<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of
the Securities Exchange Act of 1934
FOR QUARTER ENDED JUNE 30, 1996
COMMISSION FILE NUMBER 33-22857
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
A CALIFORNIA LIMITED PARTNERSHIP
I.R.S. EMPLOYER IDENTIFICATION NO. 95-4166241
9090 Wilshire Blvd., Suite 201
Beverly Hills, Calif. 90211
Registrant's Telephone Number,
Including Area Code (310) 278-2191
Securities Registered Pursuant to
Section 12(b) or 12(g) of the Act
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed with the Commission by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding twelve months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
<PAGE> 2
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1996
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements and Notes to Financial Statements
Balance Sheets, June 30, 1996 and December 31, 1995 . . . . 1
Statements of Operations,
Six and Three Months Ended June 30, 1996 and 1995 . . 2
Statement of Partners' Capital (Deficiency)
Six Months Ended June 30, 1996 . . . . . . . . . . . 3
Statements of Cash Flows
Six Months Ended June 30, 1996 and 1995 . . . . . . . 4
Notes to Financial Statements . . . . . . . . . . . . . . . 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . 12
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . 13
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
<PAGE> 3
CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P.
(a California limited partnership)
BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
ASSETS
<TABLE>
<CAPTION>
1996 1995
(Unaudited) (Audited)
------------- -------------
<S> <C> <C>
RENTAL PROPERTY (Notes 1, 2 and 3) $ 34,244,554 $ 34,772,331
CASH AND CASH EQUIVALENTS (Note 1) 3,394,680 2,738,045
RESTRICTED CASH (Notes 1 and 4) 158,700 158,700
OTHER ASSETS (Note 5) 32,926 15,102
------------- -------------
$ 37,830,860 $ 37,684,178
============= =============
LIABILITIES AND PARTNERS' CAPITAL
ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES (Note 3) $ 306,301 $ 359,359
DUE TO GENERAL PARTNER (Note 3) - 150,000
PREPAID RENT 66,489 46,965
SECURITY DEPOSITS 312,545 310,099
------------- -------------
685,335 866,423
COMMITMENTS AND CONTINGENCIES (Note 4)
PARTNERS' CAPITAL (Note 1) 37,145,525 36,817,755
------------- -------------
$ 37,830,860 $ 37,684,178
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE> 4
CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P.
(a California limited partnership)
STATEMENTS OF INCOME
SIX AND THREE MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
Six months Three months Six months Three months
ended ended ended ended
June 30, 1996 June 30, 1996 June 30, 1995 June 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES
Rental income $ 2,602,169 $ 1,339,507 $ 2,738,072 $ 1,366,816
Interest and other income (Note 1) 131,826 68,423 170,062 65,358
------------- ------------- ------------- -------------
2,733,995 1,407,930 2,908,134 1,432,174
------------- ------------- ------------- -------------
EXPENSES
Operating (Note 3) 525,655 252,466 731,366 353,253
Property taxes 133,522 62,500 273,335 144,482
Management fee - related party
in 1995 (Note 3) 79,512 40,454 101,517 41,596
General and administrative (Note 3) 234,530 124,125 213,468 113,555
Depreciation 352,777 175,138 357,778 178,889
------------- ------------- ------------- -------------
1,325,996 654,683 1,677,464 831,775
------------- ------------- ------------- -------------
NET INCOME $ 1,407,999 $ 753,247 $ 1,230,670 $ 600,399
============= ============= ============== =============
NET INCOME PER LIMITED
PARTNERSHIP INTEREST $ 0.19 $ 0.10 $ 0.17 $ 0.08
============= ============= ============== =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 5
CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P.
(a California limited partnership)
STATEMENT OF PARTNERS' CAPITAL (DEFICIENCY)
SIX MONTHS ENDED JUNE 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Special Limited
General Limited Partner
Partners Partners (Note 1) Total
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
PARTNERSHIP INTERESTS,
June 30, 1996 7,258,000
-------------
BALANCE, January 1, 1996 $ (287,786) $ 37,105,541 $ - $ 36,817,755
Distributions (5,369) (1,074,860) - (1,080,229)
Net income for the six months
ended June 30, 1996 14,080 1,393,919 - 1,407,999
------------- ------------- -------------- -------------
BALANCE, June 30, 1996 $ (279,075) $ 37,424,600 $ - $ 37,145,525
============= ============= =============== =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 6
CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P.
(a California limited partnership)
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,407,999 $ 1,230,670
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 352,777 357,778
Decrease in property tax refund
and prepaids - 313,682
(Increase) decrease in other assets (17,824) 2,594
(Decrease) increase in accounts payable and
accrued liabilities (53,058) (445,042)
Decrease in due to general partner (150,000) (91,331)
(Increase) decrease in security deposits 2,446 (3,197)
(Increase) decrease in prepaid rent 19,524 (7,077)
------------ ------------
Net cash provided by operating activities 1,561,864 1,358,077
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments pursuant to the minimum distribution guarantee 175,000 -
Distributions to partners (1,080,229) (1,080,348)
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 656,635 277,729
CASH AND CASH EQUIVALENTS, beginning of period 2,738,045 2,425,486
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 3,394,680 $ 2,703,215
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 7
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The information contained in the following notes to the financial
statements is condensed from that which would appear in the annual
financial statements; accordingly, the financial statements included
herein should be reviewed in conjunction with the financial statements
and related notes thereto contained in the Annual Report for the year
ended December 31, 1995 prepared by Century HillCreste Apartment
Investors, L.P. (the "Partnership"). Accounting measurements at
interim dates inherently involve greater reliance on estimates than at
year end. The results of operations for the interim periods presented
are not necessarily indicative of the results for the entire year.
In the opinion of the Partnership, the accompanying unaudited
financial statements contain all adjustments (consisting primarily of
normal recurring accruals) necessary to present fairly the financial
position as of June 30, 1996, and the results of operations for the
six and three months then ended and changes in cash flows for the six
months then ended.
ORGANIZATION
The Partnership, a California limited partnership, was formed on June
6, 1988, with National Partnership Investments Corp. ("NAPICO" or the
"Managing General Partner"), and HillCreste Properties Inc. (the
Non-Managing General Partner") as general partners. On October 26,
1988, the Partnership issued to investors (the "Limited Partners")
7,258,000 depositary units (each depositary unit being entitled to the
beneficial interest of a limited partnership interest) for a total
amount raised of $72,580,000, through a public offering.
Concurrent with the issuance of the depositary units, the Partnership
purchased a 315-unit luxury apartment complex in West Los Angeles,
California (the "Property") from Casden Properties (hereinafter
referred to as the "Seller"). To complete the purchase of the
Property, the Seller purchased a 10% special limited partnership
interest in the Partnership for $6,855,000. For its contribution, the
Seller has rights to receive an allocation of the Partnership's net
cash from operations after the Limited Partners receive a specified
priority return, all as more particularly set forth in the Partnership
Agreement.
Among other provisions, the Partnership Agreement provides that the
10% special limited partnership interest is subordinate to the other
Limited Partners' specified priority return in the case of
distributions of net cash flow from operations, plus the other Limited
Partners' return of capital in the case of net sales or refinancing
proceeds.
Casden Investment Corporation, an affiliate of the Seller, owns all of
the outstanding common stock of NAPICO. DA Group Holdings Inc. owns
100% of the stock of HillCreste Properties Inc.
5
<PAGE> 8
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ
from those estimates.
MINIMUM DISTRIBUTION GUARANTEE
The Minimum Distribution Guarantee Agreement (the "Guarantee
Agreement") required the Seller, who is also the special limited
partner of the Partnership, to make certain payments to the
Partnership, if and when necessary, in an amount sufficient to enable
the Partnership to provide the Limited Partners with distributions
sufficient to achieve a minimum annual return based upon the Limited
Partners' investment in the Partnership, through December 31, 1993, as
follows:
<TABLE>
<CAPTION>
Years Ended December 31, Annual Return on Investment
------------------------ ---------------------------
<S> <C>
1988 8.0%
1989 8.0%
1990 8.5%
1991 9.0%
1992 9.0%
1993 9.0%
</TABLE>
Pursuant to the Memorandum of Understanding entered into on August 11,
1995 (and more particularly described in Part II below), the Seller
agreed to pay to the Partnership, the sum of $350,000 in two equal
installments of $175,000 each; the first such $175,000 payment was
made in August 1995 and the second payment was made in May 1996.
These payments represent the amount of a real estate tax refund
received in 1994 for overpayment of prior year taxes which had
previously been offset against amounts receivable from the Seller
under the Guarantee Agreement.
Through June 30, 1996, the Seller has funded a total of $13,130,998
directly to the Partnership for distributions to the Limited Partners
pursuant to the Guarantee Agreement, which amount includes the
$350,000 referred to above. The period covered by the Guarantee
Agreement expired on December 31, 1993. Except with respect to the
payments made pursuant to the Memorandum of Understanding, commencing
in 1994, distributions, if any, to the Partners are made from cash
flow from operations. The minimum distribution guarantee payments
from the Seller have been reflected as a reduction in the carrying
amount of the Property.
In addition, in August 1995, the Seller made an additional payment of
$135,000 to the Partnership pursuant to the Memorandum of
Understanding, which amount represents interest on late payments to
the Partnership made pursuant to the Guarantee Agreement covering the
period from the second quarter of 1991 to the fourth quarter of 1993.
6
<PAGE> 9
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DEPRECIATION
Depreciation is reported using the straight-line method over the
estimated useful lives of the buildings and equipment as follows:
<TABLE>
<S> <C>
Buildings 35 years
Furniture and equipment 5 years
</TABLE>
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consists of cash and bank certificates of
deposit with an original maturity of three months or less
RESTRICTED CASH
Restricted cash consists of bank certificates of deposits assigned to
the City of Los Angeles in lieu of purchasing a subdivision
improvement bond to effectuate the privatization of streets located
within the Property's perimeter (see Note 4).
INCOME TAXES
No provision has been made for income taxes in the accompanying
financial statements as such taxes, if any, are the liability of the
individual partners.
NET INCOME PER LIMITED PARTNERSHIP UNIT
Net income per limited partner unit was computed by dividing the
limited partners' share of net income (99%) by the number of limited
partner units outstanding during the year. The number of limited
partner units was 7,258,000 for the periods presented.
NOTE 2 - RENTAL PROPERTY
At June 30, 1996 and December 31, 1995, the rental property consists
of the following:
<TABLE>
<CAPTION>
1996 1995
------------ -------------
<S> <C> <C>
Land $16,175,000 $16,175,000
Building 24,694,402 24,869,402
Furniture and equipment 3,870,000 3,870,000
------------- -------------
44,739,402 44,914,402
Less accumulated depreciation 10,494,848 10,142,071
----------- ------------
$34,244,554 $34,772,331
=========== ===========
</TABLE>
Payments made pursuant to the Guarantee Agreement have been reflected
as a reduction in the carrying value of the Property (see Note 1).
7
<PAGE> 10
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1996
NOTE 3 - FEES PAID TO GENERAL PARTNERS AND AFFILIATES
In accordance with the Partnership Agreement certain fees and
reimbursements are paid to the general partners and their affiliates
as follows:
(a) A Partnership management fee payable to the Managing General
Partner of $50,000 annually. The fee is included in general
and administrative expenses.
(b) Through December 31, 1995, the Property was managed by an
affiliate of the Managing General Partner for a fee of 3% of
rental revenue (5% prior to February 1, 1995). The property
management was transferred to an unaffiliated agent, on
January 1, 1996, who manages the property for a management fee
of 3% of rental revenue.
