<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF
1934
(AMENDMENT NO. 2)
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
[ ] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Materials Pursuant to
Section 240.14a-11(c) or Section 240.14a-12
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
A CALIFORNIA LIMITED PARTNERSHIP
(Name of Registrant as Specified In Its Charter)
EVEREST HILLCRESTE INVESTORS, LLC
a California Limited Liability Company
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
item 122(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2) Aggregate number of securities to which transaction applies:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
$40 million based upon the proposed purchase price of the property
(4) Proposed maximum aggregate value of transaction:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) Total fee paid: $8,000
[X] Fee paid previously with preliminary materials: . . . . . . . . . . . .
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid: . . . . . . . . . . . . . . . . . . . . . .
(2) Form, Schedule or Registration Statement No.:
Schedule 14A Preliminary Proxy Statement . . . . . . . . . . . . .
(3) Filing Party: Everest Hillcreste Investors, LLC . . . . . . . . . .
(4) Date Filed: . . . . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE> 2
PRELIMINARY PROXY STATEMENT
SOLICITATION OF PROXIES
OF
LIMITED PARTNERS
OF
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
A CALIFORNIA LIMITED PARTNERSHIP
BY
EVEREST HILLCRESTE INVESTORS, LLC
DECEMBER ___, 1996
Everest Hillcreste Investors, LLC ("Everest") is proposing to purchase
the Century HillCreste Apartments (the "HillCreste Apartments") now owned by
Century HillCreste Apartment Investors, L.P. ("Century HillCreste" or the
"Partnership") for a purchase price of $40,000,000 in cash, which purchase must
be completed by January 15, 1996, on the terms set forth in a purchase and sale
agreement substantially in the form attached as Exhibit A hereto (the "Purchase
Agreement"). Everest is not affiliated with any of the general partners of the
Partnership.
This proxy statement (the "Proxy Statement") and the enclosed proxy
card are being mailed to you and to each of the other holders (the "Limited
Partners") of limited partnership interests in the Partnership (the "Units") to
seek your authorization to call a Special Meeting of the Limited Partners (the
"Special Meeting") and your approval of this proposed sale at the Special
Meeting. Action on the proposed sale cannot be taken unless the holders of at
least 10% of the Partnership's outstanding Units, including the approximately
2.8% of the Partnership's outstanding Units owned by an affiliate of Everest,
authorize the calling of the Special Meeting. Limited Partners should carefully
consider the factors discussed on pages 4 and 5 below in evaluating whether to
authorize and approve the actions described herein.
Everest estimates that the proposed sale will result in net cash sales
proceeds of approximately $39,729,000 (or approximately $5.47 per Unit) based
on $271,000 of estimated Partnership direct sale expenses. Everest also
estimates that approximately $43,325,995 (or approximately $5.97 per Unit) in
cash will be available for distribution to the Limited Partners, taking into
account the Partnership's $3,596,995 of unrestricted cash reserves (based on
information contained in the Partnership's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1996 (the "September 1996 Form 10-Q")). This
cash amount available for distribution would exceed the Partnership's net book
value per Unit, as of September 30, 1996, of $5.25 by $.72, or approximately
14%. See "-Selected Financial Data" below. Everest will request the managing
general partner of the Partnership (the "Managing General Partner") to
distribute the net proceeds of the Proposed Sale within 10 days of the
completion of the sale or as soon thereafter as possible. The Managing General
Partner is not required to, and there can be no assurance that it will, comply
with such request. The Partnership's Agreement of Limited Partnership (the
"Partnership Agreement"), however, requires distribution of the net sales
proceeds from a sale of all or substantially all of the Partnership's assets in
connection with the
<PAGE> 3
termination and liquidation of the Partnership to be made by the end of the
taxable year of such liquidation or, if later, within 90 days after the date of
such liquidation.
Under the Partnership Agreement, the Limited Partners are authorized,
without necessity of the consent of the Managing General Partner or any other
general partner of the Partnership (collectively, the "General Partners"), to
approve sales of the Partnership's property. Through this proxy solicitation,
the Limited Partners are being asked by Everest to authorize and approve the
following actions for the purpose of obtaining approval of the proposed sale
described herein:
1. The giving of notice to National Partnership Investments
Corp., the Managing General Partner, on behalf of Limited
Partners representing at least 10% of the outstanding Units
calling the Special Meeting of the Limited Partners to approve
the Proposed Sale at a date, place and time, and with a record
date for the determination of Limited Partners entitled to
vote at such meeting, to be specified in such notice. By
signing and returning the enclosed Proxy Card, Limited
Partners will authorize Everest to so notify the Managing
General Partner on their behalf.
2. The adoption at the Special Meeting of a resolution approving
the sale of the HillCreste Apartments to Everest pursuant to
the Purchase Agreement for a purchase price of $40,000,000 in
cash (the "Proposed Sale"), which resolution will also include
a request to the Managing General Partner to distribute the
available proceeds of the Proposed Sale within 10 days of the
completion of the sale or as soon thereafter as possible, all
as set forth in the form of Resolutions of Limited Partners
attached as Exhibit B to this Proxy Statement.
3. Adjournment and reconvening of the Special Meeting, if and to
the extent necessary in the judgment of Everest, to solicit
further votes to approve the Proposed Sale.
4. To vote, in the discretion of Everest, on such other matters
as may come before the Special Meeting.
WE URGE YOU TO VOTE TODAY BY SIGNING THE ENCLOSED BLUE PROXY CARD. IF
YOU HAVE ANY QUESTIONS, PLEASE CONTACT MORROW & CO., INC. AT (800) 506-9061.
PROPOSED SALE TRANSACTION
Everest is offering to purchase the HillCreste Apartments, together
with certain associated Partnership assets, for $40,000,000 in cash on the
terms set forth in the Purchase Agreement. Everest is making the Proposed Sale
offer with a view to making a profit. The following description of the
Proposed Sale is qualified in its entirety by reference to the complete form of
Purchase Agreement attached as Exhibit A hereto. (The references in parentheses
in the following paragraphs are references to sections of the Purchase
Agreement described in such paragraph).
-2-
<PAGE> 4
PURCHASE AGREEMENT TERMS
The Purchase Agreement provides that within five business days
following execution of the Purchase Agreement, and subject only to the
satisfaction or waiver of the limited conditions to the Proposed Sale set forth
in the Purchase Agreement, Everest shall purchase the HillCreste Apartments,
together with all tangible personal property and all contract rights and
intangible property located on such real estate or relating thereto owned by
the Partnership. (Section 7).
The purchase price of $40,000,000 will be paid to the Partnership by
Everest in immediately available cash funds, less any credits due Everest based
upon customary prorations between Everest and the Partnership. (Sections 2 and
7). Everest has received a firm written commitment to finance the acquisition
of the Property from an institutional lender. Such financing, together with
Everest's existing capital, will provide sufficient funds to pay the purchase
price for the HillCreste Apartments.
No brokerage or sales commissions will be payable by the Partnership
in the Proposed Sale. The title insurance premium for an ALTA Owner's Policy
of Title Insurance, which Everest estimates will be approximately $32,000, the
documentary transfer taxes for the Proposed Sale, which Everest estimates will
be approximately $224,000, and other escrow fees and expenses, which Everest
estimates will be approximately $15,000, are the principal expenses that
Everest expects the Partnership would incur in connection with the Proposed
Sale. Accordingly, the material closing costs to the Partnership are estimated
to be $271,000, resulting in estimated total net sales proceeds to the
Partnership of approximately $39,729,000.
The Purchase Agreement requires the Partnership to provide only a
limited number of representations and warranties. (Section 8). Further, the
obligation of Everest to complete the Proposed Sale would be subject to only a
limited number of conditions, including that the Proposed Sale be completed by
no later than January 15, 1996, and is not subject to any financing
contingency. (Section 6).
The purchase price offered for the HillCreste Apartments was decided
upon by Everest and its advisors on the basis of, among other things, their own
views as to real estate markets and values in Los Angeles County, including
consideration of capitalization rates Everest believes to be appropriate for
multi-family properties in the current West Los Angeles marketplace, publicly
available information about the Partnership and the HillCreste Apartments
(without any access to the Partnership's books and records) and the $46,900,000
valuation of the HillCreste Apartments stated by the Managing General Partner
in the Partnership's Annual Report dated June 20, 1996 (the "Annual Report").
In evaluating the Managing Partner's stated $46,900,000 valuation for the
HillCreste Apartments, Everest and its advisors considered that (i) such
valuation was stated in the Annual Report to be "only an opinion of value and
[is] not necessarily indicative of the potential price at which the [HillCreste
Apartments] could be sold[,]" (ii) the Proposed Sale will constitute an
immediate sale for cash and, because no brokerage commissions will be payable
by the Partnership, the net proceeds to the Partnership of such sale will be
greater than in a typical sales transaction of this type, (iii) only a limited
-3-
<PAGE> 5
number of representations and warranties are required to be given by the
Partnership in the Purchase Agreement and (iv) the limited number and nature of
conditions to closing provided for in the Purchase Agreement, including the
absence of a financing contingency, provide substantially greater certainty
that the Proposed Sale, if approved by the Limited Partners, will be completed
than is typical for most real estate sales transactions.
FACTORS TO BE CONSIDERED BY LIMITED PARTNERS
In considering whether to authorize the calling of the Special Meeting
and to approve the Proposed Sale, Limited Partners should consider the
following factors, among others:
* The $40,000,000 purchase price offered by Everest is less than the
$46,900,000 valuation of the HillCreste Apartments that the Managing
General Partner stated in the Annual Report. The Managing Partner noted
that this valuation was "only an opinion of value and [is] not
necessarily indicative of the potential price at which the [HillCreste
Apartments] could be sold." The HillCreste Apartments' actual
valuation may be greater or lesser than this estimated valuation.
* The Managing General Partner is not required to comply with the request
that Everest will make on behalf of the Limited Partners to distribute
the net proceeds of the Proposed Sale within 10 days of the sale's
completion or as soon thereafter as possible. It must, however,
distribute such proceeds within the applicable time period provided in
the Partnership Agreement, as described above on pages 1 and 2.
* The lack of an established exchange or market for the Units makes it
extremely difficult for Limited Partners to sell their current
investment in the Partnership.
* The Proposed Sale will not involve payment of any real estate
brokerage commissions, which could otherwise approximate $1,000,000 to
$2,000,000 in the aggregate (based on commission rates ranging from
2.5% to 5% of the purchase price) or approximately $.14 to $.28 per
Unit. The Proposed Sale will also result in the elimination of the
Partnership's administrative costs of operating the HillCreste
Apartments.
* A Limited Partner will recognize taxable gain or loss as a result of
consummation of the Proposed Sale, depending on the specific
circumstances of each Limited Partner. See "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES" below.
* The sale of the HillCreste Apartments, the Partnership's principal
asset, to Everest will result in a dissolution of the Partnership
under the Partnership Agreement if the Managing General Partner or
another authorized party determines that the Proposed Sale is a sale
or other disposition of all or substantially all of the Partnership's
assets. Everest is not aware of any reason that completion of the
Proposed Sale should not be so regarded. If the Partnership is
dissolved, the Limited Partners will receive a final Schedule K-1 from
the Partnership and
-4-
<PAGE> 6
the ongoing expense to the Limited Partners of processing annual Schedules K-1
would thereafter be eliminated.
PRIOR CONTACTS BETWEEN EVEREST AND THE PARTNERSHIP. There have been no prior
contacts between Everest or its affiliates, on the one hand, and the
Partnership or the General Partners, on the other hand, regarding the Proposed
Sale. An affiliate of Everest owns 204,980 Units, constituting approximately
2.8% of the Partnership's outstanding Units, all of which Units were acquired
by such affiliate in 1996.
APPRAISAL RIGHTS. Neither the Partnership Agreement nor applicable law provide
rights of appraisal or similar rights to the Limited Partners who dissent from
the vote of a majority in interest of the Limited Partners approving the
Proposed Sale.
REGULATORY APPROVALS. Based on its review of publicly available filings by the
Partnership with the Securities and Exchange Commission (the "Commission") and
other publicly available information regarding the Partnership, Everest is not
aware of any filings, approvals or other actions by or with any domestic or
foreign governmental authority or administrative or regulatory agency that
would be required prior to the consummation of the Proposed Sale as
contemplated herein.
ACCOUNTING TREATMENT; PARTNERSHIP'S ACCOUNTANTS. Everest believes that the
Proposed Sale will be treated as a purchase transaction under generally
accepted accounting principles. Everest is not aware (i) whether any
representatives of the principal accountants of the Partnership for the current
year and the most recently completed fiscal year will be present at the Special
Meeting, (ii) whether, if such representative are present at the Special
Meeting, they will have an opportunity to make a statement if they desire to do
so, and (iii) whether such representatives are expected to be available to
respond to appropriate questions at the Special Meeting.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary is a general discussion of certain federal
income tax considerations believed by Everest to be applicable to the
Partnership and the Limited Partners in connection with the Proposed Sale
contemplated by this Proxy Statement. This summary is based on the Internal
Revenue Code of 1986, as amended (the "Code"), final and proposed regulations
promulgated thereunder ("Treasury Regulations"), court decisions and Internal
Revenue Service ("IRS") rulings and positions as of the date of this Proxy
Statement. All of the foregoing are subject to change, and any such change
could affect the continuing accuracy of this summary. The following discussion
assumes that the Partnership is treated as a partnership for federal income tax
purposes and is not treated as a "publicly traded partnership" within the
meaning of Section 7704 of the Code, and that the limited partnership interests
constitute partnership interests for federal income tax purposes. This summary
does not discuss all aspects of federal income taxation that may be relevant to
a particular Limited Partner in light of such Limited Partner's specific
circumstances or to certain types of Limited Partners subject to special
treatment under the federal income tax laws (for example, corporations, foreign
persons, dealers
-5-
<PAGE> 7
in securities, banks, insurance companies and specific types of tax-exempt
organizations), nor does it discuss any aspect of state, local, foreign or
other tax laws.
EACH LIMITED PARTNER SHOULD CONSULT HIS, HER OR ITS OWN TAX ADVISOR AS
TO THE PARTICULAR TAX CONSEQUENCES TO SUCH LIMITED PARTNER OF CONSUMMATION OF
THE PROPOSED SALE. EVEREST HAS NOT HAD ACCESS TO TAX INFORMATION FILED BY, OR
OTHERWISE CONTAINED IN THE RECORDS OF, THE PARTNERSHIP AND THE STATEMENTS
CONTAINED HEREIN MAY BE SUBJECT TO CHANGE OR SUPPLEMENTAL DISCUSSION BASED ON A
MORE COMPLETE REVIEW OF SUCH TAX INFORMATION.
The transfer of the HillCreste Apartments by the Partnership to
Everest in exchange for the cash purchase price will be treated as a taxable
sale for Federal income tax purposes. The Partnership itself will not pay any
Federal income tax on the sale, as a partnership is not treated as a separate
taxpayer for Federal income tax purposes. Each Limited Partner will recognize
its allocable share of the Partnership's gain on the sale of the Partnership
Property which will be equal to the excess of the Partnership's amount realized
from the sale over the Partnership's adjusted tax basis in the Partnership
Property. Any gain realized by the Partnership on the sale generally is
expected to be treated as "Section 1231 gain" (except to the extent that such
gain represents depreciation recapture taxable as ordinary income) arising from
the sale of "Section 1231 property" (i.e., real property and depreciable assets
subject to Section 1231 of the Code which are used in a trade or business and
held for more than one year). Under the rules applicable to Section 1231
property, a Limited Partner's proportionate share of the gain from the sale of
the HillCreste Apartments would be combined with any other Section 1231 gains
or losses recognized by the Limited Partner in that year and the Limited
Partner's net Section 1231 gain or loss would be taxed as capital gain or
constitute ordinary loss, as the case may be. However, net Section 1231 gain
will be treated as ordinary income to the extent of unrecaptured net Section
1231 losses for the five most recent prior years.
The Partnership anticipates that substantially all of the gain
realized from the transfer of the HillCreste Apartments will be treated as
passive income for purposes of the limitations on deductibility of passive
losses under Section 469 of the Code. However, for purposes of these
limitations, a small portion of such gain may be treated as portfolio income to
the extent that ordinary working capital, security deposits or other portfolio
income producing items are transferred to Everest.
The maximum marginal Federal income tax rate for individuals currently
is 39.6 percent (determined without regard to the phase-out of exemptions and
other tax benefits). For Limited Partners other than corporations, net
long-term capital gains (i.e., the excess of net long-term capital gain over
net short-term capital loss) are taxed at a maximum marginal rate of 28%, while
short-term capital gains are taxed at a maximum marginal rate of 39.6%. For a
taxpayer other than a corporation, net capital loss may be used to offset
ordinary income up to $3,000 per year. In general, for taxpayers other than
corporations, the unused portion of such loss may be carried forward
indefinitely, but not carried back.
-6-
<PAGE> 8
DISTRIBUTION OF NET SALE PROCEEDS FROM THE PARTNERSHIP. As a result of
the sale of the HillCreste Apartments, a Limited Partner's tax basis in his
limited partnership interests will be increased by the amount of the gain
realized. Accordingly, except as discussed below, the distribution by the
Partnership of the net proceeds from the sale generally will not result in
recognition by a Limited Partner of any additional gain, provided that the
Limited Partner's tax basis in his limited partnership interests prior to the
sale is equal to the Limited Partner's proportionate share of the Partnership's
tax basis in the HillCreste Apartments. The distribution to a Limited Partner
may result in gain or loss to that Limited Partner, however, if the Limited
Partner's tax basis in his limited partnership interests does not equal the
Limited Partner's proportionate share of the Partnership's tax basis in the
HillCreste Apartments. Such a gain or loss would most likely arise in the case
of a Limited Partner that acquired its interest through a transfer subsequent
to the initial formation of the Partnership at a time when the Partnership did
not then have in effect an election under Section 754 of the Code. In
addition, further adjustments upon dissolution and liquidation of the
Partnership to take into account accrued or other expenses may result in some
additional loss (or reduction in gain) realized.
CONSEQUENCES OF A LIQUIDATION OF THE PARTNERSHIP. If the Partnership,
following the sale of the Hillcreste Apartments and distribution of the sale
proceeds, liquidates and distributes any remaining assets to its partners (and
creditors, if any), the taxable year of the Partnership will terminate upon the
winding up of its affairs. A Limited Partner will be required to include his
distributive share of Partnership items of income and loss for such Partnership
taxable year (including the Limited Partner's share of gain from the sale of
the Hillcreste Apartments) in the Limited Partner's taxable year in which such
taxable year of the Partnership ends.
Upon liquidation, if the Partnership has further assets to distribute,
cash received by a Limited Partner will reduce his basis in his limited
partnership interest and the Limited Partner will recognize gain to the extent
that the cash distributed to such partner exceeds his tax basis in his limited
partnership interest. A distribution of property to a Limited Partner
generally would not result in gain or loss to such partner, and such property
would take a basis equal to such partner's basis in his limited partnership
interest reduced by the cash distributed to such partner. Such basis will be
allocated first to any "unrealized receivables" and "inventory" distributed to
the Limited Partner in proportion to (but not in excess of) his respective
basis in the Partnership. The remaining basis in the Limited Partner's
partnership interest (if any) would be allocated to the other items of property
he receives in proportion to his respective basis in the Partnership. If a
Limited Partner receives only cash and/or unrealized receivables and inventory
and such partner's basis in his limited partnership interest exceeds the amount
of cash plus the Partnership's basis in the property distributed, generally
such partner will recognize such excess as a loss. In general, any gain or
loss recognized by a Limited Partner on liquidation will be capital gain or
loss, and long term capital gain or loss if such partner's holding period in
his limited partnership interest is more than one year. Such gain or loss
should be passive gain or loss.
-7-
<PAGE> 9
INFORMATION CONCERNING EVEREST
Everest is a California limited liability company, formed for the sole
purpose of purchasing the HillCreste Apartments. Everest does not have any
significant assets, liabilities or business, other than its equity
capitalization. Everest is managed by Everest Realty Management, LLC, a
California limited liability company (the "Manager"). The offices of Everest
and the Manager are located at 3280 E. Foothill Boulevard, Suite 320,
Pasadena, California 91107; telephone: 818-585-5920.
Set forth below is biographical information concerning executive
officers of the Manager who are involved in the organization, direction, or
arranging of financing for this solicitation and the Proposed Sale. The
persons identified below are each United States citizens.
W. ROBERT KOHORST. Mr. Kohorst is the President and Secretary of the
Manager and Everest Properties, LLC, a California limited liability company.
He is a lawyer by profession. Since 1991, Mr. Kohorst, acting through
affiliated companies, has been engaged in the acquisition of general partner
interests, real estate companies and related assets. Mr. Kohorst holds a Juris
Doctor degree from the University of Michigan and a Bachelor of Science degree
in accounting from the University of Dayton.
DAVID I. LESSER. Mr. Lesser is the Executive Vice President of the
Manager and Everest Properties, LLC. He is a lawyer by profession. From 1991
through 1995, Mr. Lesser was a principal and member of Feder, Goodman &
Schwartz and its predecessor firm, co-managing such firm's corporate and real
estate practice. Between 1990 and 1992, Mr. Lesser was counsel to Howard,
Rice, Nemerovski, Robertson, Canady & Falk. Mr. Lesser holds a Juris Doctor
degree from Columbia University and a Bachelor of Arts degree from the
University of Rochester.
INFORMATION CONCERNING THE
PARTNERSHIP AND THE HILLCRESTE APARTMENTS
Except as otherwise indicated, the information contained in this
section and the selected financial data and the financial statements of the
Partnership contained in Exhibit C attached hereto are based upon documents and
reports publicly filed by the Partnership with the Commission. Although
Everest has no information that any statements contained in this section or any
of the financial data and statements contained in Exhibit C are untrue, Everest
does not take responsibility for the accuracy or completeness of any
information contained in this section, all of which is derived from such public
documents, or any of the financial data and statements contained in Exhibit C,
which are based entirely on public filings of the Partnership, or for any
failure by the Partnership to disclose events which may have occurred and may
affect the significance or accuracy of any such information or any such
financial data and statements but which are unknown to Everest.
-8-
<PAGE> 10
The principal executive offices of the Partnership are located at 9090
Wilshire Blvd., Suite 201, Beverly Hills, California 90211, and its telephone
number at that address is (310) 278-2191. The Partnership is a limited
partnership formed on June 6, 1988 under the laws of the State of California.
The Partnership raised $72,580,000 from sales of 7,258,000 units entitled to
the beneficial interest of a limited partner through a public offering of such
interests in 1988, and concurrently therewith purchased the HillCreste
Apartments from an affiliate of the Managing General Partner for a purchase
price of $68,548,000. The business of the Partnership is conducted primarily
by the Managing General Partner as the Partnership has no employees of its own,
and consists of the operation and management of the Century HillCreste
Apartments. The Partnership owns no real property other than the HillCreste
Apartments.
The HillCreste Apartments are a 315-unit apartment complex known as
the Century HillCreste Apartments, located at 1420 Ambassador Street in Los
Angeles, California. The average occupancy rate at the HillCreste Apartments
for 1995 and through April 30, 1996 was 94%.
The HillCreste Apartments suffered substantial damage as a result of
the January 17, 1994 Northridge Earthquake. The total cost to repair the
earthquake damage was approximately $1,476,923, of which approximately $376,000
was paid to an affiliate of the Managing General Partner during 1994 for
emergency repair work and approximately $1,100,923 was paid to an unaffiliated
contractor for the remaining repairs. Based on an estimate by the
Partnership's insurance carrier, the loss suffered by the Partnership as a
result of the earthquake damage to HillCreste Apartments was determined to be
$1,537,718, and the Partnership received in August 1994 a net insurance
settlement in the amount of $355,448.
Through January 31, 1995, an affiliate of the Managing General
Partner, Mayer Management Inc., managed the HillCreste Apartments and was paid
management fees of $181,375, $273,130 and $257,142 in 1995, 1994 and 1993,
respectively, based on 5% of collected rents. However, pursuant to a
settlement of litigation brought by the Partnership and the non-managing
General Partner against the Managing General Partner asserting, among other
claims, breach of fiduciary duty and misuse of Partnership funds, property
management was transferred to an unaffiliated property management agent,
Trammel Crow Residential Services West, which is entitled to receive an annual
management fee equal to 3% of collected rents.
The Partnership's Annual Report on Form 10-K for the Year ended
December 31, 1995 (the "1995 Form 10-K") states that the General Partners own
all of the outstanding general partnership interests of the Partnership and no
person is known to own beneficially in excess of 5% of the outstanding limited
partnership interests.
The Partnership's audited financial statements for the year ended
December 31, 1995, which have been reproduced from the 1995 Form 10- K, and the
Partnership's interim financial statements for the Quarter ended September 30,
1996, which have been reproduced from the September 1996 Form 10-Q, are
attached hereto as Exhibit C to this Proxy Statement.
-9-
<PAGE> 11
SELECTED FINANCIAL DATA. Set forth below is a summary of certain
financial and statistical information with respect to the Partnership, all of
which has been excerpted or derived from the 1995 Form 10-K and from the
September 1996 10-Q. More comprehensive financial and other information is
included in such reports and other documents filed by the Partnership with the
Commission, and the following summary is qualified in its entirety by reference
to such reports and other documents and all the financial information and
related notes contained therein.
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Year Ended December 31, Nine Months
---------------------------------------------------------------------- Ended
September 30,
1991 1992 1993 1994 1995 1996
(unaudited)
---------- ----------- ---------- ----------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Rental revenues $5,413,821 $ 4,984,986 $5,109,914 $5,390,358 $5,394,552 $ 3,966,912
Interest and other income 148,113 137,813 131,332 81,885 287,523 178,793
Total revenues $5,561,934 $ 5,122,799 $5,241,246 $5,472,243 $5,682,075 $ 4,145,705
========== =========== ========== =========== ========== ==============
Net income $1,376,911 $ 972,848 $1,848,761 $1,224,739 $2,498,336 $ 1,968,840
========== =========== ========== =========== ========== ==============
Net income per limited partner $ 0.19 $ 0.13 $ 0.25 $ 0.17 $ 0.34 $ 0.27
interest
========== =========== ========== =========== ========== ==============
Rental property owned at cost
less accumulated depreciation 46,118,308 $41,001,958 36,424,447 $35,660,38 34,772,331 $ 34,248,165
========== =========== ========== =========== ========== ==============
Distributions to Limited $6,440,732 $ 6,532,200 $4,885,727 $4,905,234 $2,290,626 $ 1,657,076
Partners
========== =========== ========== =========== ========== ==============
Total assets 50,114,552 $44,340,806 41,344,209 $38,577,45 37,684,178 $ 38,096,372
========== =========== ========== =========== ========== ==============
6
Total assets per limited partner $ 6.90 $ 6.11 $ 5.70 $ 5.32 $ 5.19 $
interest (1) 5.25
========== =========== ========== =========== ========== ==============
Pro forma total assets per $
limited partner interest(2) 6.00
- --------------------
</TABLE>
(1) Assumes 7,258,000 Units issued and outstanding.
(2) The computation of pro forma total assets per limited partner interest
is based upon an estimated $39,729,000 of net proceeds from the sale
of the rental property, as if such sale had occurred on September 30,
1996.
INFORMATION RELATING TO VOTING, SPECIAL
MEETING PROCEDURES, AND PROXIES
This Proxy Statement is furnished in connection with the solicitation
of proxies by Everest for the purpose of obtaining authority to call the
Special Meeting of the Limited Partners of the Partnership and to vote on
behalf of such Limited Partners at the Special Meeting to approve the Proposed
Sale, including the related resolution of Limited Partners calling for prompt
distribution of the net proceeds of such sale described herein. The proxies
solicited hereby also confer authority on the proxy holder named therein (i) to
vote in favor of adjournment and reconvening of the Special Meeting at a later
time and place if and to the extent Everest believes necessary to solicit
additional proxies to obtain approval of the Proposed Sale, and (ii) to vote in
the proxy holder's discretion on such other matters as may come before the
Special Meeting.
-10-
<PAGE> 12
The Partnership Agreement provides that holders of 10% or more in
interest of the Limited Partners may call a special meeting of the Limited
Partners by providing appropriate notice to the Managing General Partner
requesting that such meeting be called for a date not less than 15 nor more
than 60 days after the date such request is received by the Managing General
Partner. The Partnership Agreement further provides that the Limited Partners
calling such meeting may designate the record date for the determination of
Limited Partners entitled to vote at the special meeting called by them and may
also designate the time and place of such meeting. The Managing General
Partner also may call a special meeting of the Limited Partners under the
Partnership Agreement on its own authority. The proxies solicited hereby
authorize the proxy holder named therein to give appropriate notice to the
Managing General Partner specifying the record date and the time, place and
date for the Special Meeting described herein. Everest will give such notice
to the Managing General Partner as soon as it determines that it will have
sufficient proxies to approve the Proposed Sale and further subject to having
received proxies authorizing the calling of the Special Meeting by holders of
at least approximately 7.2% of the Partnership's outstanding Units. Within 10
days of receipt of such notice by the Managing General Partner, it will be
required under the Partnership Agreement to provide notice of the Special
Meeting to all of the Limited Partners.
Each Limited Partner, including the corporate affiliate of the
Managing General Partner that is denominated in the Partnership Agreement as
the "Special Limited Partner" and which holds approximately 10% of the
Partnership's outstanding Units, will be entitled to cast a number of votes at
the Special Meeting equal to that partner's initial "Adjusted Invested Capital"
in the Partnership divided by $10. The term "Adjusted Invested Capital" is
defined in the Partnership Agreement to mean the amount of the capital
contribution to the Partnership made by such Limited Partner (i.e., the amounts
paid by such Limited Partner for his Units in the initial public offering
thereof), as reduced by all distributions to such Limited Partner made from net
proceeds of sales or financing of Partnership assets. Everest believes that
there have been no such distributions to date. In the case of Limited Partners
who purchased their Units after the initial offering thereof by the
Partnership, such Limited Partners' Adjusted Invested Capital is equal to the
Adjusted Invested Capital of the Limited Partner or Limited Partners from whom
they acquired their Units, as reduced by any subsequent distributions of the
foregoing type.
The Partnership Agreement provides that sales of Partnership property
may be approved by the affirmative vote of a "Majority in Interest" of the
Limited Partners at a meeting of Limited Partners, without the approval of the
General Partners. The term "Majority In Interest" is defined in the
Partnership Agreement as the affirmative vote of Limited Partners, including
the Special Limited Partner, who collectively have votes equal to more than 50%
of the total outstanding votes of the Partnership. Pursuant to such provisions
of the Partnership Agreement, the approval of a majority of the outstanding
Units, including as outstanding the interests of the Special Limited Partner,
will be required to approve the Proposed Sale at the Special Meeting. FAILURE
TO VOTE, IN PERSON OR BY PROXY, AT THE SPECIAL MEETING WILL THUS HAVE THE
EFFECT OF A VOTE AGAINST THE APPROVAL OF THE PROPOSED SALE. The September 1996
Form 10-Q states that as of September 30, 1996 a total of 7,258,000 Units were
issued and outstanding. The
-11-
<PAGE> 13
Partnership's Annual Report on Form 10-K for the year ended December 31, 1995,
states that there were 6,670 holders of Units of record as of December 31,
1995.
All duly executed proxy cards received in response to this
solicitation will be voted at the Special Meeting in accordance with the
instructions specified thereon. If an executed proxy is received that does not
specify a choice, such proxies will be voted "FOR" each of the proposals
described herein, including adjournment and reconvening of the Special Meeting
to the extent Everest believes necessary to solicit additional proxies
sufficient to approve the Proposed Sale. A Limited Partner who gives a proxy
may revoke it at any time before it is voted at the Special Meeting by
executing and delivering a written revocation of such proxy, including a later
dated proxy, or by attending the Special Meeting and voting in person.
ONLY HOLDERS OF UNITS ON THE RECORD DATE MAY GRANT A PROXY WITH
RESPECT TO SUCH UNITS. IF UNITS STAND OF RECORD IN THE NAMES OF TWO OR MORE
PERSONS, ALL SUCH PERSONS SHOULD SIGN THE PROXY CARD. IF YOUR UNITS ARE HELD
IN THE NAME OF A BROKERAGE FIRM, BANK, NOMINEE OR OTHER INSTITUTION, ONLY SUCH
INSTITUTION CAN SIGN A PROXY WITH RESPECT TO YOUR UNITS AND CAN DO SO ONLY AT
YOUR DIRECTION. ACCORDINGLY, PLEASE CONTACT YOUR ACCOUNT REPRESENTATIVE AND
GIVE YOUR REPRESENTATIVE INSTRUCTIONS FOR A PROXY TO BE SIGNED WITH RESPECT TO
YOUR UNITS.
All costs associated with this solicitation of proxies will be borne
by Everest, who will not seek any reimbursement from the Partnership therefor.
This solicitation by mail may be supplemented by additional solicitations by
telephone, personal contacts or other means. Everest has engaged Morrow & Co.,
Inc. (the "Solicitor") for solicitation and advisory services in connection
with this proxy solicitation. In connection therewith, the Solicitor will be
paid reasonable and customary compensation and will be reimbursed for its
reasonable out-of-pocket expenses. Everest has also agreed to indemnify the
Solicitor against certain liabilities and expenses, including liabilities and
expenses under federal securities laws.
Everest will not pay any fees or commissions to any broker or dealer
or other person (other than the Solicitor) for soliciting proxies pursuant to
this solicitation. Banks, brokerage houses and other custodians, nominees and
fiduciaries, if any, will be requested to forward this Proxy Statement to the
customers for whom they hold Units.
_________________________________________________
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT. IF GIVEN
OR MADE, ANY SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY EVEREST. THE DELIVERY OF THIS PROXY STATEMENT SHALL
NOT UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR
THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN THE
AFFAIRS OF EVEREST OR THE PARTNERSHIP SINCE THE DATE HEREOF.
_________________________________________________
-12-
<PAGE> 14
EXHIBIT A
FORM OF
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made and
entered into as of ____________________, 1997, by and between Century
HillCreste Apartment Investors, L.P., a California limited partnership
("Seller"), and Everest Hillcreste Investors, LLC, a California limited
liability company.
IN CONSIDERATION of the respective agreements hereinafter set forth,
Seller and Buyer hereby agree as follows:
1. PROPERTY. Seller hereby agrees to sell and convey to Buyer,
and Buyer hereby agrees to purchase from Seller, subject to the terms and
conditions set forth herein, the following: (a) that certain real property
owned by Seller and located on Ambassador Road, in the City of Los Angeles,
State of California, more particularly described in Schedule 1 to the "Deed"
(as hereinafter defined) (the "Land"); (b) all rights, privileges and easements
appurtenant to the Land, (collectively, the "Appurtenances"); (c) all
improvements and fixtures located on the Land and Appurtenances (collectively,
the "Improvements", and together with the Land and Appurtenances, the "Real
Property"); (d) all tangible personal property owned by Seller located on or in
or used in connection with the Real Property as of the date hereof and as of
the "Closing Date" (as defined in Paragraph 7 (b) below), including, without
limitation, (i) all laundry equipment, recreation equipment, pool and spa
furniture and equipment, furnishings in the on-site leasing facility, clubhouse
and fitness center, and all air conditioners, refrigerators, dishwashers,
ovens/ranges, microwaves and washer/dryer units located in the rental units,
and (ii) all those items described Schedule 2 to the "Bill of Sale" (as
hereinafter defined) (collectively, the "Tangible Personal Property"); and (e)
any intangible personal property now or hereafter owned by Seller and used in
the ownership, use or operation or development of the Real Property, and
Tangible Personal Property, including, without limitation, the right to use the
name "Century HillCreste Apartments" and any goodwill associated therewith, any
contract or lease rights (individually or collectively, the "Leases"), and
Seller's interest in all security deposits and prepaid rent, if any, under the
Leases (provided that Seller's interest in such security deposits and prepaid
rent shall not be paid in cash to Buyer upon the Closing but instead shall be
transferred in the form of a credit against the Purchase Price pursuant to
Paragraph 9 (f) below) and, to the extent assignable, any and all guaranties of
the Leases, utility contracts or other agreements or rights relating to the
ownership, use and operation of the Real Property or Tangible Personal Property
(collectively, the "Intangible Property", and together with the Tangible
Personal Property, the "Personal Property"). All of the items referred to in
Subparagraphs (a), (b), and (c), (d) and (e) above are collectively referred to
herein as the "Property".
2. PURCHASE PRICE.
(a) The purchase price for the Property is Forty Million
Dollars ($40,000,000) subject to reduction by any credits due Buyer hereunder
(the "Purchase Price").
(b) The Purchase Price shall be paid in full in cash less any
credits due Buyer hereunder at closing. Closing shall be accomplished through
an escrow ("the Escrow") opened at Chicago Title Company (the "Escrow Holder").
3. TITLE TO THE PROPERTY.
(a) At the Closing, Seller shall convey to Buyer marketable
and insurable fee simple title to the Real Property and Improvements, by duly
executed and acknowledged grant deed prepared by Buyer in form reasonably
acceptable to Seller (the "Deed"). Evidence of delivery of marketable and
insurable fee simple title shall be the issuance by Chicago Title Insurance
Company (the "Title Company") to Buyer of an ALTA Owner's Policy of Title
Insurance (form B, ref. 10/17/70) in the amount of the Purchase Price, insuring
fee simple title to the Real Property and Improvements in Buyer, and without
boundary, encroachment or survey exceptions (the "Title Policy"). The Title
Policy shall provide full coverage against mechanics' and materialmen's liens
and shall contain such special endorsements as Buyer may reasonably require.
1
<PAGE> 15
(b) At the Closing (i) Seller shall transfer title to the
Intangible Property, all contracts relating to the use, operation or ownership
of the Property which Buyer elects to assume (the "Assigned Contracts") and all
applicable permits by an assignment and assumption of Intangible Property
prepared by Buyer in form reasonably acceptable to Seller (the "Assignment of
Intangible Property") and (ii) Seller shall transfer title to the Leases by an
assignment and assumption of Leases prepared by Buyer in form reasonably
acceptable to Seller (the "Assignment of Leases"), such title in each case to
be free of any liens, encumbrances or interests, other than exceptions to title
approved by Buyer pursuant to Paragraph 4 below. Other than those obligations
of Seller expressly assumed by Buyer hereunder or under any Closing document,
Seller shall pay and be solely responsible for all obligations arising out of
the conduct of Seller's business or the operation of the Property prior to
Closing.
4. DUE DILIGENCE. Buyer has obtained a current extended coverage
preliminary title report dated July 25, 1996 on the Real Property, issued by
Title Company, accompanied by copies of all documents referred to in the report
(collectively, the "Preliminary Report"). Title Company's unconditional
commitment to issue the Title Policy in approved form and subject only to Items
___ on Schedule B to the Preliminary Report at the Closing shall be a Condition
Precedent to Buyer's obligation to proceed with the Closing in addition to the
other Conditions Precedent set forth in Paragraph 6 below. In any event,
Seller covenants to cause to be released and reconveyed from the Property, and
to remove as exceptions to title at or prior to the Closing, any mortgages,
deeds of trust, or other monetary encumbrances, assessments or indebtedness
shown on the Preliminary Report, except for non-delinquent real property taxes
and assessments included on the tax bill with such real property taxes.
5. SELLER'S DELIVERIES. Seller shall deliver or cause to be
delivered to Buyer, or make available for review by Buyer either at the
Property or at Seller's offices, at Seller's sole cost and expense, within two
(2) business days following the date of this Agreement, all documents and
information relating to the Property, including, without limitation, all
Leases, warranties and permits.
6. CONDITIONS PRECEDENT TO CLOSING. The following are conditions
precedent to Buyer's obligation to purchase the Property (the "Conditions
Precedent"). The Conditions Precedent are intended solely for the benefit of
Buyer and may be waived only by Buyer in writing. In the event any Condition
Precedent is not timely satisfied, Buyer may, in its sole and absolute
discretion, terminate this Agreement, and all obligations of Buyer and Seller
hereunder (except provisions of this Agreement which recite that they survive
termination) shall terminate and be of no further force or effect.
(a) All of Seller's representations and warranties contained
in or made pursuant to this Agreement shall have been true and correct when
made and shall be true and correct as of the Closing Date.
(b) The physical condition of the Property shall be
substantially the same on the day of Closing as on the date of Buyer's
execution of this Agreement, reasonable wear and tear excepted.
(c) As of the Closing Date, there shall be no litigation or
administrative agency or other governmental proceeding of any kind whatsoever,
pending or threatened, which after Closing would, in Buyer's sole discretion,
materially adversely affect the value of the Property or the ability of Buyer
to operate the Property in the manner in which it is currently being operated.
(d) Seller shall have fully complied with all of Seller's
duties and obligations contained in this Agreement to be complied with at or
prior to the Closing, which shall take place not later than January 15, 1997.
(e) Buyer shall have confirmed that at least ninety percent
(90%) (the "Required Occupancy Level") of the apartment units on the Property
are physically occupied by tenants ("Qualified Tenants") who (1) are not in
default under their respective Leases and (2) are paying rental at commercially
reasonable rates without any special concessions.
2
<PAGE> 16
7. ESCROW; CLOSING.
(a) Upon mutual execution of this Agreement, the parties
hereto shall deposit an executed counterpart of this Agreement with Escrow
Holder and this agreement shall serve as instructions to Escrow Holder for
consummation of the purchase and sale contemplated hereby. Seller and Buyer
shall execute such supplemental Escrow instructions as may be appropriate to
enable Escrow Holder to comply with the terms of this Agreement, provided such
supplemental Escrow instructions are not in conflict with this Agreement as it
may be amended in writing from time to time. In the event of any conflict
between the provisions of this Agreement and any supplemental Escrow
instructions signed by Buyer and Seller, the terms of this Agreement shall
control.
(b) The parties intend for the "Closing" to take place not
more than five (5) business days after execution of this Agreement (the
"Closing Date").
(c) At or before the Closing, Seller shall deliver to Escrow
Holder or Buyer the following: (i) a duly executed and acknowledged Deed; (ii)
a duly executed Bill of Sale; (iii) originals of all Leases (which may be
delivered by leaving the same at the on-site management office of the Property)
and two duly executed original counterparts of the Assignment of Leases; (iv)
originals of the Assigned Contracts (which may be delivered by leaving the same
at the on-site management office of the Property); (v) two duly executed
original counterparts of the Assignment of Intangible Property; (vi) such
resolutions, authorizations, bylaws or other documents or agreements relating
to Seller, its partners and/or the Property as shall be reasonably required by
Buyer; and (vii) and notice to tenants in a form reasonably satisfactory to
Buyer and Seller.
(d) At or before the Closing, Buyer shall deliver to Escrow
Holder or Seller the following: (i) the Purchase Price, less any closing credit
due to Buyer; (ii) two duly executed original counterparts of the Assignment of
Intangible Property; and (iii) two duly executed original counterparts of the
Assignment of Leases.
(e) Seller and Buyer shall each deposit such other
instruments as are reasonably required by Escrow Holder or otherwise required
to close the escrow and consummate the purchase of the Property in accordance
with the terms hereof and practice customary in Los Angeles County.
(f) (i) The following are to be apportioned as of the
Closing Date (with Buyer being deemed to own the Property for the entire day of
the Closing for purposes of such apportionments), as follows: (1) rent under
the Leases shall be apportioned as of the Closing Date, regardless of whether
or not such rent has been received by Seller; and (2) Seller shall pay as of
the Closing all leasing commission and tenant improvement costs, if any, in
connection with any Lease executed on or before the Closing and Buyer shall be
entitled to a credit against the Purchase Price for any such commissions or
costs incurred in connection with any lease executed on or before the Closing;
(3) Buyer shall be entitled to a credit against the Purchase Price for the
total sum of all security deposits paid to Seller by tenants under any Leases,
and any interest earned thereon (to the extent interest is earned by the
tenants on such security deposits); (4) Seller shall use reasonable efforts to
cause all the utility meters to be read on the Closing Date, and will be
responsible for the cost of all utilities used prior the Closing Date, except
to the extent such utility charges are billed to and paid by tenants directly;
(5) general real estate taxes and assessments included on the tax bill with
such real property taxes, which are payable for the fiscal year in which the
Closing occurs, shall be prorated by Seller and Buyer as of the Closing Date;
(6) amounts payable under the Assigned Contracts, annual or periodic permit
and/or inspection fees (calculated on the basis of the period covered), and
liability for other Property operation and maintenance expenses and other
recurring costs shall be apportioned as of the Closing Date; (7) Seller and
Buyer shall jointly prepare and approve a preliminary Closing Statement on the
basis of the Leases and other sources of income and expenses, and shall deliver
such computation to Escrow Holder prior to Closing; and (8) if any of the
aforesaid prorations cannot be definitely calculated on the Closing Date, then
they shall be estimated at the Closing and definitely calculated as soon after
the Closing Date as feasible. Either party owing the other party a sum of
money based on such subsequent proration(s) and the post closing audit shall
promptly pay said sum to the other party.
(ii) Seller shall be liable for the premium for the Title
Policy, any sales taxes, any county and/or city transfer taxes applicable to
the sale, and any costs of obtaining or updating, as applicable, any survey
required
3
<PAGE> 17
for the issuance of the Title Policy. Escrow fees and recording fees for
recording of the Deed shall be paid fifty percent (50%) by Buyer and fifty
percent (50%) by Seller. All other costs and charges of the Escrow not
otherwise provided for in this Agreement shall be allocated in accordance with
the closing customs for the County where the Property is located. Buyer and
Seller shall each be responsible for their respective legal fees to negotiate
and execute this Agreement.
(iii) The provisions of this Subparagraph (f) shall survive
the Closing.
8. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER. As of
the date hereof and again as of Closing, Seller represents and warrants to, and
covenants with, Buyer as follows:
(a) Seller has not received written notice of, and otherwise
has no knowledge of, any material physical or mechanical defects of the
Property, including, without limitation, the structural and load-bearing
components of the Property, the parking lots, the plumbing, heating,
air-conditioning and electrical and life safety systems and building roofs.
(b) Seller has not received written notice of, and otherwise
has no knowledge of, (i) any non-compliance of the Property or the operation
thereof with applicable housing and building codes, environmental, zoning, life
safety, laws, rules and regulations related to handicapped or disabled
(including without limitation the ADA and the FHAA), land use laws and
regulations, and other applicable local, state and federal laws and regulations
(collectively, the "Laws"), or (ii) any order or directive of the applicable
Department of Building and Safety, Health Department or any other municipal,
county, state or federal authority that any work or repair, maintenance or
improvement is required to be performed on the Property.
(c) Seller has not received written notice of, and otherwise
has no knowledge of (i) any condemnation, environmental, zoning or other
land-use regulation proceedings, either instituted or planned to be instituted,
which would materially and adversely affect the use, operation or value of the
Property, or (ii) any special assessment proceedings affecting the Property.
Seller shall notify Buyer promptly of any such proceedings of which Seller
becomes aware.
(d) There are no free rent, abatements, incomplete tenant
improvements, rebates, allowances, or other unexpired concessions or rights
under any existing or pending Leases (with the exception of those specifically
excepted in Exhibit A attached hereto and incorporated herein by this
reference). Seller has paid in full all of landlord's leasing costs or
obligations with respect to existing leases.
(e) This Agreement is, and all documents executed by Seller
which are to be delivered to Buyer at the Closing will then be, duly
authorized, executed and delivered by Seller, are and at the time of Closing
will be legal, valid and binding obligations of Seller enforceable against
Seller in accordance with their respective terms.
(f) Seller is not a "foreign person" within the meaning of
Internal Revenue Code Section 1445(f)(3). Seller is not a person with respect
to which California Revenue and Taxation Code Sections 18662, 18668 and 18669
require withholding.
9. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby
represents and warrants to Seller that this Agreement is, and all documents
executed by Buyer which are to be delivered to Seller at the Closing will then
be, duly authorized, executed and delivered by Buyer, and are and at the
Closing will be legal, valid and binding obligations of Buyer, enforceable
against Buyer in accordance with their respective terms.
10. CONTINUATION AND SURVIVAL. All representations and warranties
and covenants by the respective parties contained herein or made in writing
pursuant to this Agreement, unless expressly provided to the contrary, shall
survive the execution and delivery of this Agreement, the Deed and the Closing
for a period of two (2) years.
11. POSSESSION. Possession of the Property shall be delivered to
Buyer on the Closing Date, provided, however, that prior to the Closing Date
Seller shall afford authorized representatives of Buyer access to the Property
4
<PAGE> 18
during normal business hours for purposes of satisfying Buyer with respect to
the representations, warranties and covenants of Seller contained herein and
with respect to satisfaction of any Conditions Precedent to the Closing
contained herein.
12. MAINTENANCE OF THE PROPERTY AND PROPERTY PERSONNEL. Between
Seller's execution of this Agreement and the Closing, Seller shall maintain the
Property in good order, condition and repair, ordinary wear and tear excepted,
shall perform all work required to be performed by the landlord under the terms
of any Lease, and shall make all repairs, maintenance and replacements of the
Improvements and any Tangible Personal Property and otherwise operate the
Property in the same manner as before the making of this Agreement, as if
Seller were retaining the Property. After full execution of this Agreement and
until the Closing, Seller shall maintain all existing personnel on the Property
in their current employment positions at their current rate of compensation,
subject to personnel turnover in the ordinary course of business.
13. LEASING; COLLECTION OF DELINQUENT RENT. Seller shall use
commercially reasonable efforts until Closing to lease any vacant space, or
space becoming vacant, in the Real Property to tenants at rental amounts and
utilizing the criteria Seller used prior to execution of this Agreement and
shall otherwise operate the Property in the manner in which it has been
previously operated. Buyer shall be solely responsible for collection of any
delinquent rent from continuing tenants, which collections for periods prior to
Closing shall be promptly paid to Seller. All such collections shall be
applied first to the most recent rent due.
14. INSURANCE. Through the Closing Date, Seller shall maintain or
cause to be maintained, at Seller's sole cost and expense, policies of
insurance with respect to the Property consistent with such insurance policies
as are presently maintained by Seller.
15. MARKETING. Seller agrees not to market or show the Property
to any other prospective purchasers during the term of this Agreement.
16. INDEMNITY. Buyer agrees to indemnify and hold harmless
Seller for all liability arising out of the operation by Buyer of the Property
after the Closing.
17. AS IS PURCHASE. Buyer agrees that, except as expressly set
forth herein, it is acquiring the Property on an "as-is, where-is" basis.
18. MISCELLANEOUS. (a) NOTICES. Any notice, consent or approval
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been given upon (i) hand delivery, (ii) one business
day after being deposited with Federal Express or another reliable overnight
courier service or next day delivery or transmitted by facsimile transmission,
or (iii) two business days after being deposited in the United States mail,
registered or certified mail, postage prepaid, return receipt required, and
addressed as follows:
If to Seller: __________________________
__________________________
__________________________
If to Buyer: __________________________
__________________________
__________________________
or such other address as either party may from time to time specify in writing
to the other.
(b) AMENDMENTS. Except as otherwise provided herein, this
Agreement may be amended or modified only by a written instrument executed by
Seller and Buyer.
(c) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
5
<PAGE> 19
(d) COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but
any number of which, taken together, shall constitute one and the same
instrument.
(e) TIME OF THE ESSENCE. Time is of the essence in the
transactions contemplated by this Agreement.
(f) ATTORNEYS' FEES. In the event any action is brought to
enforce or interpret this Agreement, the prevailing party in such action shall
be entitled to its reasonable attorneys' fees and costs.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
<TABLE>
<S> <C>
BUYER: SELLER:
EVEREST HILLCRESTE INVESTORS, LLC, CENTURY HILLCRESTE APARTMENT
a California limited liability company INVESTORS, L.P.,
a California limited partnership
By: EVEREST PROPERTIES, LLC, MANAGER
By: _____________________________ By: ______________________________
Its Authorized Representative Its Authorized Representative
</TABLE>
6
<PAGE> 20
EXHIBIT B: RESOLUTIONS OF THE LIMITED PARTNERS
OF CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
WHEREAS, it has been proposed that Century HillCreste Apartment
Investors, L.P., a California limited partnership (the "Partnership"), enter
into a Purchase and Sale Agreement (the "Purchase Agreement") between the
Partnership and Everest Hillcreste Investors, LLC, a California limited
liability company ("Everest"), substantially in the form attached as Exhibit A
to the Proxy Statement, dated December __, 1996 (the "Proxy Statement")
distributed to holders of limited partnership interests in the Partnership (the
"Limited Partners"), under which Everest would purchase the Century HillCreste
Apartments, together with certain associated Partnership assets (the
"HillCreste Apartments"), for $40,000,000 in cash on the terms set forth in the
Purchase Agreement; and
WHEREAS, the Partnership's Agreement of Limited Partnership (the
"Partnership Agreement") provides that sales of Partnership property may be
approved by the affirmative vote of a Majority in Interest of the Limited
Partners at a meeting of Limited Partners, without the approval or consent of
National Partnership Investments Corp., the Partnership's managing general
partner (the "Managing General Partner"), or any other general partner of the
Partnership.
NOW, THEREFORE, BE IT RESOLVED, that the Managing General Partner of
the Partnership is hereby authorized and directed to sell the HillCreste
Apartments to Everest on substantially the terms set forth in the Purchase
Agreement;
RESOLVED FURTHER, that the Managing General Partner is hereby
authorized and directed to execute and deliver, on behalf of and in the name of
the Partnership, the Purchase Agreement, with such amendments thereto as the
Managing General Partner and Everest shall deem appropriate and not
inconsistent with the material terms of the form of Purchase Agreement attached
as Exhibit A to the Proxy Statement, such Managing General Partner's approval
in that regard to be conclusively evidenced by its execution of the Purchase
Agreement, and such other documents, instruments, agreements, certificates and
other matters as may be necessary or desirable in order to consummate the sale
of the HillCreste Apartments to Everest as provided in the Purchase Agreement;
RESOLVED FURTHER, that the Managing General Partner is hereby
requested to distribute to the partners of the Partnership the available
proceeds of the sale of the HillCreste Apartments within 10 days of the
completion of such sale or as soon thereafter as practicable;
RESOLVED FURTHER, that the Managing General is hereby further
authorized, empowered and directed, on behalf of and in the name of the
Partnership, to take or cause to be taken in the name of the Partnership all
such
<PAGE> 21
other and further actions, and to execute, acknowledge, deliver and file any
and all agreements or other instruments in such form as may be required and to
incur such expense, as in its judgment is reasonably necessary, proper or
convenient in order to carry out and implement the purposes and intentions of
the foregoing resolutions and to consummate the sale of the HillCreste
Apartments by the Partnership to Everest and promptly thereafter distribute the
available proceeds of the sale of the HillCreste Apartments; and
RESOLVED FURTHER, that any and all agreements, documents and
instruments executed and delivered on behalf of the Partnership pursuant to the
foregoing resolutions shall be deemed to be the act and deed of the Partnership
and shall be binding and enforceable against the Partnership in all respects.
<PAGE> 22
EXHIBIT C
EXHIBIT C: THE PARTNERSHIP'S FINANCIAL STATEMENTS
<PAGE> 23
The following audited financial statements of the Century Hillcreste
Apartment Investors, L.P. (the "Partnership") for the Year ended December 31,
1995 have been reproduced from the Annual Report on Form 10-K for the year
ended December 31, 1995 of the Partnership.
ITEM 14. FINANCIAL STATEMENTS, SCHEDULES, EXHIBITS AND REPORTS ON FORM 8-K:
FINANCIAL STATEMENTS
Reports of Independent Public Accountants.
Balance Sheets as of December 31, 1995 and 1994.
Statements of Income for the years ended December 31, 1995, 1994 and 1993.
Statements of Partners' Capital (Deficiency) for the years ended December, 31,
1995, 1994 and 1993.
Statements of Cash Flows for the years ended December 31, 1995, 1994 and 1993.
Notes to Financial Statements.
FINANCIAL STATEMENT SCHEDULE:
Schedule III - Real Estate and Accumulated Depreciation, December 31, 1995.
The remaining schedules are omitted because any required information is
included in the financial statements and notes thereto, or they are not
applicable or not required.
<PAGE> 24
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(a California Limited Partnership)
FINANCIAL STATEMENTS,
FINANCIAL STATEMENT SCHEDULES
AND INDEPENDENT PUBLIC ACCOUNTANTS' REPORTS
DECEMBER 31, 1995
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
Century HillCreste Apartment Investors, L.P.
(A California Limited partnership)
We have audited the accompanying balance sheets of Century HillCreste Apartment
Investors, L.P. (a California Limited partnership) as of December 31, 1995 and
1994, and the related statements of income, partners' capital (deficiency) and
cash flows for the years then ended. Our audits also included the financial
statement schedule listed in the index at Item 14. These financial statements
and financial statement schedule are the responsibility of the management of
the Partnership. Our responsibility is to express an opinion on these financial
statements and financial statement schedule 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 HillCreste Apartment
Investors, L.P. as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles. Also, in our opinion, such financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
DELOITTE & TOUCHE LLP
Los Angeles, California
March 29, 1996
<PAGE> 25
CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
ASSETS
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
RENTAL PROPERTY (Notes 1, 2 and 3) $34,772,331 $35,660,385
CASH AND CASH EQUIVALENTS (Note 1) 2,738,045 2,425,486
RESTRICTED CASH (Notes 1 and 5) 158,700 158,700
OTHER ASSETS (Note 5) 15,102 332,885
----------- -----------
$37,684,178 $38,577,456
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES (Note 4) $ 359,359 $ 414,023
LIABILITY FOR EARTHQUAKE LOSS (Note 5) -- 1,091,723
DUE TO GENERAL PARTNERS (Note 4) 150,000 91,331
PREPAID RENT 46,965 22,732
SECURITY DEPOSITS 310,099 320,340
----------- -----------
866,423 1,940,149
COMMITMENTS AND CONTINGENCIES (Note 5)
PARTNERS' CAPITAL (Note 1) 36,817,755 36,637,307
----------- -----------
$37,684,178 $38,577,456
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE> 26
CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
REVENUES
Rental income $5,394,552 $5,390,358 $5,109,914
Interest and other income (Note 3) 287,523 81,885 131,332
---------- ---------- ----------
5,682,075 5,472,243 5,241,246
---------- ---------- ----------
EXPENSES
Operating (Note 4) 1,178,744 1,076,682 1,055,706
Property taxes 422,121 525,867 394,042
Management fee - related party (Note 4) 181,375 273,130 257,142
General and administrative (Note 4) 651,783 513,638 335,045
Depreciation 713,054 716,572 1,350,550
Provision for earthquake loss (Note 5) 36,662 1,141,615 --
---------- ---------- ----------
3,183,739 4,247,504 3,392,485
---------- ---------- ----------
NET INCOME $2,498,336 $1,224,739 $1,848,761
========== ========== ==========
NET INCOME PER LIMITED
PARTNERSHIP INTEREST $ 0.34 $ 0.17 $ 0.25
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 27
CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL (DEFICIENCY)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Special Limited
General Limited Partner
Partners Partners (Note 1) Total
--------- ------------ --------- ------------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1993 $(217,343) $ 43,671,010 $ -- $ 43,453,667
DISTRIBUTIONS -- (4,885,727) -- (4,885,727)
NET INCOME FOR 1993 18,488 1,830,273 -- 1,848,761
--------- ------------ --------- ------------
BALANCE, DECEMBER 31, 1993 (198,855) 40,615,556 -- 40,416,701
DISTRIBUTIONS (98,899) (4,905,234) -- (5,004,133)
NET INCOME FOR 1994 12,247 1,212,492 -- 1,224,739
--------- ------------ --------- ------------
BALANCE, DECEMBER 31, 1994 (285,507) 36,922,814 -- 36,637,307
DISTRIBUTIONS (27,262) (2,290,626) (2,317,888)
NET INCOME FOR 1995 24,983 2,473,353 -- 2,498,336
--------- ------------ --------- ------------
BALANCE, DECEMBER 31, 1995 $(287,786) $ 37,105,541 $ -- $ 36,817,755
========= ============ ========= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 28
CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,498,336 $ 1,224,739 $ 1,848,761
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 713,054 716,572 1,350,550
Provision for earthquake loss 36,662 1,141,615 --
Decrease (increase) in other assets 317,783 324,066 (328,185)
Increase (decrease) in accounts payable and
accrued liabilities (54,664) (396,000) 33,343
Increase in due to general partners 58,669 91,331 --
Decrease in security deposits (10,241) (13,430) (6,825)
Increase (decrease) in prepaid rent 24,233 (30,465) 13,851
----------- ----------- -----------
Net cash provided by operating activities 3,583,832 3,058,428 2,911,495
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Redemption of short term investments -- 1,451,600 --
Increase in restricted cash -- (158,700) --
Payments received pursuant to the minimum
distribution guarantee 175,000 2,992,712 1,105,317
Insurance proceeds for earthquake loss -- 355,448 --
Earthquake loss payments (1,128,385) (405,340) --
----------- ----------- -----------
Net cash provided (used in) by investing activities (953,385) 4,235,720 1,105,317
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners (2,317,888) (5,004,133) (4,885,727)
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 312,559 2,290,015 (868,915)
CASH AND CASH EQUIVALENTS, beginning of year 2,425,486 135,471 1,004,386
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, end of year $ 2,738,045 $ 2,425,486 $ 135,471
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Reduction in rental property resulting from
minimum distribution guarantee receivable $ -- $ -- $ 2,945,222
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 29
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(a California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Century HillCreste Apartment Investors, L.P. (the "Partnership"), a
California limited partnership, was formed on June 6, 1988, with
National Partnership Investments Corp. (the "Managing General
Partner"), and HillCreste Properties Inc. (the "Non-Managing General
Partner") as the 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 apartment complex in the Century City area of Los
Angeles, California (the "Property") from Casden Properties (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.
Among other things, the Partnership Agreement provides that the 10%
special limited partnership interest be 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
distribution proceeds.
Casden Investment Corporation, an affiliate of the Seller, owns 100% of
the outstanding common stock of NAPICO. DA Group Holdings Inc. owns
100% of the stock of HillCreste Properties Inc.
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.
Depreciation
Depreciation is reported using the straight-line method over the
estimated useful lives of the buildings and equipment as follows:
Buildings 35 years
Furniture and equipment 5 years
Minimum Distribution Guarantee
The minimum distribution guarantee payments from the Seller have been
reflected as a reduction in the carrying amount of the Property.
For its contribution of $6,855,000, 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.
5
<PAGE> 30
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(a California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Cash and Cash Equivalents
Cash and cash equivalents consist 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 city streets located within the
Property's perimeter (see Note 5).
Income Taxes
No provision has been made for income taxes in the accompanying
financial statements since such taxes, if any, are the liability of the
partners.
Net Income Per Limited Partner 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 all years presented.
Reclassifications
Certain reclassifications have been made to the 1994 financial
statements to conform to the 1995 presentation.
2. RENTAL PROPERTY
At December 31, 1995 and 1994, rental property consists of the
following:
<TABLE>
<CAPTION>
1995 1994
----------- ----------
<S> <C> <C>
Land $16,175,000 $16,175,000
Buildings 24,869,402 25,044,402
Furniture and equipment 3,870,000 3,870,000
------------ -----------
44,914,402 45,089,402
Less: Accumulated depreciation 10,142,071 9,429,017
----------- -----------
$34,772,331 $35,660,385
=========== ===========
</TABLE>
6
<PAGE> 31
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(a California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
3. MINIMUM DISTRIBUTION GUARANTEE RECEIVABLE FROM PARTNER
The Minimum Distribution Guarantee Agreement (the "Guarantee
Agreement") required the Seller, who is also the Special Limited
Partner, to make 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 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, 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 to be made
on February 11, 1996 (but has not yet been made). 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. Because certain disputes have arisen among the parties, the
Seller has not yet paid the second installment of $175,000, which is
not reflected in the accompanying financial statements.
Through December 31, 1995, the Seller has funded a total of $12,955,998
directly to the Partnership for distributions to the Limited Partners
pursuant to the Guarantee Agreement, which includes the $175,000 paid
in August 1995, referred to above. The period covered by the Guarantee
Agreement expired on December 31, 1993. Except with respect to the
payments made or to be 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 Partnership's basis in 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
entered into on August 11, 1995, which amount represents interest on
late payments to the Partnership covering the period from the second
quarter of 1991 to the fourth quarter of 1993 pursuant to the Guarantee
Agreement.
4. FEES PAID TO MANAGING GENERAL PARTNER 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 of $50,000 annually is paid to the
Managing General Partner. This fee is included in general and
administrative expenses for 1995, 1994 and 1993.
7
<PAGE> 32
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(a California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
4. FEES PAID TO MANAGING GENERAL PARTNERS AND AFFILIATES (CONTINUED)
b. Prior to February 1, 1995, a property management fee equal to
5% of collected revenues was paid to an affiliate of the
Managing General Partner. Effective February 1, 1995, the
property management fee was reduced to 3%. On January 1, 1996,
property management was transferred to an unaffiliated agent,
who manages the property for a fee of 3% of rental revenues.
The property management fees paid to the affiliate for the
years ended December 31, 1995, 1994 and 1993 were $181,375,
$273,130 and $257,142, respectively. Additionally, the
Partnership paid approximately $41,700, $21,200 and $53,500 for
the years ended December 31, 1995, 1994 and 1993, respectively,
to an affiliate of the Managing General Partner for maintenance
services.
c. Through December 1990, partnership expense reimbursements, not
to exceed $50,000 annually, were paid to the Non-Managing
General Partner. The 1990 reimbursement has been accrued and is
included in accounts payable and accrued liabilities at
December 31, 1995 and 1994. The Non-Managing General Partner
has requested reimbursement for expenses for 1991 through 1995,
however, the Managing General Partner is disputing such
reimbursements and none have been paid or accrued.
d. Payments in the amount of approximately $376,000 were made to
an affiliate of the Managing General Partner, in connection
with earthquake related repairs during the year ended December
31, 1994 (see Note 5). These amounts were included in the
provision for earthquake damage.
e. 1% of distributions (as defined in the Partnership Agreement)
is payable quarterly to the Managing General Partner. The fees
paid for the years ended December 31, 1995, 1994 and 1993 were
$27,262, $98,899 and $0, respectively.
f. The Partnership is obligated to pay certain fees to the
Managing General Partner or its affiliates upon sale of the
Property. The payment of such fees is subordinated to certain
preferred returns to the Limited Partners.
At December 31, 1995, $150,000 was estimated as due to the Non-Managing
General Partner for reimbursement of professional fees paid on behalf
of the Partnership in connection with issues raised in the Memorandum
of Understanding. At December 31, 1994, approximately $91,000 was due
the Managing General Partner for reimbursement of professional fees
paid on behalf of the Partnership. This amount was paid in 1995.
5. COMMITMENTS AND CONTINGENCIES
a. On January 17, 1994, the Property sustained damage due to the
earthquake in the Los Angeles area (the "Northridge
Earthquake"). For the years ended December 31, 1995 and 1994,
approximately $37,000, and $1,142,000, respectively, has been
provided for repairing the damage caused by the Northridge
Earthquake.
Based on a determination by the building's insurance carrier
that the loss suffered by the Property as a result of the
Northridge Earthquake was $1,537,718, the Partnership received
in August 1994 a net insurance settlement in the amount of
$355,448. This amount was determined by reducing the gross
amount of the loss by: (a) the deductible provided for in the
policy in the amount of $1,071,808; (b) the $34,095 paid to the
independent public adjuster that processed the building's
claim; and (c) the insurance company's holdback of $76,367. The
insurance settlement of $355,448 has been offset against the
provision for earthquake loss.
8
<PAGE> 33
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(a California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
5. COMMITMENTS AND CONTINGENCIES (CONTINUED)
b. 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 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, a six month
extension to June 20, 1996 was approved.
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.
