FORM 10-K - ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
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, 1998
[ ] 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.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip code)
Issuer's telephone number (864) 239-1000
Securities registered under Section 12(b) of the 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 issuers revenues for its most recent fiscal year. $4,765,000.
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. No
market exists for the limited partnership interests of the Registrant, and
therefore, no aggregate market value can be determined. Market value
information for Registrant's Partnership Interests is not available.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
PART I
ITEM 1. DESCRIPTION OF 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
Managing General Partner is a subsidiary of Apartment Investment and Management
Company ("AIMCO"), a publicly-traded real estate investment trust. The
Partnership's Agreement provides that the Partnership is to terminate on
December 31, 2020, unless terminated prior to such date.
The principal business of the Registrant is to operate, manage and ultimately
sell income producing real properties. Beginning in July 1986, the Registrant
offered $50,000,000 in Limited Partnership Assignee Units. The offering was
completed on March 31, 1988, with 73,341 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. In
September 1998, the three properties directly owned by the Partnership were
sold. The Partnership's joint venture partner, an affiliated partnership, is
currently marketing the joint venture properties for sale. See "Item 2.
Properties" below for a description of the Registrant's investment in joint
ventures.
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, and by agents retained by the general
partners. Until September 1, 1998 (date of property sales), property management
services were performed at the Partnership's properties by an affiliate of the
Managing General Partner.
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
services 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.
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.
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.
The real estate business in which the Partnership is engaged is highly
competitive. There are other commercial properties within the market area of the
Partnership's properties. The number and quality of competitive properties,
including those which may be managed by an affiliate of the Managing General
Partner in such market area could have a material effect on the rental market
for commercial properties owned by the Registrant and the rents that may be
charged for such properties. In addition, various limited partnerships have
been formed by the Managing General Partner and/or affiliates to engage in
business which may be competitive with the Partnership.
Transfer of Control
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 Financial Group,
Inc. ("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.
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia and Insignia Properties Trust merged into AIMCO,
with AIMCO being the surviving corporation (the "Insignia Merger"). As a
result, AIMCO ultimately acquired a 100% ownership interest in the Managing
General Partner. The Managing General Partner does not believe that this
transaction will have a material effect on the affairs and operations of the
Partnership.
Property Sales
In September 1998, the Partnership sold its three investment properties, Butler
Square Shopping Center, Kenilworth Commons Shopping Center, and Plantation
Pointe Shopping Center to an unaffiliated party. The Partnership's net proceeds
were approximately $16,651,000 after payment of closing costs. The Partnership
realized a gain of approximately $3,381,000 on the sale during the third quarter
of 1998.
Segments
Segment data for the years ended December 31, 1998, 1997 and 1996 is included in
"Item 8. Financial Statements and Supplementary Data - Note I" and is an
integral part of the Form 10-K.
ITEM 2. PROPERTIES
The Partnership owns a 33 1/3% interest in 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, which is currently being marketed for sale.
For additional information relating to Coral Palm Plaza Joint Venture and its
property see "Exhibit 99.1" attached hereto.
The Partnership also owns a 32% interest in 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, and are also being
marketed for sale. For additional information relating to Minneapolis Business
Park's Joint Venture and its properties see "Exhibit 99.2" attached hereto.
ITEM 3. 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, the Managing General Partner and several of their affiliated
partnerships and corporate entities. The complaint 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 by Insignia and entities which were, at
the time, affiliates of Insignia ("Insignia Affiliates") of interests in certain
general partner entities, past tender offers by Insignia Affiliates as well as a
recently announced agreement between Insignia and AIMCO. The complaint seeks
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 during February 1999. No
ruling on such demurrers has been received. The Managing General Partner does
not anticipate that costs associated with this case, if any, will be material to
the Partnership's overall operations.
On July 30, 1998, certain entities claiming to own limited partnership interests
in certain limited partnerships whose general partners were, at the time,
affiliates of Insignia filed a complaint entitled Everest Properties, LLC, et.
al. v. Insignia Financial Group, Inc., et. al. in the Superior Court of the
State of California, County of Los Angeles. The action involves 44 real estate
limited partnerships (including the Partnership) in which the plaintiffs
allegedly own interests and which Insignia Affiliates allegedly manage or
control (the "Subject Partnerships"). This case was settled on March 3, 1999.
The Partnership is responsible for a portion of the settlement costs. The
expense will not have a material effect on the Partnership's net income.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
During the quarter ended December 31, 1998, 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 3,680 partners of record. There is no
intention to sell additional Limited Partnership Assignee Units nor is there an
established market for these units.
During the years ended December 31, 1998, 1997 and 1996, distributions of
approximately $16,111,000 ($217.48 per limited partnership assignee unit),
$1,111,000 ($15.00 per limited partnership assignee unit) and $1,111,000 ($15.00
per limited partnership assignee unit) were paid respectively. Distributions in
1998 consisted of $15,000,000 ($202.48 per limited partnership unit) from
proceeds from the sale of three commercial properties and approximately
$1,111,000 ($15.00 per limited partnership unit) from operations. Additionally,
all distributions in 1997 and 1996 were paid from operations.
ITEM 6. SELECTED FINANCIAL DATA
The following represents selected financial data for the Registrant, for the
years ended December 31, 1998, 1997, 1996, 1995, and 1994. 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,
1998 1997 1996 1995 1994
(in thousands, except per unit data)
Total revenues $ 4,765 $ 2,150 $ 2,250 $ 2,012 $ 1,767
Net income (loss) $ 3,976 $ 176 $ 986 $ 1,017 $ (871)
Net income (loss) per limited
partnership assignee unit(1) $ 52.02 $ 2.25 $ 13.30 $ 13.44 $(11.75)
Total assets $11,576 $23,404 $24,333 $24,424 $24,566
Cash distributions per limited
partnership assignee unit $217.48 $ 15.00 $ 15.00 $ 15.00 $ 15.00
(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
The matters discussed in this Form 10-K contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the disclosure
contained in this Form 10-K and the other filings with the Securities and
Exchange Commission made by the Registrant from time to time. The discussion of
the Registrant'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 operation. 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.
This item should be read in conjunction with the financial statements and other
items contained elsewhere in this report.
Results of Operations
1998 Compared to 1997
The Partnership's net income for the years ended December 31, 1998 and 1997 was
approximately $3,976,000 and $176,000, respectively. (See "Note E" of the
financial statements for a reconciliation of these amounts to the Partnership's
federal taxable losses.) The increase in net income was due to an increase in
total revenues and a decrease in total expenses. Revenues increased due to the
gain realized on the sale of the Partnership's three investment properties and
resulting decrease in total expenses. In September 1998, the Partnership sold
three investment properties, Butler Square Shopping Center, Kenilworth Commons
Shopping Center, and Plantation Pointe Shopping Center to an unaffiliated party.
The Partnership's net proceeds were approximately $16,651,000, after payment of
closing costs. The Partnership realized a gain of approximately $3,381,000 on
the sale. Also contributing to the increase in net income was an increase in
equity in income of both of the Partnership's unconsolidated joint ventures.
The increase in equity income of the unconsolidated joint ventures are primarily
attributable to the write down of Coral Palm in 1997 and increased rental
revenues and decreased operating expenses.
Expenses of the unconsolidated joint ventures decreased due to a decrease in
major repairs and maintenance costs. Decreases in both operating and
depreciation expenses primarily contributed to the decrease in total expenses.
Operating expense decreased due to exterior painting projects at Alpha Business
Center, Plymouth Service Center and Coral Palm Plaza in 1997, as well as a
decrease in snow removal costs at the three Minneapolis properties.
Depreciation expense decreased due to the sale of the related depreciable
properties.
General and administrative expense remained relatively constant for the
comparable periods. Included in general and administrative expenses at December
31, 1998, 1997, and 1996 are management reimbursements to the Managing General
Partner allowed under the Partnership Agreement. In addition, costs associated
with the quarterly and annual communications with investors and regulatory
agencies and the annual audit and appraisals required by the Partnership
Agreement are also included.
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.
Liquidity and Capital Resources
At December 31, 1998, the Partnership had cash and cash equivalents of
approximately $3,529,000 compared to approximately $1,889,000 at December 31,
1997. The increase in cash and cash equivalents is due to approximately
$1,100,000 of cash provided by operating activities and approximately
$16,651,000 of cash provided by investing activities, which was partially offset
by approximately $16,111,000 of cash used in financing activities. Cash provided
by investing activities consisted of sales proceeds received from the 1998 sale
of the investment properties. Cash used in financing activities consisted of
partner distributions. The Partnership invests its working capital reserves in
money market accounts.
At December 31, 1997, the Partnership had cash and cash equivalents of
approximately $1,889,000 compared to approximately $1,929,000 at December 31,
1996. The decrease in cash and cash equivalents is due to approximately
$1,078,000 of cash provided by operating activities offset by approximately
$7,000 and $1,111,000 of cash used in investing and financing activities,
respectively. Cash used in investing activities consisted of capital
improvements. Cash used in financing activities consisted of distributions paid
to partners.
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 and to comply with Federal,
state, and local legal and regulatory requirements. Due to sale of all
properties, there is no 1999 budget for this Partnership.
During the years ended December 31, 1998, 1997 and 1996, distributions of
approximately $16,111,000, $1,111,000 and $1,111,000 were paid respectively.
Distributions in 1998 consist of approximately $15,000,000 from proceeds from
the sale of three commercial properties and approximately $1,111,000 of cash
from operations. Additionally, all distributions in 1997 and 1996 were paid
from operations.
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 Compliance
General Description of the Year 2000 Issue and the Nature and Effects of the
Year 2000 on Information Technology (IT) and Non-IT Systems
The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. The Partnership
is dependent upon the Managing General Partner and its affiliates for management
and administrative services ("Managing Agent"). Any of the computer programs or
hardware that have date-sensitive software or embedded chips may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result
in a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities.
Over the past two years, the Managing Agent has determined that it will be
required to modify or replace significant portions of its software and certain
hardware so that those systems will properly utilize dates beyond December 31,
1999. The Managing Agent presently believes that with modifications or
replacements of existing software and certain hardware, the Year 2000 issue can
be mitigated. However, if such modifications and replacements are not made or
not completed in time, the Year 2000 issue could have a material impact on the
operations of the Partnership.
The Managing Agent's plan to resolve Year 2000 issues involves four Phases:
assessment, remediation, testing, and implementation. To date, the Managing
Agent has fully completed its assessment of all the information systems that
could be significantly affected by the Year 2000, and has begun the remediation,
testing and implementation phases on both hardware and software systems.
Assessments are continuing in regards to embedded systems. The status of each
is detailed below.
Status of Progress in Becoming Year 2000 Compliant, Including Timetable for
Completion of Each Remaining Phase
Computer Hardware:
During 1997 and 1998, the Managing Agent identified all of the computer systems
at risk and formulated a plan to repair or replace each of the affected systems.
In August 1998, the mainframe system used by the Managing Agent became fully
functional. In addition to the mainframe, PC-based network servers and routers
and desktop PCs were analyzed for compliance. The Managing Agent has begun to
replace each of the non-compliant network connections and desktop PCs and, as of
December 31, 1998, had completed approximately 75% of this effort.
The total cost to the Managing Agent to replace the PC-based network servers,
routers and desktop PCs is expected to be approximately $1.5 million of which
$1.3 million has been incurred to date. The remaining network connections and
desktop PCs are expected to be upgraded to Year 2000 compliant systems by March
31, 1999.
Computer software:
The Managing Agent utilizes a combination of off-the-shelf, commercially
available software programs as well as custom-written programs that are designed
to fit specific needs. Both of these types of programs were studied, and
implementation plans written and executed with the intent of repairing or
replacing any non-compliant software programs.
During 1998, the Managing Agent began converting the existing property
management and rent collection systems to its management properties Year 2000
compliant systems. The estimated additional costs to convert such systems at
all properties, is $200,000, and the implementation and the testing process is
expected to be completed by March 31, 1999.
The final software area is the office software and server operating systems.
The Managing Agent has upgraded all non-compliant office software systems on
each PC and has upgraded 80% of the server operating systems. The remaining
server operating systems are planned to be upgraded to be Year 2000 compliant by
March 31, 1999.
Operating Equipment:
The Managing Agent has operating equipment, primarily at the property sites,
which needed to be evaluated for Year 2000 compliance. In September 1997, the
Managing Agent began taking a census and inventory of embedded systems
(including those devices that use time to control systems and machines at
specific properties, for example elevators, heating, ventilating, and air
conditioning systems, security and alarm systems, etc.).
The Managing Agent has chosen to focus its attention mainly upon security
systems, elevators, heating, ventilating and air conditioning systems, telephone
systems and switches, and sprinkler systems. While this area is the most
difficult to fully research adequately, management has not yet found any major
non-compliance issues that put the Managing Agent at risk financially or
operationally. The Managing Agent intends to have a third-party conduct an
audit of these systems and report their findings by March 31, 1999.
Any of the above operating equipment that has been found to be non-compliant to
date has been replaced or repaired. To date, these have consisted only of
security systems and phone systems. As of December 31, 1998 the Managing Agent
has evaluated approximately 86% of the operating equipment for the Year 2000
compliance.
The total cost incurred for all properties managed by the Managing Agent as of
December 31, 1998 to replace or repair the operating equipment was approximately
$400,000. The Managing Agent estimates the cost to replace or repair any
remaining operating equipment is approximately $325,000, which is expected to be
completed by April 30, 1999.
The Managing Agent continues to have "awareness campaigns" throughout the
organization designed to raise awareness and report any possible compliance
issues regarding operating equipment within our enterprise.
Nature and Level of Importance of Third Parties and Their Exposure to the Year
2000
The Managing Agent continues to conduct surveys of its banking and other vendor
relationships to assess risks regarding their Year 2000 readiness. The Managing
Agent has banking relationships with three major financial institutions, all of
which have indicated their compliance efforts will be complete before May 1999.
The Managing Agent has updated data transmission standards with two of the three
financial institutions. The Managing Agent's contingency plan in this regard is
to move accounts from any institution that cannot be certified Year 2000
compliant by June 1, 1999.
The Partnership does not rely heavily on any single vendor for goods and
services, and does not have significant suppliers and subcontractors who share
information systems (external agent). To date the Partnership is not aware of
any external agent with a Year 2000 compliance issue that would materially
impact the Partnership's results of operations, liquidity, or capital resources.
However, the Partnership has no means of ensuring that external agents will be
Year 2000 compliant.
The Managing Agent does not believe that the inability of external agents to
complete their Year 2000 remediation process in a timely manner will have a
material impact on the financial position or results of operations of the
Partnership. However, the effect of non-compliance by external agents is not
readily determinable.
Costs to Address Year 2000
The total cost of the Year 2000 project to the Managing Agent is estimated at
$3.5 million and is being funded from operating cash flows. To date, the
Managing Agent has incurred approximately $2.8 million ($0.6 million expensed
and $2.2 million capitalized for new systems and equipment) related to all
phases of the Year 2000 project. Of the total remaining project costs,
approximately $0.5 million is attributable to the purchase of new software and
operating equipment, which will be capitalized. The remaining $0.2 million
relates to repair of hardware and software and will be expensed as incurred.
The Partnership's portion of these costs are not material.
Risks Associated with the Year 2000
The Managing Agent believes it has an effective program in place to resolve the
Year 2000 issue in a timely manner. As noted above, the Managing Agent has not
yet completed all necessary phases of the Year 2000 program. In the event that
the Managing Agent does not complete any additional phases, certain worst case
scenarios could occur. The worst case scenarios could include elevators,
security and heating, ventilating and air conditioning systems that read
incorrect dates and operate with incorrect schedules (e.g., elevators will
operate on Monday as if it were Sunday). Although such a change would be
annoying to residents, it is not business critical.
In addition, disruptions in the economy generally resulting from Year 2000
issues could also adversely affect the Partnership. The Partnership could be
subject to litigation for, among other things, computer system failures,
equipment shutdowns or failure to properly date business records. The amount of
potential liability and lost revenue cannot be reasonably estimated at this
time.
Contingency Plans Associated with the Year 2000
The Managing Agent has contingency plans for certain critical applications and
is working on such plans for others. These contingency plans involve, among
other actions, manual workarounds and selecting new relationships for such
activities as banking relationships and elevator operating systems.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CENTURY PENSION INCOME FUND XXIV,
List of Financial Statements
Independent Auditors' Report
Balance Sheets - December 31, 1998 and 1997
Statements of Operations - Years Ended December 31, 1998, 1997 and 1996
Statements of Changes in Partners' Capital - Years Ended December 31,
1998, 1997 and 1996
Statements of Cash Flows - Years Ended December 31, 1998, 1997 and 1996
Notes to Financial Statements
Independent Auditors' Report
To the Partners
Century Pension Income Fund XXIV,
A California Limited Partnership
Greenville, South Carolina
We have audited the accompanying balance sheets of Century Pension Income Fund
XXIV, A California Limited Partnership (the "Partnership") as of December 31,
1998 and 1997, 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, 1998. 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, 1998 and 1997, and
the results of its operations and its cash flows for each of the three years in
the period ended December 31, 1998 in conformity with generally accepted
accounting principles.
/s/ Imowitz Koenig & Co., LLP
Certified Public Accountants
New York, N.Y.
March 3, 1999
CENTURY PENSION INCOME FUND XXIV
BALANCE SHEETS
(in thousands, except unit data)
December 31,
1998 1997
Assets
Cash and cash equivalents $ 3,529 $ 1,889
Receivables and deposits -- 308
Other assets 186 181
Investments in unconsolidated joint ventures 7,861 7,429
Investment properties:
Land -- 4,397
Buildings and related personal property -- 13,386
-- 17,783
Accumulated depreciation -- (4,186)
-- 13,597
$ 11,576 $ 23,404
Liabilities and Partners' Capital
Liabilities
Accounts payable $ 3 $ 4
Tenant security deposit liabilities -- 34
Accrued property taxes -- 81
Due to general partner 176 --
Other liabilities 274 27
Partners' Capital
General partner's -- --
Limited partners' (73,341 units issued and
outstanding at December 31, 1998 and 1997) 11,123 23,258
11,123 23,258
$ 11,576 $ 23,404
See Accompanying Notes to Financial Statements
CENTURY PENSION INCOME FUND XXIV
STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended December 31,
1998 1997 1996
Revenues:
Rental income $ 1,233 $2,044 $2,133
Other income 151 106 117
Gain on sale of investment properties 3,381 -- --
Total revenues 4,765 2,150 2,250
Expenses:
Operating 235 400 392
General and administrative 556 516 656
Depreciation 322 482 478
Property taxes 108 161 161
Total expenses 1,221 1,559 1,687
Income before equity in income (loss) of
unconsolidated joint ventures 3,544 591 563
Equity in income (loss) of unconsolidated
joint ventures 432 (415) 423
Net income $ 3,976 $ 176 $ 986
Net income allocated to general partner $ 161 $ 11 $ 11
Net income allocated to limited partners 3,815 165 975
$ 3,976 $ 176 $ 986
Net income per limited partnership unit $ 52.02 $ 2.25 $13.30
Distribution per limited partnership unit $217.48 $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, 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
Net income for the year ended
December 31, 1998 -- 161 3,815 3,976
Distributions to partners -- (161) (15,950) (16,111)
Partners' capital at
December 31, 1998 73,341 $ -- $ 11,123 $ 11,123
See Accompanying Notes to Financial Statements
CENTURY PENSION INCOME FUND XXIV
STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1998 1997 1996
Cash flows from operating activities:
Net income $ 3,976 $ 176 $ 986
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 322 482 478
Amortization of lease commissions 32 39 44
Gain on sale of investment properties (3,381) -- --
Equity in (income) loss of unconsolidated
Joint ventures' operations (432) 415 (423)
Change in accounts:
Receivables and deposits 308 (10) (104)
Other assets 6 (30) (88)
Accounts payable (4) (9) 10
Tenant security deposit liabilities -- (9) (3)
Accrued property taxes 26 15 25
Other liabilities 247 9 2
Net cash provided by operating activities 1,100 1,078 927
Cash flows from investing activities:
Proceeds from sale of investment properties 16,651 -- --
Property improvements and replacements -- (7) (39)
Contributions to unconsolidated joint ventures -- -- (38)
Net cash provided by (used in)
investing activities 16,651 (7) (77)
Cash flows used in financing activities:
Distributions paid to partners (16,111) (1,111) (1,111)
Net increase (decrease) in cash and cash
equivalents 1,640 (40) (261)
Cash and cash equivalents at beginning of period 1,889 1,929 2,190
Cash and cash equivalents at end of period $ 3,529 $ 1,889 $ 1,929
Supplemental disclosure of non-cash transaction:
Subordinated sales interest payable to
general partner $ 176 $ -- $ --
See Accompanying Notes to Financial Statements
Century Pension Income Fund XXIV
Notes to Financial Statements
December 31, 1998
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 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").
Both NPI Equity II and FCMC are wholly-owned by Apartment Investment and
Management Company, a publicly-traded real estate investment trust ("AIMCO").
The directors and officers of the Managing General Partner also serve as
executive officers of AIMCO. The Partnership is to terminate on December 31,
2020, unless terminated prior to such date.
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 1998,
1997 and 1996.
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 leased certain commercial space to tenants under
various lease terms. The leases were accounted for as operating leases in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 13,
"Accounting for Leases".
Some of the leases contained stated rental increases during their term. For
leases with fixed rental increases, rents were recognized on a straight-line
basis over the terms of the lease. Cash collections exceeded the straight-line
basis of revenue recognition by approximately $9,000 during the year ended
December 31, 1998. This straight-line basis recognized $25,000 and $39,000 more
in rental income than was collected in 1997 and 1996, respectively. For all
other leases, minimum rents were recognized over the terms of the leases.
Fair Value of Financial Instruments: Statement of Financial Accounting Standards
("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.
Depreciation: Depreciation was 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 were included in other
assets, are deferred and amortized over the lives of the related leases. At
December 31, 1997, deferred leasing commissions totaled approximately $244,000
and accumulated amortization totaled approximately $92,000.
Escrows for Taxes: All escrow funds were designated for the payment of real
estate taxes and were held by the Partnership. These funds totaled
approximately $114,000 at December 31, 1997 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.
Segment Reporting: In June 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 131, "Disclosure about
Segments of an Enterprise and Related Information" ("Statement 131"), which is
effective for years beginning after December 15, 1997. Statement 131
established standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports. It also establishes standards for related
disclosures about products and services, geographic areas, and major customers
(see "Note I" for required disclosure).
Reclassification: Certain reclassifications have been made to the 1997 and 1996
balances to conform to the 1998 presentation.
NOTE B _ TRANSFER OF CONTROL
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 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, IFGP Corporation, an affiliate of Insignia Financial Group,
Inc. ("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.
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia and Insignia Properties Trust merged into AIMCO,
with AIMCO being the surviving corporation (the "Insignia Merger"). As a
result, AIMCO ultimately acquired a 100% ownership interest in the Managing
General Partner. The Managing General Partner does not believe that this
transaction 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 charged to expense in 1998, 1997
and 1996:
For the Years Ended December 31,
1998 1997 1996
(in thousands)
Partnership management fee (1) $123 $123 $123
Reimbursement for services of affiliates (2) 118 97 126
Subordinated sales interest (3) 176 -- --
(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 the years ended December 31, 1998 and 1996.
(3) The Partnership Agreement provides for the payment of a subordinated sales
interest to the general partner not to exceed the lesser of (i) three
percent of the gross sales price of a property or (ii) one-half of the
competitive real estate commission, as defined in the Partnership
Agreement. The general partner was entitled to this fee in connection with
the sale of the Partnership's three investment properties during 1998.
Payment cannot be made until the Limited Partners receive their original
invested capital plus a 6% per annum return. Once the limited partners have
received their priority return and return of their original investment, the
subordinated sales interest can be paid. The Partnership has recognized a
deferred asset until the fee becomes payable.
For the period of January 19, 1996 to August 31, 1997, the Partnership insured
its properties under a master policy through an agency affiliated with the
Managing General Partner with an 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.
The general partner received cash distributions of approximately $161,000,
$11,000 and $11,000, during each of the years ended December 31, 1998, 1997, and
1996, respectively.
NOTE D - 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 ("CPIF 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,
1998 1997
Total assets $ 5,049 $ 5,041
Total liabilities (223) (366)
Total venture's equity $ 4,826 $ 4,675
Years ended December 31,
1998 1997
Total revenues $ 987 $ 739
Total expenses (836) (2,897)
Net income (loss) $ 151 $(2,158)
In 1996, the Partnership made contributions of approximately $38,000 to Coral
Palm. In 1997, the property owned by Coral Palm 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 CPIF 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 Parks Joint Venture is as
follows (in thousands):
December 31,
1998 1997
Total assets $19,874 $18,331
Total liabilities (539) (167)
Total venture's equity $19,335 $18,164
Years ended December 31,
1998 1997
Total revenues $ 3,293 $ 3,190
Total expenses (2,122) (2,262)
Net income $ 1,171 $ 928
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, except per unit data):
1998 1997 1996
Net income - financial statements $ 3,976 $ 176 $ 986
Differences resulted from:
Depreciation 82 145 132
Equity in unconsolidated joint venture's operations 50 765 (16)
Gain on sale (1,477) -- --
Other 25 14 (38)
Net income - income tax method $ 2,656 $ 1,100 $ 1,064
Taxable income per limited partnership assignee unit
after giving effect to the allocation to the
general partner $ 34 $ 15 $ 14
Partner's equity - financial statements $11,123 $23,258 $24,193
Differences resulted from:
Sales commissions 3,050 3,050 3,050
Organization expenses 2,452 2,452 2,452
Depreciation -- 1,106 961
Payments credited to rental properties -- 112 112
Equity in unconsolidated joint ventures' operations 4,349 4,299 3,534
Subordinated sales interest (176) -- --
Other (7) (31) (44)
Partners' equity - income tax method $20,791 $34,246 $34,258
NOTE F - REAL ESTATE AND ACCUMULATED DEPRECIATION
Years Ended December 31,
1998 1997 1996
Real Estate:
Balance at beginning of year $ 17,783 $ 17,776 $ 17,737
Property improvements and replacements -- 7 39
Disposition of properties (17,783) -- --
Balance at end of year $ -- $ 17,783 $ 17,776
Accumulated Depreciation:
Balance at beginning of year $ 4,186 $ 3,704 $ 3,226
Additions charged to expense 322 482 478
Disposition of properties (4,508) -- --
Balance at end of year $ -- $ 4,186 $ 3,704
The aggregate cost of the investment properties for Federal income tax purposes
at December 31, 1997 and 1996 is approximately $17,896,000 and $17,888,000,
respectively. Accumulated depreciation for Federal income tax purposes at
December 31, 1997 and 1996 is approximately $3,080,000 and $2,743,000,
respectively.
NOTE G - SALE OF INVESTMENT PROPERTY
In September 1998, the Partnership sold its three investment properties, Butler
Square Shopping Center, Kenilworth Commons Shopping Center, and Plantation
Pointe Shopping Center to an unaffiliated party. The Partnership's net proceeds
were approximately $16,651,000 after payment of closing costs. The Partnership
realized a gain of approximately $3,381,000 on the sale during the third quarter
of 1998.
The sales transaction is summarized as follows:
(in thousands)
Cash proceeds received $ 16,651
Net real estate (1) (13,275)
Other 5
Gain on sale of investment property $ 3,381
(1) Real estate at cost, net of accumulated depreciation of approximately
$4,508,000.
NOTE H _ DISTRIBUTIONS
During the years ended December 31, 1998, 1997 and 1996, distributions of
approximately $16,111,000, $1,111,000 and $1,111,000 were paid, respectively.
Distributions in 1998 consisted of $15,000,000 ($202.48 per limited partnership
unit) from sales proceeds from the sale of three commercial properties and
approximately $1,111,000 ($15.00 per limited partnership unit) from operations.
Additionally, all distributions in 1997 and 1996 were paid from operations.
NOTE I _ SEGMENT INFORMATION
Description of the types of products and services from which the reportable
segment derives its revenues: As defined by SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information", the Partnership had one
reportable segment: commercial properties. The commercial property segment
consisted of three retail shopping centers located in three different states:
South Carolina, North Carolina, and Georgia. All of the commercial properties
were sold in September 1998.
Measurement of segment profit or loss: The Partnership evaluates performance
based on net income. The accounting policies of the reportable segment are the
same as those described in the summary of significant accounting policies.
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 is
managed separately, they have been aggregated into one segment as they provide
services with similar types of products and customers.
Segment information for the years 1998, 1997, and 1996 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 segment.
1998
Commercial Other Totals
Rental income $ 1,233 $ -- $ 1,233
Other income 9 142 151
Depreciation 322 -- 322
General and administrative expense -- 556 556
Gain on disposal of assets 3,381 -- 3,381
Equity in income of joint venture -- 432 432
Segment profit 3,958 18 3,976
Total assets 186 11,390 11,576
Capital expenditures for investment
properties -- -- --
1997
Commercial Other Totals
Rental income $ 2,044 $ -- $ 2,044
Other income 9 97 106
Depreciation 482 -- 482
General and administrative expense -- 516 516
Equity in loss of joint venture -- (415) (415)
Segment profit (loss) 1,010 (834) 176
Total assets 14,102 9,302 23,404
Capital expenditures for investment
properties 7 -- 7
1996
Commercial Other Totals
Rental income $ 2,133 $ -- $ 2,133
Other income 16 101 117
Depreciation 478 -- 478
General and administrative expense -- 656 656
Equity in income of joint venture -- 423 423
Segment profit (loss) 1,118 (132) 986
Total assets 14,570 9,763 24,333
Capital expenditures for investment
properties 39 -- 39
NOTE J _ 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, the Managing General Partner and several of their affiliated
partnerships and corporate entities. The complaint 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 by Insignia and entities which were, at
the time, affiliates of Insignia ("Insignia Affiliates") of interests in certain
general partner entities, past tender offers by Insignia Affiliates as well as a
recently announced agreement between Insignia and AIMCO. The complaint seeks
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 during February 1999. No
ruling on such demurrers has been received. The Managing General Partner does
not anticipate that costs associated with this case, if any, will be material to
the Partnership's overall operations.
On July 30, 1998, certain entities claiming to own limited partnership interests
in certain limited partnerships whose general partners were, at the time,
affiliates of Insignia filed a complaint entitled Everest Properties, LLC, et.
al. v. Insignia Financial Group, Inc., et. al. in the Superior Court of the
State of California, County of Los Angeles. The action involves 44 real estate
limited partnerships (including the Partnership) in which the plaintiffs
allegedly own interests and which Insignia Affiliates allegedly manage or
control (the "Subject Partnerships"). This case was settled on March 3, 1999.
The Partnership is responsible for a portion of the settlement costs. The
expense will not have a material effect on the Partnership's net income.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
ITEM 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 Century Pension Income Fund XXIV (the "Partnership" or "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 subsidiary of Apartment Investment and Management Company
("AIMCO").
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
Patrick J. Foye 41 Executive Vice President and Director
Timothy R. Garrick 42 Vice President - Accounting and Director
Patrick J. Foye has been Executive Vice President and Director of the Managing
General Partner since October 1, 1998. Mr. Foye has served as Executive Vice
President of AIMCO since May 1998. Prior to joining AIMCO, Mr. Foye was a
partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to
1998 and was Managing Partner of the firm's Brussels, Budapest and Moscow
offices from 1992 through 1994. Mr. Foye is also Deputy Chairman of the Long
Island Power Authority and serves as a member of the New York State
Privatization Council. He received a B.A. from Fordham College and a J.D. from
Fordham University Law School.
Timothy R. Garrick has served as Vice President-Accounting of AIMCO and Vice
President-Accounting and Director of the Managing General Partner since October
1, 1998. Prior to that date, Mr. Garrick served as Vice President-Accounting
Services of Insignia Financial Group since June of 1997. From 1992 until June
of 1997, Mr. Garrick served as Vice President of Partnership Accounting and from
1990 to 1992 as an Asset Manager for Insignia Financial Group. From 1984 to
1990, Mr. Garrick served in various capacities with U.S. Shelter Corporation.
From 1979 to 1984, Mr. Garrick worked on the audit staff of Ernst & Whinney.
Mr. Garrick received his B.S. Degree from the University of South Carolina and
is a Certified Public Accountant.
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 as of December
31, 1998.
Entity Number of Units Percentage
Insignia Properties LP 2 0.003%
(an affiliate of AIMCO)
Their business address is 55 Beattie Place, Greenville, SC 29602.
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.
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 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 charged to expense in 1998, 1997
and 1996:
For the Years Ended December 31,
1998 1997 1996
(in thousands)
Partnership management fee (1) $123 $123 $123
Reimbursement for services of affiliates (2) 118 97 126
Subordinated sales interest (3) 176 -- --
(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 the years ended December 31, 1998 and 1996
(3) The Partnership Agreement provides for the payment of a subordinated sales
interest to the general partner to not exceed the lesser of (i) three
percent of the gross sales price of a property or (ii) one-half of the
competitive real estate commission, as defined in the Partnership
Agreement. The general partner is entitled to this fee in connection with
the sale of the Partnership's three investment properties during 1998.
Payment cannot be made until the Limited Partners receive their original
invested capital plus a 6% per annum return. Once the limited partners have
received their priority return and return of their original investment, the
subordinated sales interest can be paid. The Partnership has recognized a
deferred asset until the fee becomes payable.
For the period of January 19, 1996 to August 31, 1997, the Partnership insured
its properties under a master policy through an agency affiliated with the
Managing General Partner with an 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.
The general partner received cash distributions of approximately $161,000,
$11,000 and $11,000 during each of the years ended December 31, 1998, 1997, and
1996.
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.
2.1 Agreement and Plan of Merger, dated as of October 1, 1998, by
and between AIMCO and IPT; incorporated by reference to
Exhibit 2.1 of IPT's Current Report on Form 8-K dated October
1, 1998.
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, 1998, 1997 and
1996.
99.2 Minneapolis Business Parks Joint Venture and audited financial
statements for the years ended December 31, 1998, 1997 and
1996.
(b) Reports on Form 8-K:
Current Report on Form 8-K dated October 1, 1998 and filed on October
16, 1998 disclosing change in control of Registrant from Insignia
Financial Group, Inc. to AIMCO.
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 19th 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/ Patrick J. Foye
Patrick J. Foye
Executive Vice President
By:/s/Timothy R. Garrick
Timothy R. Garrick
Vice President _ Accounting
Date: March 31, 1999
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities on the date
indicated.
/s/ Patrick J. Foye Executive Vice President Date: March 31, 1999
Patrick J. Foye and Director
/s/ Timothy R. Garrick Vice President - Accounting Date: March 31, 1999
Timothy R. Garrick and Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Century
Pension Income fund XXIV 1998 Year-end 10-KSB and is qualified in its entirety
by reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000780590
<NAME> CENTURY PENSION INCOME FUND XXIV
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 3,529
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 11,576
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 11,123
<TOTAL-LIABILITY-AND-EQUITY> 11,576
<SALES> 0
<TOTAL-REVENUES> 4,765
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,221
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,976
<EPS-PRIMARY> 52.02<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, 1998, 1997 and 1996
Exhibit 99.1 (Continued)
CORAL PALM PLAZA JOINT VENTURE
List of Financial Statements
Independent Auditors' Report
Balance Sheets - December 31, 1998 and 1997
Statements of Operations - Years Ended December 31, 1998, 1997 and 1996
Statements of Changes in Partners' Capital - Years Ended December 31,
1998, 1997 and 1996
Statements of Cash Flows - Years Ended December 31, 1998, 1997 and 1996
Notes to Financial Statements
Exhibit 99.1 (Continued)
CORAL PALM PLAZA JOINT VENTURE
Independent Auditors' Report
To the Partners
Coral Palm Plaza Joint Venture
Greenville, South Carolina
We have audited the accompanying balance sheets of Coral Palm Plaza Joint
Venture (the "Partnership") as of December 31, 1998 and 1997, 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, 1998. 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 Coral Palm Plaza Joint Venture
as of December 31, 1998 and 1997, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1998 in
conformity with generally accepted accounting principles.
/s/ Imowitz Koenig & Co., LLP
Certified Public Accountants
New York, N.Y.
March 3, 1999
Exhibit 99.1 (continued)
CORAL PALM PLAZA JOINT VENTURE
BALANCE SHEETS
(in thousands)
December 31,
1998 1997
Assets
Cash and cash equivalents $ 702 $ 427
Other assets 523 652
Investment Property:
Land 1,980 1,980
Building and related personal property 5,658 5,532
7,638 7,512
Less accumulated depreciation (3,814) (3,550)
3,824 3,962
$ 5,049 $ 5,041
Liabilities and Partners' Capital
Accrued expenses and other liabilities $ 223 $ 366
Partners' Capital:
Century Pension Income Fund XXIII 3,212 3,111
Century Pension Income Fund XXIV 1,614 1,564
Total partners' capital 4,826 4,675
$ 5,049 $ 5,041
See Accompanying Notes to Financial Statements
Exhibit 99.1 (continued)
CORAL PALM PLAZA JOINT VENTURE
STATEMENTS OF OPERATIONS
(in thousands)
Years Ended December 31,
1998 1997 1996
Revenues:
Rental income $ 951 $ 706 $ 1,157
Other income 36 33 26
Total revenues 987 739 1,183
Expenses:
Operating 378 380 357
General and administrative 16 4 16
Depreciation 264 254 250
Property taxes 178 192 184
Provision for impairment -- 2,067 --
Total expenses 836 2,897 807
Net income (loss) $ 151 $(2,158) $ 376
Allocation of net income (loss):
Century Pension Income Fund XXIII $ 101 $(1,446) $ 252
Century Pension Income Fund XXIV 50 (712) 124
$ 151 $(2,158) $ 376
See Accompanying Notes to Financial Statements
Exhibit 99.1 (continued)
CORAL PALM PLAZA JOINT VENTURE
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(in thousands)
<TABLE>
<CAPTION>
Century Pension Century Pension
Income Fund XXIII Income Fund XXIV Total
<S> <C> <C> <C>
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
Net income for the year ended
December 31, 1998 101 50 151
Partners' capital at December 31, 1998 $ 3,212 $ 1,614 $ 4,826
</TABLE>
See Accompanying Notes to Financial Statements
Exhibit 99.1 (continued)
CORAL PALM PLAZA JOINT VENTURE
STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1998 1997 1996
Cash flows from operating activities:
Net income (loss) $ 151 $(2,158) $ 376
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation 264 254 250
Amortization of lease commissions 47 39 37
Provision for impairment of value -- 2,067 --
Change in accounts:
Other assets 82 (78) (226)
Accrued expenses and other liabilities (143) (102) 123
Net cash provided by operating activities 401 22 560
Cash flows from investing activities:
Property improvements and replacements (126) (53) (477)
Net cash used in investing activities (126) (53) (477)
Cash flows provided by financing activities:
Contributions received from partners -- -- 112
Net increase (decrease) in cash and cash equivalents 275 (31) 195
Cash and cash equivalents at beginning of year 427 458 263
Cash and cash equivalents at end of year $ 702 $ 427 $ 458
See Accompanying Notes to Financial Statements
Exhibit 99.1 (continued)
CORAL PALM PLAZA JOINT VENTURE
Notes To Financial Statements
December 31, 1998
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 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.
Tenant Security Deposits: The Partnership requires security deposits from
lessees for the duration of the lease and such deposits are included in 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 $6,000 and $28,000 more in rental income than was collected in
1998 and 1997, 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: The Partnership's investment property, which consists of
one shopping center, is 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 had 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, 1998 and 1997 deferred leasing
commissions totaled approximately $340,000 and $324,000 and accumulated
amortization totaled approximately $150,000 and $104,000, 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 1997 and 1996
balances to conform to the 1998 presentation.
NOTE B - RELATED PARTY TRANSACTIONS
During 1998 and 1997, the Partnership paid property management fees of
approximately $34,000 and $31,000, respectively, to an affiliate of the general
partners. 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 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 - REAL ESTATE AND ACCUMULATED DEPRECIATION
Initial Cost to Partnership
(in thousands)
Buildings Net Cost Capitalized
and Related (written down) Subsequent
Description Encumbrances Land Personal Property to Acquisition
(in thousands)
Coral Palm
Plaza $ -- $ 5,009 $11,046 $(8,417)
<TABLE>
<CAPTION>
Gross Amount at Which Carried
at December 31, 1998
(in thousands)
Buildings
and Related
Personal Accumulated Year of Acquired Depreciable
Description Land Property Total Depreciation Construction Date Life-Years
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Coral Palm Plaza $1,980 $5,658 $7,638 $3,814 1985 1/87 4 to 39 Years
</TABLE>
Reconciliation of Real Estate and Accumulated Depreciation (in thousands)
Years Ended December 31,
1998 1997 1996
Real Estate:
Balance at beginning of year $ 7,512 $ 9,526 $ 9,049
Property improvements 126 53 477
Allowance for impairment of value -- (2,067) --
Balance at end of year $ 7,638 $ 7,512 $ 9,526
Accumulated Depreciation:
Balance at beginning of year $ 3,550 $ 3,296 $ 3,046
Additions charged to expense 264 254 250
Balance at end of year $ 3,814 $ 3,550 $ 3,296
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1998 and 1997, is approximately $17,224,000 and $17,098,000,
respectively. Accumulated depreciation for Federal income tax purposes at
December 31, 1998 and 1997, is approximately $4,034,000 and $3,678,000,
respectively.
NOTE F - MINIMUM FUTURE RENTAL REVENUES
Minimum future rental revenues from operating leases having non-cancelable lease
terms in excess of one year at December 31, 1998 are as follows (in thousands):
1999 $ 818
2000 795
2001 637
2002 663
2003 549
Thereafter 993
Total $4,455
Rental revenue from one tenant was 20 percent, 22 percent and 12 percent of
total rental revenues in 1998, 1997 and 1996, respectively. Rental revenue from
another tenant was 11 percent, 13 percent and 12 percent of total rental
revenues in 1998, 1997 and 1996, respectively.
Rental revenues included percentage and other contingent rentals of
approximately $60,000 in 1998 and approximately $33,000 in 1996. There was no
percentage or contingent rental revenue in 1997.
Amortization of deferred leasing commissions totaled $47,000, $39,000 and
$37,000 for the years ended December 31, 1998, 1997, and 1996, respectively, and
are included in operating expense.
EXHIBIT 99.2
MINNEAPOLIS BUSINESS PARKS JOINT VENTURE
FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 and 1996
Exhibit 99.2 (continued)
MINNEAPOLIS BUSINESS PARKS JOINT VENTURE
List of Financial Statements
Independent Auditors' Report
Balance Sheets - December 31, 1998 and 1997
Statements of Operations - Years Ended December 31, 1998, 1997 and 1996
Statements of Changes in Partners' Capital - Years Ended December 31,
1998, 1997 and 1996
Statements of Cash Flows - Years Ended December 31, 1998, 1997 and 1996
Notes to Financial Statements
Exhibit 99.2 (continued)
MINNEAPOLIS BUSINESS PARKS JOINT VENTURE
Independent Auditors' Report
To the Partners
Minneapolis Business Parks Joint Venture
Greenville, South Carolina
We have audited the accompanying balance sheets of Minneapolis Business Parks
Joint Venture (the "Partnership") as of December 31, 1998 and 1997, 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, 1998. 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, 1998 and 1997, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1998 in conformity with generally accepted accounting principles.
/s/ Imowitz Koenig & Co., LLP
Certified Public Accountants
New York, N.Y.
March 3, 1999
Exhibit 99.2 (continued)
MINNEAPOLIS BUSINESS PARKS JOINT VENTURE
BALANCE SHEETS
(in thousands)
December 31,
1998 1997
Assets
Cash and cash equivalents $ 4,191 $ 2,751
Receivables and other assets 1,033 650
Investment Properties:
Land 4,523 4,523
Building and related personal property 16,489 16,184
21,012 20,707
Less accumulated depreciation (6,362) (5,777)
14,650 14,930
$19,874 $18,331
Liabilities and Partners' Capital
Accrued expenses and other liabilities $ 539 $ 167
Partners' Capital:
Century Pension Income Fund XXIII 13,088 12,299
Century Pension Income Fund XXIV 6,247 5,865
Total partners' capital 19,335 18,164
$19,874 $18,331
See Accompanying Notes to Financial Statements
Exhibit 99.2 (continued)
MINNEAPOLIS BUSINESS PARKS JOINT VENTURE
STATEMENTS OF OPERATIONS
(in thousands)
Years Ended December 31,
1998 1997 1996
Revenues:
Rental income $3,121 $3,052 $3,000
Other income 172 138 136
Total revenues 3,293 3,190 3,136
Expenses:
Operating 773 931 837
General and administrative 19 5 16
Depreciation 585 581 593
Property taxes 745 745 756
Total expenses 2,122 2,262 2,202
Net income $1,171 $ 928 $ 934
Allocation of net income:
Century Pension Income Fund XXIII $ 789 $ 631 $ 635
Century Pension Income Fund XXIV 382 297 299
$1,171 $ 928 $ 934
See Accompanying Notes to Financial Statements
Exhibit 99.2 (continued)
MINNEAPOLIS BUSINESS PARKS JOINT VENTURE
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(in thousands)
<TABLE>
<CAPTION>
Century Pension Century Pension
Income Fund XXIII Income Fund XXIV Total
<S> <C> <C> <C>
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
Net income for the year ended
December 31, 1998 789 382 1,171
Partners' capital at December 31, 1998 $13,088 $ 6,247 $19,335
</TABLE>
See Accompanying Notes to Financial Statements
Exhibit 99.2 (continued)
MINNEAPOLIS BUSINESS PARKS JOINT VENTURE
STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1998 1997 1996
Cash flows from operating activities:
Net income $1,171 $ 928 $ 934
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 585 581 593
Amortization 80 71 84
Change in accounts:
Receivables and other assets (463) (214) (155)
Accrued expenses and other liabilities 372 (9) 19
Net cash provided by operating activities 1,745 1,357 1,475
Cash flows from investing activities:
Property improvements and replacements (305) (149) (91)
Cash used in investing activities (305) (149) (91)
Cash flows from financing activities: -- -- --
Net increase in cash and cash equivalents 1,440 1,208 1,384
Cash and cash equivalents at beginning of year 2,751 1,543 159
Cash and cash equivalents at end of year $4,191 $2,751 $1,543
See Accompanying Notes to Financial Statements
Exhibit 99.2 (continued)
MINNEAPOLIS BUSINESS PARKS JOINT VENTURE
Notes to Financial Statements
December 31, 1998
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. Cash collections exceeded the straight-line
basis of revenue recognition by approximately $43,000 in 1998. The straight-
line basis recognized approximately $23,000 more in rental income than was
collected in 1997. For all other leases, minimum rents are recognized over the
terms of the leases.
Investment Properties: Investment properties include three commercial
properties and 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, 1998 and 1997, deferred leasing commissions totaled approximately
$422,000 and $452,000 and accumulated amortization totaled approximately
$236,000 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 1997 and 1996
balances to conform to the 1998 presentation.
NOTE B - MINIMUM FUTURE RENTAL REVENUES
Minimum future rental revenues from operating leases having non-cancelable lease
terms in excess of one year at December 31, 1998, are as follows (in thousands):
1999 $1,891
2000 1,286
2001 712
2002 294
2003 167
Thereafter 7
Total $4,357
Amortization of deferred leasing commissions totaled $80,000, $62,000 and
$84,000 for the years ended December 31, 1998, 1997, and 1996, respectively.
NOTE C - REAL ESTATE AND ACCUMULATED DEPRECIATION
Initial Cost to Partnership
(in thousands)
Buildings and Net Cost Capitalized
Related Personal (Removed) Subsequent
Description Encumbrances Land Property to Acquisition
(in thousands)
Alpha Business Center $ -- $ 3,199 $ 6,735 $ 733
Plymouth Service -- 475 2,306 37
Westpoint Business -- 1,166 5,987 374
Total $ -- $ 4,840 $15,028 $ 1,144
<TABLE>
<CAPTION>
Gross Amount at Which Carried
at December 31, 1998
(in thousands)
Buildings
and Related
Personal Accumulated Year of Acquired Depreciable
Description Land Property Total Depreciation Construction Date Life-Years
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Alpha Business Center $ 3,002 $ 7,665 $10,667 $ 3,025 1979 5/87 5-39 Years
Plymouth Service 419 2,399 2,818 871 1979 5/87 5-39 Years
Westpoint Business 1,102 6,425 7,527 2,466 1979 5/87 5-39 Years
Total $ 4,523 $16,489 $21,012 $ 6,362
</TABLE>
Reconciliation of Real Estate and Accumulated Depreciation (in thousands)
Years Ended December 31,
1998 1997 1996
Real Estate
Balance at beginning of year $20,707 $20,558 $20,467
Property improvements 305 149 91
Balance at end of year $21,012 $20,707 $20,558
Accumulated Depreciation:
Balance at beginning of year $ 5,777 $ 5,196 $ 4,603
Additions charged to expense 585 581 593
Balance at end of year $ 6,362 $ 5,777 $ 5,196
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1998 and 1997, is approximately $22,236,000 and $22,040,000,
respectively. Accumulated depreciation for Federal income tax purposes at
December 31, 1998 and 1997, is approximately $5,517,000 and $5,004,000,
respectively.
