of structural improvements, floor covering replacements and appliance
replacements. These improvements were funded from operating cash flow.
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 $71,883,000 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 nine months ended September 30, 2000, the Partnership distributed
approximately $3,617,000 (approximately $3,190,000 to the limited partners or
$38.50 per limited partnership unit) from operations. Subsequent to September
30, 2000 a distribution was declared and paid of approximately $1,332,000
(approximately $1,175,000 to limited partners or $14.18 per limited partnership
unit). During the nine months ended September 30, 1999, the Partnership
distributed approximately $6,785,000 (approximately $5,984,000 or $72.23 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.
<PAGE>
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 is considering applications for lead
counsel and has currently scheduled a hearing on the matter for November 20,
2000. 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 September 30, 2000.
<PAGE>
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:
