FORM 10-K - ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
(As last amended in Rel No. 34-31905, eff. 10/26/93.)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO 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 PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period from___________to____________
Commission file number 0-15710
CENTURY PENSION INCOME FUND XXIV
California 94-2984976
(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)
(864) 239-1000
Issuer's telephone number
Securities registered under Section 12(b) of the Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Individual Investor Units and Pension Investor Notes
(Title of each class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K contained herein, and will not 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-K or any amendment to this
Form 10-K [X]
State the aggregate market value of the voting stock held by non-affiliates of
the registrant. The aggregate market value shall be computed by reference to the
price at which the stock was sold, or the average bid and asked prices of such
stock, as of a specified date within 60 days prior to the date of filing.
Market value information for Registrant's Partnership Interests is not
available.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
PART I
ITEM 1. BUSINESS
Century Pension Income Fund XXIV (the "Partnership" or "Registrant") was
organized in June 1984 as a California limited partnership under the Uniform
Limited Partnership Act of the California Corporations Code. Fox Partners VI, a
California general partnership, is the General Partner of the Registrant. Fox
Capital Management Corporation (the "Managing General Partner") and Fox Realty
Investors ("FRI") are the General Partners of Fox Partners VI. The managing
general partner of FRI is NPI Equity Investments II, Inc. ("NPI Equity II").
The Registrant's Registration Statement, filed pursuant to the Securities Act of
1933 (No. 33-1261), was declared effective by the Securities and Exchange
Commission on June 9, 1986. The Registrant marketed its securities pursuant to
its Prospectus dated June 9, 1986, which was 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 Registrant is to acquire, manage and ultimately
sell income-producing real properties. The Registrant is a "closed" limited
partnership real estate syndicate of the unspecified asset type.
Beginning in July 1986, the Registrant offered $50,000,000 in Limited
Partnership Assignee Units. The offering was completed on March 31, 1988, with
Limited Partnership Assignee Units having an initial price of $36,670,500 being
sold. The net proceeds of this offering were used to acquire three properties
and interests in four other properties through two joint ventures with an
affiliated partnership. The Registrant's property portfolio is geographically
diversified with properties acquired in five states. See "Item 2, Properties"
below for a description of the Registrant's properties.
The Registrant is involved in only one industry segment as described above. The
Registrant does not engage in any foreign operations or derive revenues from
foreign services.
Both the income and expenses of operating the properties which are owned by the
Registrant are subject to factors beyond the Registrant's control, such as
oversupply of similar rental facilities as a result of overbuilding, increases
in unemployment or population shifts, changes in zoning laws or changes in
patterns of needs of the users. Expenses, such as local real estate taxes and
management expenses, are subject to change and cannot always be reflected in
rental increases due to market conditions or existing leases. The profitability
and marketability of developed real property may be adversely affected by
changes in general and local economic conditions and in prevailing interest
rates, and favorable changes in such factors will not necessarily enhance the
profitability or marketability of such property. Even under the most favorable
market conditions there is no guarantee that any property owned by the
Registrant can be sold by it or, if sold, that such sale can be made upon
favorable terms.
It is possible that legislation on the state or local level may be enacted in
states where the Registrant's properties are located which may include some form
of rent control. 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 Managing General Partner is unable to predict
the extent, if any, to which such existing or new legislation or regulations
might adversely affect the properties owned by the Registrant.
The Registrant 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 Registrant received
notice that it is a potentially responsible party with respect to an
environmental clean up site.
A further description of the Partnership's business is included in "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations" included in this Form 10-K.
The Registrant has no employees. Management and administrative services are
performed by the Managing General Partner, Insignia Commercial Group, L.P., an
affiliate of Insignia Financial Group, Inc. ("Insignia"), the ultimate parent
company of the Managing General Partner, and a third party management company.
Pursuant to a management agreement between them, Insignia Commercial Group,
L.P., and a third party management company provide property management services
to the Registrant. See "Item 8. Financial Statements and Supplementary Data -
Note B" for additional information.
The real estate business in which the Partnership is engaged is highly
competitive, and the Partnership is not a significant factor in this industry.
The Registrant's properties are subject to competition from similar properties
in the vicinity in which the properties are located. In addition, various
limited partnerships have been formed by the General Partners and/or their
affiliates to engage in business which may be competitive with the Registrant.
In January 1995, the Registrant's Coral Palm Plaza Joint Venture in which the
Registrant has a one-third interest received an $800,000 payment from a former
significant tenant that had occupied 27,000 square feet at Coral Palm Plaza.
During June 1995, management re-leased 20,000 square feet of the unoccupied
space, on similar terms, and recognized a portion of the lease buy-out in the
amount of $517,000. During September 1995, management re-leased the remaining
7,000 square feet of the unoccupied space, on similar terms, and recognized the
remaining portion of the lease buy-out fee as rental income in 1995, which
represents the amortization of the fee prior to the new tenants' lease
commencement dates.
In addition, in October 1995, the Coral Palm Plaza Joint Venture accepted a
lease buy-out from a tenant that occupied 11,300 square feet of space for
$300,000. Management is currently attempting to re-lease the vacated space.
From March 1988 through December 1993, the Registrant's affairs were managed by
Metric Management, Inc. ("MMI") or a predecessor. On December 16, 1993, the
service agreement with MMI was modified and, as a result thereof, the Managing
General Partner began directly providing real estate advisory and asset
management services to the Registrant. As advisor, such affiliate provides all
partnership accounting and administrative services, investment management, and
supervisory services over property management and leasing.
On December 6, 1993, the shareholders of the Managing General Partner entered
into a Voting Trust Agreement with NPI Equity II pursuant to which NPI Equity II
was granted the right to vote 100% of the outstanding stock of the Managing
General Partner. In addition, NPI Equity II became the managing partner of FRI.
As a result, NPI Equity II indirectly became responsible for the operation and
management of the business and affairs of the Registrant and the other
investment partnerships originally sponsored by the Managing General Partner
and/or FRI. The individuals who had served previously as partners of FRI and as
officers and directors of the Managing General Partner contributed their general
partnership interests in FRI to a newly formed limited partnership, Portfolio
Realty Associates, L.P. ("PRA"), in exchange for limited partnership interests
in PRA. The shareholders of the Managing General Partner and the prior partners
of FRI, in their capacity as limited partners of PRA, continue to hold,
indirectly, certain economic interests in the Registrant and such other
investment limited partnerships, but have ceased to be responsible for the
operation and management of the Registrant and such other partnerships.
On January 19, 1996, IFGP Corporation, an affiliate of Insignia, acquired all of
the issued and outstanding shares of capital stock of National Property
Investors, Inc. ("NPI"). At the time, NPI was the sole shareholder of NPI
Equity II. In addition, on June 1996, an affiliate of Insignia purchased all of
the issued and outstanding shares of capital stock of the Managing General
Partner. As a result of the foregoing transactions, IFGP Corporation caused new
officers and directors of NPI Equity II and the Managing General Partner to be
elected. See "Item 10, Directors and Executive Officers of the Registrant."
On March 17, 1998, Insignia entered into an agreement to merge its national
residential property management operations, and its controlling interest in
Insignia Properties Trust, with Apartment Investment and Management Company
("AIMCO"), a publicly traded real estate investment trust. The closing, which
is anticipated to happen in the third quarter of 1998, is subject to customary
conditions, including government approvals and the approval of Insignia's
shareholders. If the closing occurs, AIMCO will then control the General
Partner of the Partnership.
ITEM 2. PROPERTIES
The following table sets forth the Partnership's investments in properties:
Date of
Property Purchase Type Size
Butler Square Center 01/88 Shopping 80,000
Mauldin, South Carolina Center sq.ft.
Kenilworth Commons Shopping Center 08/88 Shopping 38,000
Charlotte, North Carolina Center sq.ft.
Plantation Pointe Shopping Center 04/89 Shopping 63,000
Smyrna, Georgia Center sq.ft.
The Partnership owns 33 1/3% of a joint venture, Coral Palm Plaza Joint Venture,
with Century Pension Income Fund XXIII ("CPF XXIII"), an affiliated partnership.
The joint venture owns one property, Coral Palm Plaza, located in Coral Springs,
Florida. For additional information relating to Coral Palm Plaza Joint Venture
and its property see "Exhibit 99.1" attached hereto.
The Partnership owns 32% of a joint venture, Minneapolis Business Parks Joint
Venture, with CPF XXIII. The joint venture owns three properties, Alpha
Business Center, Plymouth Service Center and Westpoint Business Center, all of
which are located in Minnesota. For additional information relating to
Minneapolis Business Park's Joint Venture and its properties see "Exhibit 99.2"
attached hereto.
SCHEDULE OF PROPERTIES:
(dollar amounts in thousands)
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
Butler Square $ 6,709 $ 1,916 3-39 yrs S/L $ 5,370
Kenilworth Commons 4,569 901 5-39 yrs S/L 3,925
Plantation Pointe 6,505 1,369 4-39 yrs S/L 5,521
$17,783 $ 4,186 $14,816
See "Note A" of the financial statements included in "Item 8" for a further
description of the Partnership's depreciation policy.
SCHEDULE OF RENTAL RATES AND OCCUPANCY:
Average Annual Rental Rates Average Annual Occupancy
Property 1997 1996 1997 1996
Butler Square $ 8.31 sq.ft. $ 8.28 sq.ft. 100% 99%
Kenilworth Commons 12.70 sq.ft. 12.28 sq.ft. 100% 100%
Plantation Pointe 9.09 sq.ft. 9.21 sq.ft. 97% 98%
As noted under "Item 1. Business," the real estate industry is highly
competitive. All of the properties of the Partnership are subject to
competition from other commercial buildings in the area. The Managing General
Partner believes that all of the properties are adequately insured.
The following is a schedule of the lease expirations at the Registrant's
properties for the years beginning 1998 through the maturities of current
leases:
Number of % of Gross
Expirations Square Feet Annual Rent Annual Rent
Butler Square
1998 3 5,075 $ 55,000 8.30%
1999 8 27,656 232,000 34.77%
2000 2 7,400 53,000 8.02%
2002 1 1,500 23,000 3.49%
2007 1 38,654 303,000 45.42%
Kenilworth Commons
1998 2 2,259 50,000 10.20%
1999 2 2,284 45,000 9.38%
2000 5 5,307 107,000 22.16%
2001 2 2,267 48,000 9.99%
2008 1 26,000 234,000 48.27%
Plantation Pointe
1998 3 5,825 94,000 17.17%
2000 2 2,930 44,000 7.97%
2001 1 4,435 51,000 9.27%
2002 1 3,700 52,000 9.44%
2008 1 44,000 308,000 56.14%
SCHEDULE OF REAL ESTATE TAXES AND RATES:
(dollar amounts in thousands)
1997 1997
Billing Rate
Butler Square $ 67 1.51%
Kenilworth Commons 42 1.26%
Plantation Pointe 52 4.08%
SCHEDULE OF SIGNIFICANT TENANTS (1)
AT DECEMBER 31, 1997:
Square Nature of Expiration Base Rent
Footage Business of Lease Per Year
Butler Square Center
Tenant 1 38,654 Grocer 2007 $302,660
Tenant 2 8,470 Retail 1999 $ 59,290
Kenilworth Commons Shopping Center
Tenant 1 26,000 Grocer 2008 $234,000
Plantation Pointe Shopping Center
Tenant 1 44,000 Grocer 2008 $308,000
(1) Tenant occupying 10% or more of total rentable square footage of the
property.
ITEM 3. LEGAL PROCEEDINGS
The Registrant is unaware of any pending or outstanding litigation that is not
of a routine nature. The Managing General Partner of the Registrant believes
that all such pending or outstanding routine litigation will be resolved without
a material adverse effect upon the business, financial condition, or operations
of the Partnership.
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
During the year ended December 31, 1997, no matter was submitted to a vote of
unit holders through the solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S EQUITY AND RELATED SECURITY
HOLDER MATTERS
The Partnership, a publicly-held limited partnership, sold 73,341 Limited
Partnership Assignee Units aggregating $36,670,500. The Partnership currently
has 73,341 units outstanding held by 3,907 partners of record. There is no
intention to sell additional Limited Partnership Assignee Units nor is there an
established market for these units.
During each of the years ended December 31, 1997, 1996 and 1995, the Partnership
made quarterly distributions totaling approximately $1,111,000 to the partners
in each year. The limited partners received approximately $1,100,000 ($15.00 per
limited partnership unit) and the general partner received approximately
$11,000. The amounts represent a distribution of cash from operations. The
Partnership made a distribution totaling approximately $278,000 to the partners
during February 1998.
ITEM 6. SELECTED FINANCIAL DATA
The following represents selected financial data for the Registrant, for the
years ended December 31, 1997, 1996, 1995, 1994, and 1993. The data should be
read in conjunction with the financial statements included elsewhere herein.
This data is not covered by the independent auditors' report.
For the Years Ended December 31,
1997 1996 1995 1994 1993
(in thousands, except per unit data)
Total revenues $ 2,150 $ 2,250 $ 2,012 $ 1,767 $ 1,790
Net income (loss) $ 176 $ 986 $ 1,017 $ (871) $ 567
Net income (loss) per
limited partnership
assignee unit (1) $ 2.25 $ 13.30 $ 13.44 $(11.75) $ 7.54
Total Assets $23,404 $24,333 $24,424 $24,566 $26,551
Cash distribution per limited
partnership assignee units $ 15.00 $ 15.00 $ 15.00 $ 15.00 $ 18.75
(1) $500 original contribution per unit, based on weighted average units
outstanding during the period after giving effect to the allocation of net
income (loss) to the General Partner.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This item should be read in conjunction with the consolidated financial
statements and other items contained elsewhere in this report.
Results of Operations
1997 Compared to 1996
The Partnership's net income for the year ended December 31, 1997 was
approximately $176,000 versus approximately $986,000 for the year ended December
31, 1996. The decline in net income is attributable to decreases in equity in
income of the unconsolidated 33.3% owned joint venture, Coral Palm Plaza, and in
rental revenue. The decrease in equity in joint venture operations is the
result of the write-down of the Coral Palm Plaza Joint Venture property during
1997. During the year ended December 31, 1997, the Joint Venture property lost
two major tenants. Based on its evaluation of the condition of the property
after the loss of the tenants, the General Partner concluded that a $2,067,000
write-down was needed to reduce the property to its estimated fair value. The
decrease in rental revenue is primarily due to decreases in rental revenue at
Butler Square and in tenant reimbursements at Plantation Pointe. Partially
offsetting the above decreases was a decrease in total expenses due to a
decrease in general and administrative expenses. The decrease in general and
administrative expense is partially attributable to a decrease in reimbursements
for services of affiliates related to the transition from the Atlanta, Georgia
to the Greenville, South Carolina administrative office in 1996. Additionally,
the transition of asset management responsibilities to the Greenville office
contributed to increased reimbursements during 1996. Included in operating
expense for the year ended December 31, 1997 is approximately $58,000 of major
repairs and maintenance comprised primarily of exterior building repairs, major
landscaping, parking lot repairs, and exterior painting.
1996 Compared to 1995
The Partnership's net income for the year ended December 31, 1996, was
approximately $986,000 versus approximately $1,017,000 for the year ended
December 31, 1995. The decline in net income is attributable to a decrease in
equity in income of the unconsolidated 33.3% owned joint venture, Coral Palm
Plaza, and to an increase in general and administrative expense. The decrease
in equity in joint venture operations is the result of the recognition of income
in 1995 relating to a lease buy-out at the Partnership's unconsolidated joint
venture property, Coral Palm Plaza. In December 1994, Coral Palm Plaza accepted
a lease buy-out of $800,000 from a significant tenant that had occupied 27,000
square feet. The payment was received in 1995. During 1995, Coral Palm Plaza
re-leased all of the unoccupied space, on similar terms, and recognized the
remaining portion of the lease buy-out in the amount of $699,000 as other
income. The decline in net income was partially offset by increased rental
revenue at Butler Square due to increased occupancy.
Operating expense in 1996 increased due to parking lot repairs and increased
management fees at Butler Square. Included in operating expense is
approximately $46,000 of major repairs and maintenance comprised of major
landscaping and parking lot repairs for the year ended December 31, 1996. The
increase in general and administrative expenses is partially due to an increase
in reimbursements to affiliates which was directly attributable to the combined
transition efforts of the Greenville, South Carolina and Atlanta, Georgia
administrative offices during the 1995 year-end close, preparation of the 10-K
and tax returns (including the limited partner K-1's), filing for the first two
quarterly reports and transition of asset management responsibilities to the new
administration.
During 1997, 1996, and 1995, the Registrant was allocated its equity income
(loss) in the operations of the unconsolidated joint ventures. In 1995, the
Registrant received cash distributions from the unconsolidated joint ventures.
The financial statements for the unconsolidated joint ventures are presented in
Exhibits 99.1 and 99.2 attached hereto.
Liquidity and Capital Resources
The Registrant's real estate properties consist of three shopping center
properties and investments in two unconsolidated joint ventures. The three
shopping centers are located in South Carolina, North Carolina and Georgia. The
unconsolidated joint venture properties include one shopping center in Florida
and three business parks in Minnesota. The properties are leased to tenants
subject to leases with remaining lease terms of up to twelve years. The
Registrant receives rental income from its properties and is responsible for
operating expenses, administrative expenses and capital improvements.
At December 31, 1997, the Partnership had cash and cash equivalents of
approximately $1,889,000 as compared to $1,929,000 at December 31, 1996. The
net decrease in cash and cash equivalents for the years ended December 31, 1997
and 1996 is $40,000 and $261,000, respectively. Net cash provided by operating
activities increased primarily due to the decrease in receivables and deposits
and in other assets. The decrease in receivables and deposits and other assets
is attributable to the timing of receipts. Net cash used in investing activities
decreased due to a Partnership contribution to Coral Palm during 1996 which was
not necessary during 1997. The decrease in cash used in investing activities is
also attributable to decreases in purchases of property improvements and
replacements. Net cash used in financing activities remained constant
representing distributions to the partners for the years ended December 31, 1997
and 1996.
The Registrant uses working capital reserves provided from any undistributed
cash flow from operations and distributions from unconsolidated joint ventures
as its primary source of liquidity. For the long term, cash from operations and
distributions from unconsolidated joint ventures will remain the Registrant's
primary source of liquidity.
The Partnership has no material capital programs scheduled to be performed in
1998, although certain routine capital expenditures and maintenance expenses
have been budgeted. These capital expenditures and maintenance expenses will be
incurred only if cash is available from operations.
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
Partnership distributed a total of $1,111,000 to the partners during each of the
years ended December 31, 1997, 1996, and 1995. These distributions included
$11,000 to the general partner and $1,100,000 ($15.00 per unit) to the limited
partners. Future cash distributions will depend on the levels of cash generated
from operations, property sales, and the availability of cash reserves, however,
quarterly distributions are expected to continue throughout 1998. The level of
such distributions will be contingent upon successful future operations.
The business in which the Registrant is engaged is highly competitive, and the
Registrant is not a significant factor in its industry. Each investment
property is located in or near a major urban area and, accordingly, competes for
rentals not only with similar properties in its immediate area but with hundreds
of similar properties throughout the urban area. Such competition is primarily
on the basis of location, rents, services and amenities. In addition, the
Registrant 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.
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.
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 of the Partnership 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 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CENTURY PENSION INCOME FUND XXIV,
List of Financial Statements
Independent Auditors' Report
Balance Sheets - December 31, 1997 and 1996
Statements of Operations-Years Ended December 31, 1997, 1996 and 1995
Statements of Changes in Partners' Capital-Years Ended December 31,
1997, 1996 and 1995
Statements of Cash Flows-Years Ended December 31, 1997, 1996 and 1995
Notes to Financial Statements
To the Partners
Century Pension Income Fund XXIV,
A California Limited Partnership
Greenville, South Carolina
Independent Auditors' Report
We have audited the accompanying balance sheets of Century Pension Income Fund
XXIV, A California Limited Partnership (the "Partnership") as of December 31,
1997 and 1996, and the related statements of operations, changes in partners'
capital and cash flows for each of the three years in the period ended December
31, 1997. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
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 audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Century Pension Income Fund
XXIV, A California Limited Partnership, as of December 31, 1997 and 1996, and
the results of its operations and its cash flows for each of the three 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, N.Y.
February 12, 1998
CENTURY PENSION INCOME FUND XXIV
BALANCE SHEETS
(in thousands, except unit data)
<TABLE>
<CAPTION>
December 31,
1997 1996
<S> <C> <C>
Assets
Cash and cash equivalents $ 1,889 $ 1,929
Receivables and deposits 308 298
Other assets 181 190
Investments in unconsolidated joint ventures 7,429 7,844
Investment properties:
Land 4,397 4,397
Buildings and related personal property 13,386 13,379
17,783 17,776
Less accumulated depreciation (4,186) (3,704)
13,597 14,072
$ 23,404 $ 24,333
Liabilities and Partners' Capital
Liabilities
Accounts payable $ 4 $ 13
Tenant security deposit liabilities 34 43
Accrued property taxes 81 66
Other liabilities 27 18
Partners' Capital
General partner's -- --
Limited partners' (73,341 units issued and
outstanding at December 31, 1997 and 1996) 23,258 24,193
Total partners' capital 23,258 24,193
$ 23,404 $ 24,333
<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>
CENTURY PENSION INCOME FUND XXIV
STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended December 31,
1997 1996 1995
Revenues:
Rental income $2,044 $2,133 $1,895
Other income 106 117 117
Total revenues 2,150 2,250 2,012
Expenses:
Operating 400 392 387
General and administrative 516 656 512
Depreciation 482 478 462
Property taxes 161 161 141
Total expenses 1,559 1,687 1,502
Income before equity in (loss) income of
unconsolidated joint ventures 591 563 510
Equity in (loss) income of
unconsolidated joint ventures (415) 423 507
Net income $ 176 $ 986 $1,017
Net income allocated to general partner $ 11 $ 11 $ 31
Net income allocated to limited partners 165 975 986
$ 176 $ 986 $1,017
Net income per limited partnership unit $ 2.25 $13.30 $13.44
Distribution per limited partnership unit $15.00 $15.00 $15.00
See Accompanying Notes to Financial Statements
CENTURY PENSION INCOME FUND XXIV
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner's Partners' Total
Original capital contributions 73,341 $ -- $ 36,671 $ 36,671
Partners' capital
at December 31, 1994 73,341 $ (20) $ 24,432 $ 24,412
Net income for the year ended
December 31, 1995 -- 31 986 1,017
Distributions to partners -- (11) (1,100) (1,111)
Partners' capital
at December 31, 1995 73,341 -- 24,318 24,318
Net income for the year ended
December 31, 1996 -- 11 975 986
Distributions to partners -- (11) (1,100) (1,111)
Partners' capital
at December 31, 1996 73,341 -- 24,193 24,193
Net income for the year ended
December 31, 1997 -- 11 165 176
Distributions to partners -- (11) (1,100) (1,111)
Partners' capital
at December 31, 1997 73,341 $ -- $ 23,258 $ 23,258
See Accompanying Notes to Financial Statements
CENTURY PENSION INCOME FUND XXIV
STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1997 1996 1995
Cash flows from operating activities:
Net income $ 176 $ 986 $ 1,017
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 482 478 462
Amortization of lease commissions 39 44 38
Equity in loss (income) of unconsolidated
joint ventures' operations 415 (423) (507)
Change in accounts:
Receivables and deposits (10) (104) (21)
Other assets (30) (88) (70)
Accounts payable (9) 10 (37)
Tenant security deposit liabilities (9) (3) 2
Accrued property taxes 15 25 (13)
Other liabilities 9 2 --
Net cash provided by operating activities 1,078 927 871
Cash flows from investing activities:
Property improvements and replacements (7) (39) (413)
Distributions received from
unconsolidated joint ventures -- -- 805
Contributions to unconsolidated joint ventures -- (38) --
Net cash (used in) provided by
investing activities (7) (77) 392
Cash flows from financing activities:
Distributions to partners (1,111) (1,111) (1,111)
Net cash used in financing activities (1,111) (1,111) (1,111)
Net (decrease) increase in cash and cash equivalents (40) (261) 152
Cash and cash equivalents at beginning of period 1,929 2,190 2,038
Cash and cash equivalents at end of period $ 1,889 $ 1,929 $ 2,190
See Accompanying Notes to Financial Statements
Century Pension Income Fund XXIV
Notes to Financial Statements
December 31, 1997
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Century Pension Income Fund XXIV (the "Partnership") is a limited partnership
organized in 1984 under the laws of the State of California to acquire, manage
and ultimately sell income-producing real estate. The Partnership currently owns
three shopping centers located in South Carolina, North Carolina and Georgia.
The Partnership also holds joint venture interests in a shopping center in
Florida and in three business parks in Minnesota. The General Partner is Fox
Partners VI, a California general partnership, whose General Partners are Fox
Capital Management Corporation ("FCMC" or the "Managing General Partner"), a
California corporation and Fox Realty Investors ("FRI"), a California general
partnership. The managing general partner of FRI is NPI Equity Investments II,
Inc. ("NPI Equity II"). The capital contributions of $36,670,500 ($500 per
assignee unit) were made by Limited Partnership Assignee Unit Holders.
On December 6, 1993, the shareholders of FCMC entered into a Voting Trust
Agreement with NPI Equity II pursuant to which NPI Equity II was granted the
right to vote 100 percent of the outstanding stock of FCMC and NPI Equity II
became the managing general partner of FRI. As a result, NPI Equity II
effectively became responsible for the operation and management of the business
and affairs of the Partnership and the other investment partnerships originally
sponsored by FCMC and/or FRI. NPI Equity II was, at the time, a wholly-owned
subsidiary of National Property Investors, Inc. ("NPI, Inc."). The shareholders
of FCMC and the partners in FRI retain indirect economic interests in the
Partnership and such other investment limited partnerships, but have ceased to
be responsible for the operation and management of the Partnership and such
other partnerships.
On January 19, 1996, the stockholders of NPI, Inc. sold all of the issued and
outstanding stock of NPI, Inc. to an affiliate of Insignia Financial Group, Inc.
("Insignia"). In addition, on June 1996, an affiliate of Insignia purchased all
of the issued and outstanding shares of capital stock of the Managing General
Partner. As a result of the foregoing transactions, IFGP Corporation caused new
officers and directors of NPI Equity II and the Managing General Partner to be
elected.
Basis of Presentation: The Partnership's investments in unconsolidated joint
ventures are accounted for under the equity method of accounting.
Distributions: Cash distributions from operations were made at annualized rates
of 3.0 percent of original capital contributions for each of the years 1997,
1996 and 1995.
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 financial statements and
accompanying notes. Actual results could differ from those estimates.
Cash and Cash Equivalents: Cash and cash equivalents include cash on hand and
in banks, money market funds and certificates of deposit with original
maturities less than 90 days. At certain times, the amount of cash deposited at
a bank may exceed the limit on insured deposits.
Leases: The Partnership leases certain commercial space to tenants under
various lease terms. The leases are accounted for as operating leases in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 13,
"Accounting for Leases".
Some of the leases contain stated rental increases during their term. For
leases with fixed rental increases, rents are recognized on a straight-line
basis over the terms of the lease. This straight-line basis recognized $25,000
and $39,000 more in rental income than was collected in 1997 and 1996,
respectively. This amount will be collected in future years, as cash
collections under the terms of the leases exceed the straight-line basis of
revenue recognition.
For all other leases, minimum rents are recognized over the terms of the leases.
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 approximates their fair
value due to the short term maturity of these instruments.
Investment Properties: Investment properties are stated at cost. Acquisition
fees are capitalized as a cost of real estate. In accordance with 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 computed by the straight-line method over
estimated useful lives ranging from thirty to thirty nine years for buildings
and improvements and three to five years for furnishings.
Deferred Leasing Commissions: Leasing commissions, which are included in other
assets, are deferred and amortized over the lives of the related leases. At
December 31, 1997 and 1996, deferred leasing commissions totaled $244,000 and
$221,000 and accumulated amortization totaled $92,000 and $71,000, respectively.
Escrows for Taxes: All escrow funds are designated for the payment of real
estate taxes and are held by the Partnership. These funds totaled approximately
$114,000 and $92,000 at December 31, 1997 and 1996 respectively and are included
in receivables and deposits.
Net Income (Loss) Per Limited Partnership Assignee Unit: Net income (loss) per
limited partnership assignee unit is computed by dividing the net income (loss)
allocated to the unit holders by 73,341 units outstanding.
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 financial statements of the Partnership.
Net Income Allocation: In accordance with the Partnership Agreement, net income
and taxable income have been allocated to the General Partner in an amount equal
to the amount of cash distributions received by the General Partner.
Reclassification: Certain reclassifications have been made to the 1996 and 1995
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.
The following transactions with affiliates of the Managing General Partner were
charged to expense in 1997, 1996 and 1995 (in thousands):
<TABLE>
<CAPTION>
For the Years Ended December 31,
1997 1996 1995
<S> <C> <C> <C>
Partnership management fee (included in general
and administrative expense) (1) $123 $123 $123
Real estate tax reduction fees -- -- 16
Reimbursement for services of affiliates (included
in general and administrative and operating 97 126 97
expenses) (2)
<FN>
(1) The Partnership Agreement provides for the payment of a partnership
management fee to the General Partner equal to ten percent of cash available
for distribution. This management fee is intended to defray some of the
expenses related to services provided by the General Partner, or an
affiliate, but not reimbursed by the Partnership.
(2) Included in "Reimbursements for services of affiliates" for the year ended
December 31, 1997, is approximately $1,000 in reimbursements for
construction oversight costs. There were no reimbursements of this nature
for either of the years ended December 31, 1996 or 1995.
</FN>
</TABLE>
For the period of 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 current agent assumed the financial obligations
to the affiliate of the Managing General Partner who received payments on these
obligations from the agent. The amount of the Partnership's insurance premiums
accruing to the benefit of the affiliate of the Managing General Partner by
virtue of the agent's obligations is not significant.
The General Partner received cash distributions of $11,000 during each of the
years ended December 31, 1997, 1996, and 1995.
NOTE C - INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES
The Partnership has investments in two unconsolidated joint ventures as follows:
Coral Palm Plaza Joint Venture
On January 23, 1987, the Partnership acquired a 33.33% ownership interest in
Coral Palm Plaza Joint Venture ("Coral Palm"), a joint venture with Century
Pension Income Fund XXIII, a California Limited Partnership ("CPF XXIII") and an
affiliate of FCMC and FRI. Also, on January 23, 1987, Coral Palm Plaza Joint
Venture acquired the Coral Palm Plaza, a shopping center located in Coral
Springs, Florida. The Partnership's interest in the Coral Palm Plaza Joint
Venture is reported using the equity method of accounting.
Summary financial information for Coral Palm Plaza Joint Venture is as follows
(in thousands):
December 31,
1997 1996
Total assets $ 5,041 $ 7,301
Total liabilities (366) (468)
Total ventures' equity $ 4,675 $ 6,833
Years Ended December 31,
1997 1996
Total revenues $ 739 $ 1,183
Total expenses (2,897) (807)
Net income $(2,158) $ 376
In 1996, the Partnership made contributions of approximately $38,000 to the
Joint Venture. In 1997, the property owned by the Joint Venture with a carrying
value of $6,029,000 was determined to be impaired and its value was written down
by $2,067,000 to reflect its fair value at December 31, 1997 of $3,962,000.
Minneapolis Business Parks Joint Venture
On April 30, 1987, the Partnership acquired a 32% ownership interest in
Minneapolis Business Parks Joint Venture, a joint venture with CPF XXIII. On
May 5, 1987, Minneapolis Business Parks Joint Venture acquired Alpha Business
Center located in Bloomington, Minnesota; Plymouth Service Center located in
Plymouth, Minnesota, and Westpoint Business Center located in Plymouth,
Minnesota. The Partnership's interest in the Minneapolis Business Parks Joint
Venture is reported using the equity method of accounting.
Summary financial information for Minneapolis Business Park Joint Venture is as
follows (in thousands):
December 31,
1997 1996
Total assets $18,331 $17,412
Total liabilities (167) (176)
Total ventures' equity $18,164 $17,236
Years Ended December 31,
1997 1996
Total revenues $ 3,190 $ 3,136
Total expenses (2,262) (2,202)
Net income $ 928 $ 934
NOTE D - MINIMUM FUTURE RENTAL REVENUES
Minimum future rental revenues from operating leases having non-cancelable lease
terms in excess of one year at December 31, 1997, are as follows (in thousands):
1998 $ 1,645
1999 1,396
2000 1,081
2001 967
2002 902
Thereafter 4,490
Total $10,481
The Partnership had one tenant at each of its properties whose rental revenue
was in excess of 10% of total Partnership rental revenue. At December 31, 1997,
1996 and 1995, the percentages were as follows:
Percentage of Total Rental Revenue
1997 1996 1995
Butler Square Center 15% 14% 18%
Kenilworth Commons Shopping Center 11% 11% 15%
Plantation Pointe Shopping Center 15% 14% 18%
Amortization of leasing commissions totaled $39,000, $44,000 and $38,000 in
1997, 1996 and 1995, respectively.
NOTE E - RECONCILIATION TO INCOME TAX METHOD OF ACCOUNTING
The differences between the accrual method of accounting for income tax
reporting and the accrual method of accounting used in the financial statements
are as follows (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Net income - financial statements $ 176 $ 986 $ 1,017
Differences resulted from:
Depreciation 145 132 130
Equity in unconsolidated joint ventures' operations 765 (16) (178)
Other 14 (38) (2)
Net income - income tax method $ 1,100 $ 1,064 $ 967
Taxable income per limited partnership assignee unit
after giving effect to the allocation to the general
partner $ 15 $ 14 $ 13
Partner's equity - financial statements $23,258 $24,193 $24,318
Differences resulted from:
Sales commissions 3,050 3,050 3,050
Organization expenses 2,452 2,452 2,452
Depreciation 1,106 961 829
Payments credited to rental properties 112 112 112
Equity in unconsolidated joint ventures' operations 4,299 3,534 3,550
Other (31) (44) (6)
Partners' equity - income tax method $34,246 $34,258 $34,305
NOTE F - REAL ESTATE AND ACCUMULATED DEPRECIATION
(in thousands)
Initial Cost to Partnership
Net Cost
Buildings Capitalized
and Related (written down)
Personal Subsequent to
Description Encumbrances Land Property Acquisition
Butler Square Center $ -- $ 873 $ 5,396 $ 440
Kenilworth Commons
Shopping Center -- 1,701 2,895 (27)
Plantation Pointe
Shopping Center -- 1,865 4,563 77
TOTAL $ -- $4,439 $12,854 $ 490
</TABLE>
<TABLE>
<CAPTION>
Gross Amount at Which Carried
at December 31, 1997
Buildings
and Related
Personal Accumulated Year of Date of Depreciable
Land Property Total Depreciation Construction Acquisition Life-Years
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Butler Square Center $ 866 $ 5,843 $ 6,709 $ 1,916 1987 1/88 3 to 39 years
Kenilworth Commons
Shopping Center 1,679 2,890 4,569 901 1988 8/88 5 to 39 years
Plantation Pointe
Shopping Center 1,852 4,653 6,505 1,369 1988 4/89 4 to 39 years
TOTAL $4,397 $13,386 $17,783 $ 4,186
</TABLE>
Reconciliation of Real Estate and Accumulated Depreciation (in thousands):
Real Estate:
Years Ended December 31,
1997 1996 1995
Balance at beginning of year $17,776 $17,737 $17,324
Property improvements and replacements 7 39 413
Balance at end of year $17,783 $17,776 $17,737
Accumulated Depreciation:
Balance at beginning of year $ 3,704 $ 3,226 $ 2,764
Additions charged to expense 482 478 462
Balance at end of year $ 4,186 $ 3,704 $ 3,226
The aggregate cost of the investment properties for Federal income tax purposes
at December 31, 1997, 1996 and 1995, is approximately $17,896,000, $17,888,000
and $17,849,000, respectively. Accumulated depreciation for Federal income tax
purposes at December 31, 1997, 1996 and 1995, is approximately $3,080,000,
$2,743,000 and $2,397,000, respectively.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURES
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Neither the Registrant nor Fox Partners VI ("Fox"), the General Partner of the
Registrant, has any officers or directors. Fox Capital Management Corporation
("FCMC" or the "Managing General Partner"), the managing general partner of Fox,
manages and controls substantially all of the Registrant's affairs and has
general responsibility and ultimate authority in all matters affecting its
business. The Managing General Partner is a wholly-owned affiliate of Insignia
Financial Group, Inc. ("Insignia").
The names and ages of, as well as the positions held by the executive officers
and directors of FCMC are set forth below. No family relationships exist among
any of the officers or directors of FCMC.
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 FCMC 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 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 FCMC 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 Chief Financial Officer from
January 1992 to August 1996.
Martha L. Long has been Controller of FCMC 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, South
Carolina.
Robert D. Long, Jr. has been Vice President of FCMC 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 FCMC 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 FCMC since June 1996 and
Assistant Secretary of Insignia since 1991.
ITEM 11. EXECUTIVE COMPENSATION
The Registrant is not required to and did not pay any compensation to the
officers or directors of the Managing General Partner. The Managing General
Partner does not presently pay any compensation to any of its officers or
directors. (See "Item 13, Certain Relationships and Related Transactions.")
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There is no person known to the Registrant who owns beneficially or of record
more than five percent of the voting securities of the Registrant.
The Registrant is a limited partnership and has no officers or directors. The
Managing General Partner, as managing general partner of Fox, has discretionary
control over most of the decisions made by or for the Registrant in accordance
with the terms of the Partnership Agreement. The directors and officers of the
Managing General Partner and its affiliates, as a group do not own any of the
Registrant's voting securities.
On March 17, 1998, Insignia entered into an agreement to merge its national
residential property management operations, and its controlling interest in
Insignia Properties Trust, with Apartment Investment and Management Company
("AIMCO"), a publicly traded real estate investment trust. The closing, which
is anticipated to happen in the third quarter of 1998, is subject to customary
conditions, including government approvals and the approval of Insignia's
shareholders. If the closing occurs, AIMCO will then control the General
Partner of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
partnership activities. The Partnership Agreement provides for payments to
affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership.
The following transactions with affiliates of the Managing General Partner were
charged to expense in 1997, 1996 and 1995 (in thousands):
For the Years Ended December 31,
1997 1996 1995
Partnership management fee (1) $123 $123 $123
Real estate tax reduction fees -- -- 16
Reimbursement for services of affiliates (2) 97 126 97
(1) The Partnership Agreement provides for the payment of a partnership
management fee to the General Partner equal to ten percent of cash available
for distribution. This management fee is intended to defray some of the
expenses related to services provided by the General Partner, or an
affiliate, but not reimbursed by the Partnership.
(2) Included in "Reimbursements for services of affiliates" for the year ended
December 31, 1997, is approximately $1,000 in reimbursements for
construction oversight costs. There were no reimbursements of this nature
for either of the years ended December 31, 1996 or 1995.
For the period of 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 was allocated
its one percent continuing interest in the Partnership's net income and taxable
income and cash distributions. Net income and taxable income have been
allocated to the General Partner in an amount equal to the amount of cash
distributions received by the General Partner.
The General Partner received cash distributions of $11,000 during each of the
years ended December 31, 1997, 1996, and 1995.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1)(2) Financial Statements and Financial Statement Schedules:
See "Item 8" of this Form 10-K for Financial Statements of the
Registrant, Notes thereto, and Financial Statement Schedules. (A
Table of Contents to Financial Statements and Financial Statement
Schedules is included in "Item 8" and incorporated herein by
reference.)
(a)(3) Exhibits:
2. NPI, Inc. Stock Purchase Agreement, dated as of August 17,
1995, incorporated by reference to the Registrant's Current
Report on Form 8-K dated August 17, 1995.
3 4. Agreement of Limited Partnership, incorporated by reference
to Exhibit A to the Prospectus of the Registrant dated June
9, 1986 and thereafter supplemented included in the
Registrant's Registration Statement on Form S-11 (Reg. No.
33-1261)
16. Letter dated April 27, 1994 from the Registrant's Former
Independent Auditors incorporated by reference to the
Registrant's Current Report on Form 8-K dated April 22,
1994.
27. Financial Data Schedule is filed as an Exhibit to this
report.
99.1 Coral Palm Plaza Joint Venture and audited financial
statements for the years ended December 31, 1997, 1996 and
1995.
99.2 Minneapolis Business Parks Joint Venture and audited
financial statements for the years ended December 31, 1997,
1996 and 1995.
(b) Reports on Form 8-K:
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized this 31st day of March
1998.
CENTURY PENSION INCOME FUND XXIV
By: Fox Partners VI
Its General Partner
By: Fox Capital Management Corporation
Its Managing General Partner
By: /s/ William H. Jarrard, Jr.
William H. Jarrard, Jr.
President and Director
Date: March 31, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated.
/s/ William H. Jarrard, Jr. President and
William H. Jarrard, Jr. Director
/s/ Ronald Uretta Vice President and
Ronald Uretta Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Century
Pension Income Fund XXIV 1997 Year-End 10-K and is qualified in its entirety by
reference to such 10-K filing.
</LEGEND>
<CIK> 0000780590
<NAME> CENTURY PENSION INCOME FUND XXIV
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 1,889
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 17,783
<DEPRECIATION> (4,186)
<TOTAL-ASSETS> 23,404
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 23,258
<TOTAL-LIABILITY-AND-EQUITY> 23,404
<SALES> 0
<TOTAL-REVENUES> 2,150
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,559
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 176
<EPS-PRIMARY> 2.25<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
EXHIBIT 99.1
CORAL PALM PLAZA JOINT VENTURE
FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 and 1995
List of Financial Statements
Independent Auditors' Report
Balance Sheets - December 31, 1997 and 1996
Statements of Operations-Years Ended December 31, 1997, 1996 and 1995
Statements of Changes in Partners' Capital-Years Ended December 31,
1997, 1996 and 1995
Statements of Cash Flows-Years Ended December 31, 1997, 1996 and 1995
Notes to Financial Statements
To the Partners
Coral Palm Plaza Joint Venture
Greenville, South Carolina
Independent Auditors' Report
We have audited the accompanying balance sheets of Coral Palm Plaza Joint
Venture (the "Partnership") as of December 31, 1997 and 1996, and the related
statements of operations, changes in partners capital and cash flows for each of
the three years in the period ended December 31, 1997. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these 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 audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Coral Palm Plaza Joint Venture
as of December 31, 1997 and 1996, and the results of its operations and its cash
flows for each of the three 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, N.Y.
February 12, 1998
CORAL PALM PLAZA JOINT VENTURE
BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
December 31,
1997 1996
<S> <C> <C>
Assets
Cash and cash equivalents $ 427 $ 458
Other assets 652 613
Investment properties:
Land 1,980 2,393
Buildings and related personal property 5,532 7,133
7,512 9,526
Less accumulated depreciation (3,550) (3,296)
3,962 6,230
$ 5,041 $ 7,301
Liabilities and Partners' Capital
Accrued expenses and other liabilities $ 366 $ 468
Partners' Capital:
Century Pension Income Fund XXIII 3,111 4,557
Century Pension Income Fund XXIV 1,564 2,276
Total partners' capital 4,675 6,833
$ 5,041 $ 7,301
<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>
CORAL PALM PLAZA JOINT VENTURE
STATEMENTS OF OPERATIONS
(in thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
1997 1996 1995
<S> <C> <C> <C>
Revenues:
Rental income $ 706 $ 1,157 $ 939
Other income 33 26 717
Total revenues 739 1,183 1,656
Expenses:
Operating 572 541 625
General and administrative 4 16 11
Depreciation 254 250 217
Provision for impairment
of value 2,067 -- --
Total expenses 2,897 807 853
Net (loss) income $(2,158) $ 376 $ 803
Allocation of net (loss) income:
Century Pension Income Fund XXIII $(1,446) $ 252 $ 535
Century Pension Income Fund XXIV (712) 124 268
$(2,158) $ 376 $ 803
<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>
CORAL PALM PLAZA JOINT VENTURE
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
Years Ended December 31, 1997, 1996, and 1995
(in thousands)
<TABLE>
<CAPTION>
Century Pension Century Pension
Income Fund XXIII Income Fund XXIV Total
<S> <C> <C> <C>
Partners' capital at December 31, 1994 $ 4,339 $ 2,169 $ 6,508
Net income for the year ended
December 31, 1995 535 268 803
Distributions to partners (643) (323) (966)
Partners' capital at December 31, 1995 4,231 2,114 6,345
Net income for the year ended
December 31, 1996 252 124 376
Contributions from partners 74 38 112
Partners' capital at December 31, 1996 4,557 2,276 6,833
Net loss for the year ended
December 31, 1997 (1,446) (712) (2,158)
Partners' capital at December 31, 1997 $ 3,111 $ 1,564 $ 4,675
<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>
CORAL PALM PLAZA JOINT VENTURE
STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
1997 1996 1995
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) income $(2,158) $ 376 $ 803
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Depreciation 254 250 217
Amortization of lease commissions 39 37 32
Provision for impairment of value 2,067 -- --
Change in accounts:
Other assets (78) (226) 512
Accrued expenses and other liabilities (102) 123 (499)
Net cash provided by operating activities 22 560 1,065
Cash flows from investing activities:
Property improvements and replacements (53) (477) (75)
Net cash used in investing activities (53) (477) (75)
Cash flows from financing activities:
Joint venture partners'
distributions paid -- -- (966)
Contributions received from Partners -- 112 --
Net Cash provided by (used in) financing activities -- 112 (966)
Net (decrease) increase in Cash and Cash Equivalents (31) 195 24
Cash and Cash Equivalents at Beginning of Year 458 263 239
Cash and Cash Equivalents at End of Year $ 427 $ 458 $ 263
<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>
CORAL PALM PLAZA JOINT VENTURE
Notes To Financial Statements
December 31, 1997
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization: Coral Palm Plaza Joint Venture (the "Partnership") is a general
partnership organized in 1987 under the laws of the State of California to
acquire Coral Palm Plaza, a shopping center located in Coral Springs, Florida.
The General Partners are Century Pension Income Fund XXIII ("XXIII") and Century
Pension Income Fund XXIV ("XXIV"), California limited partnerships affiliated
through their General Partners.
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 amount reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Cash and Cash Equivalents: Cash and cash equivalents include cash on hand and
in banks, money market funds and certificates of deposit with original
maturities of less than 90 days. At certain times, the amount of cash deposited
at a bank may exceed the limit on insured deposits.
Tenant Security Deposits: The Partnership requires security deposits from
lessees for the duration of the lease and such deposits are included in
receivables and other assets. Deposits are refunded when the tenant vacates,
provided the tenant has not damaged its space and is current on its rental
payments.
Leases: The Partnership leases certain commercial space to tenants under
various lease terms. The leases are accounted for as operating leases in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 13,
"Accounting for Leases."
Some of the leases contain stated rental increases during their term. For
leases with fixed rental increases, rents are recognized on a straight-line
basis over the terms of the lease. This straight-line basis recognized
approximately $28,000 and $119,000 more in rental income than was collected in
1997 and 1996, respectively. This amount will be collected in future years as
cash collections under the terms of the leases exceed the straight-line basis of
revenue recognition.
For all other leases, minimum rents are recognized over the terms of the leases.
Investment Properties: Investment properties are stated at cost. Acquisition
fees are capitalized as a cost of real estate. 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. The Partnership has determined that Coral Palm Plaza
with a carrying amount of $6,029,000 was impaired and wrote its value down by
$2,067,000 to reflect its fair value at December 31, 1997 of $3,962,000.
Depreciation: Depreciation is computed by the straight-line method over
estimated useful lives ranging from four to thirty-nine years for buildings and
improvements and related personal property.
Deferred Leasing Commission: Leasing commissions, which are included in other
assets, are deferred and amortized over the lives of the related leases, which
range from one to eleven years. At December 31, 1997 and 1996 deferred leasing
commissions totaled $324,000 and $221,000 and accumulated amortization totaled
$104,000 and $85,000, respectively.
Net Income (Loss) Allocation: Net income (loss) is allocated based on the ratio
of each partner's capital contribution to the Joint Venture.
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 financial statements of the Partnership.
Reclassification: Certain reclassifications have been made to the 1996 and 1995
balances to conform to the 1997 presentation.
NOTE B - RELATED PARTY TRANSACTIONS
During 1997 and 1996, the Partnership paid property management fees totaling
$31,000 and $23,000, respectively, to an affiliate of the General Partner.
These fees were allocated 66.67% to XXIII and 33.33% to XXIV, in accordance with
the partnership agreement.
NOTE C - PROVISION FOR IMPAIRMENT OF VALUE
In December 1997, two significant tenants that had occupied 36,000 square feet
(27% of leasable space) at Coral Palm Plaza moved out. The Partnership
determined that, based on economic conditions at the time as well as projected
future operational cash flows, a decline in value had occurred which was other
than temporary. Accordingly, the property's carrying value was reduced to an
amount equal to its estimated fair value and an impairment write down of
$2,067,000 was recorded at December 31, 1997.
NOTE D - TERMINATION AGREEMENT WITH FORMER TENANT
In December 1994, the Partnership accepted a lease buy-out of $800,000 from a
significant tenant that had occupied 27,000 square feet. The payment was
received in 1995. During 1995, management re-leased all of the unoccupied
space, on similar terms, and recognized the remaining portion of the lease buy-
out in the amount of $699,000 as other income.
In October 1995, the Partnership accepted a lease buy-out and termination
agreement with a former tenant at the Partnership's property. The $300,000
termination payment, has been deferred and is being amortized into income on a
straight-line basis over the remaining three years of the former tenant's lease.
Management is currently attempting to re-lease the space.
NOTE E - MINIMUM FUTURE RENTAL REVENUES
Minimum future rental revenues from operating leases having non-cancelable lease
terms in excess of one year at December 31, 1997 are as follows:
1998 $1,043
1999 1,024
2000 943
2001 828
2002 759
Thereafter 2,042
Total $6,639
Rental revenue from one tenant was 22 percent, 12 percent and 20 percent of
total rental revenues in 1997, 1996 and 1995, respectively. Rental revenue from
another tenant was 13 percent, 12 percent and 19 percent of total rental
revenues in 1997, 1996 and 1995, respectively.
Rental revenues included percentage and other contingent rentals of $33,000 and
$59,000 in 1996 and 1995, respectively. There was not any percentage or
contingent rental revenue in 1997.
Amortization of deferred leasing commissions totaled $39,000, $37,000 and
$32,000 for the years ended December 31, 1997, 1996, and 1995, respectively.
NOTE F - REAL ESTATE AND ACCUMULATED DEPRECIATION
(dollar amounts in thousands)
<TABLE>
<CAPTION>
Initial Cost to Partnership
Buildings Net Cost Capitalized
and Related (written down) Subsequent
Description Encumbrances Land Personal Property to Acquisition
<S> <C> <C> <C> <C>
Coral Palm Plaza
Coral Springs,
Florida $ -- $ 5,009 $11,046 $(8,543)
</TABLE>
<TABLE>
<CAPTION>
Gross Amount at Which Carried
at December 31, 1997
Buildings
and Related Accumulated Year of Date of Depreciable
Description Land Personal Property Total Depreciation Construction Acquisition Life-Years
<S> <C> <C> <C> <C> <C> <C> <C>
Coral Palm Plaza $1,980 $5,532 $7,512 $3,550 1985 1/87 4 to 39 Years
</TABLE>
Reconciliation of Real Estate and Accumulated Depreciation (in thousands)
<TABLE>
<CAPTION>
Real Estate:
Years Ended December 31,
1997 1996 1995
<S> <C> <C> <C>
Balance at beginning of year $ 9,526 $ 9,049 $ 8,974
Property improvements 53 477 75
Allowance for impairment of value (2,067) -- --
Balance at end of year $ 7,512 $ 9,526 $ 9,049
Accumulated Depreciation:
Balance at beginning of year $ 3,296 $ 3,046 $ 2,829
Additions charged to expense 254 250 217
Balance at end of year $ 3,550 $ 3,296 $ 3,046
</TABLE>
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1997 and 1996, is approximately $17,098,000 and $17,044,000,
respectively. Accumulated depreciation for Federal income tax purposes at
December 31, 1997 and 1996, is approximately $3,678,000 and $3,324,000,
respectively.
EXHIBIT 99.2
MINNEAPOLIS BUSINESS PARKS JOINT VENTURE
FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 and 1995
List of Financial Statements
Independent Auditors' Report
Balance Sheets - December 31, 1997 and 1996
Statements of Operations-Years Ended December 31, 1997, 1996 and 1995
Statements of Changes in Partners' Capital-Years Ended December 31,
1997, 1996 and 1995
Statements of Cash Flows-Years Ended December 31, 1997, 1996 and 1995
Notes to Financial Statements
To the Partners
Minneapolis Business Parks Joint Venture
Greenville, South Carolina
Independent Auditors' Report
We have audited the accompanying balance sheets of Minneapolis Business Parks
Joint Venture (the "Partnership") as of December 31, 1997 and 1996, and the
related statements of operations, changes in partners' capital and cash flows
for each of the three years in the period ended December 31, 1997. These
financial statements are the responsibility of the Partnership's management.
Our responsibility is to express an opinion on these 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 financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Minneapolis Business Parks
Joint Venture as of December 31, 1997 and 1996, and the results of its
operations and its cash flows for each of the three 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, N.Y.
February 12, 1998
MINNEAPOLIS BUSINESS PARKS JOINT VENTURE
BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
December 31,
1997 1996
<S> <C> <C>
Assets
Cash and cash equivalents $ 2,751 $ 1,543
Receivables and other assets 650 507
Investment Properties:
Land 4,523 4,523
Building and related personal property 16,184 16,035
20,707 20,558
Less accumulated depreciation (5,777) (5,196)
14,930 15,362
$18,331 $17,412
Liabilities and Partners' Capital
Accrued expenses and other liabilities $ 167 $ 176
Partners' Capital:
Century Pension Income Fund XXIII 12,299 11,668
Century Pension Income Fund XXIV 5,865 5,568
Total partners' capital 18,164 17,236
$18,331 $17,412
<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>
MINNEAPOLIS BUSINESS PARKS JOINT VENTURE
STATEMENTS OF OPERATIONS
(in thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
1997 1996 1995
<S> <C> <C> <C>
Revenues:
Rental income $3,052 $3,000 $2,833
Other income 138 136 48
Total revenues 3,190 3,136 2,881
Expenses:
Operating 1,676 1,593 1,521
General and administrative 5 16 8
Depreciation 581 593 604
Total expenses 2,262 2,202 2,133
Net income $ 928 $ 934 $ 748
Allocation of net income:
Century Pension Income Fund XXIII $ 631 $ 635 $ 509
Century Pension Income Fund XXIV 297 299 239
$ 928 $ 934 $ 748
<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>
MINNEAPOLIS BUSINESS PARKS JOINT VENTURE
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
(in thousands)
<TABLE>
<CAPTION>
Century Pension Century Pension
Income Fund XXIII Income Fund XXIV Total
<S> <C> <C> <C>
Partners' capital at December 31, 1994 $11,548 $5,512 $17,060
Net income for the year ended
December 31, 1995 509 239 748
Distributions to partners (1,024) (482) (1,506)
Partners' capital at December 31, 1995 11,033 5,269 16,302
Net income for the year ended
December 31, 1996 635 299 934
Partners' capital at December 31, 1996 11,668 5,568 17,236
Net income for the year ended
December 31, 1997 631 297 928
Partners' capital at December 31, 1997 $12,299 $5,865 $18,164
<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>
MINNEAPOLIS BUSINESS PARKS JOINT VENTURE
STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
1997 1996 1995
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income $ 928 $ 934 $ 748
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 581 593 604
Amortization 71 84 79
Change in accounts:
Receivables and other assets (214) (155) (167)
Accrued expenses and other liabilities (9) 19 6
Net cash provided by operating activities 1,357 1,475 1,270
Cash Flows From Investing Activities:
Property improvements and replacements (149) (91) (253)
Cash used in investing activities (149) (91) (253)
Cash Flows From Financing Activities:
Joint venture partners' distributions paid -- -- (1,506)
Cash used in financing activities -- -- (1,506)
Net increase (decrease) in Cash and Cash Equivalents 1,208 1,384 (489)
Cash and Cash equivalents at Beginning of Year 1,543 159 648
Cash and Cash equivalents at End of Year $2,751 $1,543 $ 159
<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>
MINNEAPOLIS BUSINESS PARKS JOINT VENTURE
Notes to Financial Statements
December 31, 1997
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization: Minneapolis Business Parks Joint Venture (the "Partnership") is a
general partnership organized in 1987 under the laws of the State of California
to acquire three business parks in Minnesota. The General Partners are Century
Pension Income Fund XXIII ("XXIII") and Century Pension Income Fund XXIV
("XXIV"), California limited partnerships which are affiliated through their
General Partners.
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 financial statements and
accompanying notes. Actual results could differ from those estimates.
Cash and Cash Equivalents: Cash and cash equivalents include cash on hand and
in banks, money market funds and certificates of deposit with original
maturities of less than 90 days. At certain times, the amount of cash deposited
at a bank may exceed the limit on insured deposits.
Leases: The Partnership leases certain commercial space to tenants under
various lease terms. The leases are accounted for as operating leases in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 13,
"Accounting for Leases."
Some of the leases contain stated rental increases during their term. For
leases with fixed rental increases, rents are recognized on a straight-line
basis over the terms of the lease. This straight-line basis recognized
approximately $23,000 and $96,000 more in rental income than was collected in
1997 and 1996, respectively. This amount will be collected in future years as
cash collections under the terms of the leases exceed the straight-line basis of
revenue recognition.
For all other leases, minimum rents are recognized over the terms of the leases.
Investment Properties: Investment properties are stated at cost. Acquisition
fees are capitalized as a cost of real estate. 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 computed by the straight-line method over
estimated useful lives ranging from five to thirty-nine years for buildings and
improvements and related personal property.
Deferred Leasing Commission: Leasing commissions are deferred and amortized
over the lives of the related leases, which range from one to eleven years. At
December 31, 1997 and 1996, deferred leasing commissions totaled $452,000 and
$418,000 and accumulated amortization totaled $221,000 and $221,000,
respectively.
Net Income Allocation: Net income is allocated based on the ratio of each
partner's capital contribution to the Joint Venture.
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 financial statements of the Partnership.
Reclassification: Certain reclassifications have been made to the 1996 and 1995
balances to conform to the 1997 presentation.
NOTE B - RELATED PARTY TRANSACTIONS
During 1995, the Partnership paid an affiliate of the general partner a $33,000
fee relating to a successful real estate tax appeal on Alpha and Westpoint
Business Center joint venture properties. These fees were allocated 68% to
XXIII and 32% to XXIV, in accordance with the Partnership Agreement.
NOTE C - MINIMUM FUTURE RENTAL REVENUES
Minimum future rental revenues from operating leases having non-cancelable lease
terms in excess of one year at December 31, 1997, are as follows:
1998 $ 2,467
1999 1,906
2000 1,285
2001 799
2002 393
Thereafter 303
Total $ 7,153
Amortization of deferred leasing commissions totaled $62,000, $84,000 and
$79,000 for the years ended December 31, 1997, 1996, and 1995, respectively.
NOTE D - REAL ESTATE AND ACCUMULATED DEPRECIATION
(dollar amounts in thousands)
<TABLE>
<CAPTION>
Initial Cost to Partnership
Buildings and Net Cost Capitalized
Related Personal (removed) Subsequent
Description Encumbrances Land Property to Acquisition
<S> <C> <C> <C> <C>
Alpha Business Center $ -- $3,199 $ 6,735 $606
Plymouth Service -- 475 2,306 (40)
Westpoint Business -- 1,166 5,987 273
Total $ -- $4,840 $15,028 $839
</TABLE>
<TABLE>
<CAPTION>
Gross Amount at Which Carried
at December 31, 1997
Buildings
and Related Accumulated Year of Date of Depreciable
Description Land Personal Property Total Depreciation Construction Acquisition Life-Years
<S> <C> <C> <C> <C> <C> <C> <C>
Alpha Business Center $3,002 $ 7,538 $10,540 $2,730 1979 5/87 5-39 Years
Plymouth Service 419 2,322 2,741 793 1979 5/87 5-39 Years
Westpoint Business 1,102 6,324 7,426 2,254 1979 5/87 5-39 Years
Total $4,523 $16,184 $20,707 $5,777
</TABLE>
Reconciliation of Real Estate and Accumulated Depreciation (in thousands)
Real Estate:
Years Ended December 31,
1997 1996 1995
Balance at beginning of year $20,558 $20,467 $20,214
Property improvements 149 91 253
Balance at end of year $20,707 $20,558 $20,467
Accumulated Depreciation:
Balance at beginning of year $ 5,196 $ 4,603 $ 3,999
Additions charged to expense 581 593 604
Balance at end of year $ 5,777 $ 5,196 $ 4,603
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1997 and 1996, is approximately $22,040,000 and $21,891,000,
respectively. Accumulated depreciation for Federal income tax purposes at
December 31, 1997 and 1996, is approximately $5,004,000 and $4,496,000,
respectively.