(c) Partnership expense reimbursements, payable to the
Non-Managing General Partner, not to exceed $50,000 annually.
The 1990 reimbursement has been accrued and is included in
accounts payable and accrued liabilities at June 30, 1996 and
December 31, 1995. The Non-Managing General partner has
requested reimbursement for expenses for 1991 through June 30,
1996, however, the Managing General Partner is disputing such
reimbursement and none have been accrued.
(d) The Partnership is obligated to pay fees to the Managing
General Partner or its affiliates upon sale of the Property
based upon the form of such sale. The payment of such fees
are subordinated to certain preferred returns to the Limited
Partners.
(e) 1% of distributions (as defined in the Partnership Agreement)
is payable quarterly to the Managing General Partner.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
a. Approvals from the City of Los Angeles were obtained to
"privatize" the streets and alleys providing access to the
Property and to construct wrought iron security fencing with
controlled entrances into the Property. The final resolution
vacating the streets and alleys was approved by the City on
December 31, 1994. Landscape and architectural drawings have
been prepared for the construction of the perimeter fencing
and related improvements, including a guardhouse at the
Ambassador Street entrance and a directory/trellis at the
Peerless Street location. These plans were approved and a
building permit was issued by the City of Los Angeles on June
20, 1995. This permit was to expire on December 20, 1995,
however, an extension to December 31, 1996 was approved.
8
<PAGE> 11
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1996
NOTE 4 - COMMITMENTS AND CONTINGENCIES (CONTINUED)
As a condition to its approval of the proposed
"privatization", the City of Los Angeles requires the
construction of a storm drain and related improvements, for
which an improvement agreement and guarantee in the amount
$158,000 has been filed with the City of Los Angeles. The
Partnership has pledged a Certificate of Deposit in such
amount to the City to secure the improvement guarantee.
Presently, plans for the improvements are being bid out and
other construction coordination issues are being resolved.
Thereafter, the work on the improvements will commence.
b. The Managing General Partner of the Partnership is a plaintiff
in various lawsuits and has also been named as a defendant in
other lawsuits arising from transactions in the ordinary
course of business. In the opinion the Managing General
Partner, the claims will not result in any material liability
to the Partnership.
NOTE 5 - FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosure about
Fair Value of Financial Instruments," requires disclosure of fair
value information about financial instruments. The carrying amount of
assets and liabilities reported on the balance sheets that require
such disclosure approximates fair value due to their short-term
maturity.
9
<PAGE> 12
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
JUNE 30, 1996
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS
OF OPERATIONS
CAPITAL RESOURCES AND LIQUIDITY
The Partnership raised proceeds of $72,580,000 from the sale of
limited partnership interests, pursuant to a public offering and
received additional capital contributions from the General Partners of
$1,050 and from the special limited partner of $6,855,000, all of
which funds were previously expended. Currently, the only sources of
Partnership revenue consist of income from rental operations at the
Property and interest earned on Partnership reserves.
Concurrent with the issuance of depositary units to the Limited
Partners, the Partnership received the Guarantee Agreement from the
Seller, (an affiliate of the Managing General Partner), which required
the Seller to make payments or loans as provided therein, if and when
necessary, in an amount sufficient to enable the Partnership to
provide the Limited Partners with minimum distributions through
December 1993.
Pursuant to the Memorandum of Understanding entered into on August 11,
1995, the Seller agreed to pay to the Partnership the sum of $350,000
in two equal installments of $175,000 each; the first such $175,000
payment was made in August 1995 and the second payment was made in May
1996. These payments represent the amount of a real estate tax refund
received in 1994 for overpayment of prior year taxes which had
previously been offset against amounts receivable from the Seller
under the Guarantee Agreement.
Through June 30, 1996, the Seller has funded $13,130,998 directly to
the Partnership for distributions to the Limited Partners pursuant to
the Guarantee Agreement, which includes the $350,000 referred to
above.
Concurrent with the execution of the Memorandum of Understanding on
August 11, 1995, the Partnership received the sum of $135,000 from the
Seller as compensation for late distribution payments under the
Guarantee Agreement. This amount was distributed pro rata to the
Limited Partners and represents interest on such late payments
calculated at the rate of approximately five percent (5%) per annum,
from the date that each such distribution was required to be made to
Limited Partners to the date such distribution was actually made.
Approvals from the City of Los Angeles were obtained to "privatize"
the streets and alleys providing access to the Property and to
construct wrought iron security fencing with controlled entrances into
the Property. The final resolution vacating the streets and alleys
was approved by the City on December 31, 1994. Landscape and
architectural drawings have been prepared for the construction of the
perimeter fencing and related improvements, including a guardhouse at
the Ambassador Street entrance and a directory/trellis at the Peerless
Street location. These plans were approved and a building permit was
issued by the City of Los Angeles on June 20, 1995. This permit was
to expire on December 20, 1995, however, an extension to December 31,
1996 was approved.
10
<PAGE> 13
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
JUNE 30, 1995
ITEM 2. MANAGEMENT'S ANALYSIS AND DISCUSSION OF FINANCIAL POSITION AND RESULTS
OF OPERATIONS (CONTINUED)
As a condition to its approval of the proposed "privatization", the
City of Los Angeles requires the construction of a storm drain and
related improvements, for which an improvement agreement and guarantee
in the amount $158,000 has been filed with the City of Los Angeles.
The Partnership has pledged a Certificate of Deposit in such amount to
the City to secure the improvement guarantee.
Presently, plans for the improvements are being bid out and other
construction coordination issues are being resolved. Thereafter, the
work on the improvements will commence.
RESULTS OF OPERATIONS
Occupancy averaged 94% for six months ended June 30, 1996 as compared
to an average of 95% for the same time period in 1995. Operating
expenses decreased primarily due to the reduced rental demand.
Since the investigation and recommendation of the staff of the
Securities and Exchange Commission (the "Commission") (see "Legal
Proceedings" for further discussion) concern the Partnership's
financial statements and Commission filings, a portion of the legal
fees incurred in responding to the staff have been allocated to and
charged to the Partnership by the Managing General Partner. These
legal fees primarily account for the increase in general and
administrative expenses in 1996. In the opinion of the Managing
General Partner, any action that might result from the Commission
staff's investigation is not likely to have a material adverse effect
on the Partnership.
11
<PAGE> 14
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
JUNE 30, 1996
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As of June 30, 1996, NAPICO was a plaintiff or defendant in several lawsuits.
None of these suits are related to the Partnership.
The Non-Managing General Partner, and certain of its affiliates, on their own
behalf and on behalf of the Partnership and certain other partnerships with
which they are associated, and NAPICO, and certain of its affiliates, have
entered into a Memorandum of Understanding dated August 11, 1995 and a
Supplement to Memorandum of Understanding dated April 30, 1996, ("MOU"). In
addition to establishing certain Partnership controls, the MOU resolved and
settled various management and control issues which were under discussion for
some time and various claims which were raised in a lawsuit filed in the Los
Angeles Superior Court on June 9, 1995 by the Non-Managing General Partner, the
Partnership and others against, among others, the Managing General Partner
("the Lawsuit"). All parties entered into the MOU without any admission of
wrongdoing or liability by any defendant as to any claim in the Lawsuit, in a
desire to avoid continued litigation that would be expensive, time consuming
and complex.
By virtue of the MOU, the parties thereto have agreed, among other things, to
the following:
1. To compensate the Partnership and its Limited Partners for
guarantee and distribution payments that were not made on a
timely basis in 1991, 1992, 1993, and 1994, the Partnership
received the sum of $135,000 from the seller, such amount was
distributed pro rata to the Limited Partners.
2. Casden Properties paid to the Partnership $350,000,
representing the amount of a real estate tax rebate which had
previously been offset against amounts due from Casden
Properties under the Guarantee Agreement. Although the
parties disagreed about the appropriate accounting treatment
for this tax rebate, Casden Properties agreed to repay this
rebate to the Partnership in two equal installments of
$175,000 each; the first such $175,000 payment was made on or
about August 11, 1995 and the second payment was made on or
about May 1, 1996.
3. An analysis was prepared of the books and records of the
Partnership including an analysis of the books and records of
the master disbursement account maintained by the
Partnership's former property management company, MMI. On May
1, 1996, based on the analysis, MMI paid the Partnership
$8,095 in interest related to funds it maintained in the
master disbursement account.
4. Property management responsibility for the HillCreste property
was transferred from MMI to an independent property management
company, Trammell Crow Residential Services effective January
1, 1996.
5. On May 1, 1996, the Partnership reimbursed the Non-Managing
General Partner $90,000 for professional fees, which were paid
on behalf of the Partnership in connection with issues raised
in the MOU.
12
<PAGE> 15
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
JUNE 30, 1996
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS (CONTINUED)
6. The Partnership has employed an independent Cash Manager,
designated by the Non-Managing General Partner and approved by
the Managing General Partner, to perform cash management
services, including maintenance of the Partnership's bank
accounts and reserves, payment of property management fees and
other accounts payable, payments to affiliates of the Managing
General Partner, and payment of cash distributions to the
Limited Partners. The Managing General Partner has agreed to
prepare detailed annual budgets to be approved by the
Non-Managing General Partner and thereafter used by the Cash
Manager as a guide and control over Partnership operations.
7. Upon the uncured breach of certain provisions of the MOU or
upon a future breach of NAPICO's fiduciary duties, the Non-
Managing General Partner may cause the Managing General
Partner to (i) surrender its rights as Managing General
Partner of the Partnership or (ii) resign as the Managing
General Partner of the Partnership and become a limited
partner thereof.
The staff of the Securities and Exchange Commission (the "Commission") informed
the Partnership and NAPICO in August, 1995 that it intends to recommend that
the Commission institute a civil action and/or administrative proceeding
against the Partnership, NAPICO and others that would be based, in part, on
allegations that certain of the Partnership's financial statements in 1991,
1992 and 1993 should have characterized certain current assets deposited in the
master disbursement account of the Partnership's property management company as
accounts receivable from a related party rather than as cash. Since the
staff's investigation and its recommendation concern the Partnership's
financial statements and Commission filings, a portion of the legal fees
incurred in responding to the staff have been allocated to and charged to the
Partnership by NAPICO. These legal fees primarily account for the increase in
general and administrative expenses in 1996, compared to 1995. The Partnership
and NAPICO strenuously disagree with the staff's contentions, which have not
yet been considered by the Commission. Moreover, in the opinion of NAPICO, any
action that might result from the staff's recommendation is not likely to have
a material adverse effect on the Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) No reports on Form 8-K were filed during the quarter ended
June 30, 1996.
13
<PAGE> 16
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
JUNE 30, 1996
SIGNATURES
Pursuant to the requirements 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.
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(a California limited partnership)
By: National Partnership Investments Corp.
Managing General Partner
Date:
---------------------------------------
By:
---------------------------------------
Bruce Nelson
President
Date:
---------------------------------------
By:
---------------------------------------
Shawn Horwitz
Executive Vice President and
Chief Financial Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
PARTNERSHIP'S STATEMENT OF EARNINGS AND BALANCE SHEETS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 3,394,680
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,586,306
<PP&E> 44,739,402
<DEPRECIATION> 10,494,848
<TOTAL-ASSETS> 37,830,860
<CURRENT-LIABILITIES> 306,301
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 37,145,525
<TOTAL-LIABILITY-AND-EQUITY> 37,830,860
<SALES> 0
<TOTAL-REVENUES> 2,733,995
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,325,996
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,407,999
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,407,999
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,407,999
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