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.
c. 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 of management and the Managing
General Partner, the claims will not result in any material
liability to the Partnership.
6. 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> 34
SCHEDULE III
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
NOTES: 1. Rental property is stated at cost. Depreciation is provided for
on the straight-line method over the estimated useful lives of
the assets. Substantially all of the apartments are leased on a
month-to-month basis.
2. The total cost of land, buildings, and equipment for federal
income tax purposes at December 31, 1995 is approximately
$51,053,790.
3. Investment in rental property:
<TABLE>
<CAPTION>
Buildings,
Furniture
and
Land Equipment Total
----- ----------- -------
<S> <C> <C> <C>
Balance, January 1, 1993 $16,175,000 $32,188,853 $48,363,853
Less: minimum distribution
guarantee amounts funded
and accrued in 1993 - (3,226,961) (3,226,961)
----------- ----------- -----------
Balance, December 31, 1993 16,175,000 28,961,892 45,136,892
Less: minimum distribution
guarantee amounts funded
in 1994 - (47,490) (47,490)
----------- ----------- -----------
Balance, December 31, 1994 16,175,000 28,914,402 45,089,402
Less: minimum distribution
guarantee amounts funded
in 1995 - (175,000) (175,000)
----------- ----------- -----------
Balance, December 31, 1995 $16,175,000 $28,739,402 $44,914,402
=========== =========== ===========
</TABLE>
<PAGE> 35
SCHEDULE III
(Continued)
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Buildings,
Furniture
and
Equipment
---------
<S> <C>
Accumulated Depreciation:
- - -------------------------
Balance, January 1, 1993 $ 7,361,895
Provision for the year ended
December 31, 1993 1,350,550
-----------
Balance, December 31, 1993 8,712,445
Provision for the year ended
December 31, 1994 716,572
-----------
Balance, December 31, 1994 9,429,017
Provision for the year ended
December 31, 1995 713,054
-----------
Balance, December 31, 1995 $10,142,071
===========
</TABLE>
<PAGE> 36
The following interim financial statements for the Quarter ended
September 30, 1996 of Century HillCreste Apartment Investors, L.P. (the
"Partnership") have been reproduced from the Quarterly Report on Form 10-Q for
the Quarter ended September 30, 1996 of the Partnership.
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1996
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements and Notes to Financial Statements
Balance Sheets, September 30, 1996 and December 31, 1995 . . . . . . . . . . . . . .
Statements of Operations,
Nine and Three Months Ended September 30, 1996 and 1995 . . . . . . . . . . .
Statement of Partners' Capital (Deficiency)
Nine Months Ended September 30, 1996 . . . . . . . . . . . . . . . . . . . .
Statements of Cash Flows
Nine Months Ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . .
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
<PAGE> 37
CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
ASSETS
<TABLE>
<CAPTION>
1996 1995
(Unaudited) (Audited)
------------- -------------
<S> <C> <C>
RENTAL PROPERTY (Notes 1, 2 and 3) $ 34,248,165 $ 34,772,331
CASH AND CASH EQUIVALENTS (Note 1) 3,596,995 2,738,045
RESTRICTED CASH (Notes 1 and 4) 158,700 158,700
OTHER ASSETS (Note 5) 92,512 15,102
------------- -------------
$ 38,096,372 $ 37,684,178
============= =============
LIABILITIES AND PARTNERS' CAPITAL
ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES (Note 3) $ 579,132 $ 359,359
DUE TO GENERAL PARTNER (Note 3) - 150,000
PREPAID RENT 70,445 46,965
SECURITY DEPOSITS 328,526 310,099
------------- -------------
978,103 866,423
COMMITMENTS AND CONTINGENCIES (Note 4)
PARTNERS' CAPITAL (Note 1) 37,118,269 36,817,755
------------- -------------
$ 38,096,372 $ 37,684,178
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE> 38
CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
NINE AND THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
Nine months Three months Nine months Three months
ended ended ended ended
Sept. 30, 1996 Sept. 30, 1996 Sept. 30, 1995 Sept. 30, 1995
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES
Rental income $ 3,966,912 $ 1,364,743 $ 4,045,047 $ 1,353,957
Interest and other income (Notes 1 and 3) 178,793 46,967 368,163 177,432
--------------- --------------- --------------- ---------------
4,145,705 1,411,710 4,413,210 1,531,389
--------------- --------------- --------------- ---------------
EXPENSES
Operating (Note 3) 859,409 333,754 993,132 288,079
Property taxes 312,340 178,818 408,076 134,741
Management fee - related party
in 1995 (Note 3) 150,550 71,038 142,543 41,026
General and administrative (Note 3) 325,400 90,870 440,256 226,788
Depreciation 529,166 176,389 536,667 178,889
Earthquake loss - - 25,000 25,000
--------------- --------------- --------------- ---------------
2,176,865 850,869 2,545,674 894,523
--------------- --------------- --------------- ---------------
NET INCOME $ 1,968,840 $ 560,841 $ 1,867,536 $ 636,866
=============== =============== =============== ===============
NET INCOME PER LIMITED
PARTNERSHIP INTEREST $ 0.27 $ 0.08 $ 0.26 $ 0.09
=============== =============== =============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 39
CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENT OF PARTNERS' CAPITAL (DEFICIENCY)
NINE MONTHS ENDED SEPTEMBER 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Special Limited
General Limited Partner
Partners Partners (Note 1) Total
------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
PARTNERSHIP INTERESTS,
September 30, 1996 7,258,000
=============
BALANCE, January 1, 1996 $ (287,786) $ 37,105,541 $ - $ 36,817,755
Distributions (11,250) (1,657,076) - (1,668,326)
Net income for the nine months
ended September 30, 1996 19,688 1,949,152 - 1,968,840
------------- ------------- --------------- -------------
BALANCE, September 30, 1996 $ (279,348) $ 37,397,617 $ - $ 37,118,269
============= ============= ================ =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 40
CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,968,840 $ 1,867,536
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 529,166 536,667
(Increase) decrease in other assets (77,410) 289,098
Increase (decrease) in accounts payable and
accrued liabilities 219,773 (575,688)
Decrease in due to general partner (150,000) (91,331)
Increase (decrease) in security deposits 18,427 (3,808)
Increase (decrease) in prepaid rent 23,480 (6,251)
------------ ------------
Net cash provided by operating activities 2,532,276 2,016,223
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in fixed assets (180,000) -
Payments pursuant to the minimum distribution guarantee 175,000 175,000
Distributions to partners (1,668,326) (1,628,576)
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 858,950 562,647
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,738,045 2,425,486
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 3,596,995 $ 2,988,133
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 41
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 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 NAPICO, the accompanying unaudited financial
statements contain all adjustments (consisting primarily of normal
recurring accruals) necessary to present fairly the financial position
as of September 30, 1996, and the results of operations for the nine
and three months then ended and changes in cash flows for the nine
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"), an affiliate of the Managing General
Partner. 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> 42
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 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 a 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 September 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> 43
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 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.
RECLASSIFICATIONS
Certain reclassifications have been made in the 1995 financial
statements to conform to the 1996 presentation.
7
<PAGE> 44
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996
NOTE 2 - RENTAL PROPERTY
At September 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
Exterior improvements in progress 180,000 -
------------ ------------
44,919,412 44,914,402
Less accumulated depreciation (10,671,237) 10,142,071
------------ ------------
$ 34,248,165 $ 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).
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 September 30, 1996
and December 31, 1995. The Non-Managing General partner has
requested reimbursement for expenses for 1991 through
September 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.
8
<PAGE> 45
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996
NOTE 3 - FEES PAID TO GENERAL PARTNERS AND AFFILIATES (CONTINUED)
(f) Due to the complexity of the storm drain work (Note 4), an
affiliate of the Operating General Partner is providing
construction supervision of the storm drain improvements at a
cost not to exceed $1,820.
(g) Pursuant to the Memorandum of Understanding entered into on
August 11, 1995, the previously affiliated management company
paid to the Partnership $8,095 in interest on May 1, 1996,
related to funds it maintained in a master disbursement
account, and the Seller made payments to the Partnership in
the amount of $485,000, as more particularly described above.
In addition, the Partnership on May 1, 1996 reimbursed the
Non-Managing General Partner $90,000 for professional fees,
which were estimated to have been paid on behalf of the
Partnership in connection with issues raised in the Memorandum
of Understanding.
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.
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.
Contracts in the amount of $683,000 and $49,975 have been
awarded to construct the wrought iron security fencing and to
construct a storm drain and related improvements,
respectively, for which construction work has commenced in
September 1996. As of September 30, 1996, $180,000 has been
paid to the contractor.
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.
9
<PAGE> 46
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996
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.
10
<PAGE> 47
REVOCABLE PROXY
PROXY OF LIMITED PARTNER
The undersigned has received the Proxy Statement of Everest Hillcreste
Investors, LLC, a California limited liability company ("Everest"), dated
December __, 1996, relating to (1) authorization of Everest to notify National
Partnership Investments Corp., the Managing General Partner of Century
HillCreste Apartment Investors, L.P., a California limited partnership (the
"Partnership"), to call a special meeting of Limited Partners (the "Special
Meeting") of the Partnership; (2) a proposal to adopt a resolution at the
Special Meeting approving the sale of the HillCreste Apartments now owned by
the Partnership to Everest for a purchase price of $40,000,000 in cash (the
"Proposed Sale"), which resolution will also include a request to the Managing
General Partner to distribute the available proceeds of the Proposed Sale
within 10 days of the completion of such sale or as soon thereafter as
possible; (3) authorization of Everest to vote for adjournment and reconvening
of the Special Meeting, if and to the extent necessary in the judgment of
Everest, to solicit further votes to approve the Proposed Sale; and (4)
authorization of Everest to vote, in its discretion, upon such other matters as
may properly come before the Special Meeting.
The undersigned, hereby appoints W. Robert Kohorst and David I. Lesser
as the proxy and attorney in fact of the undersigned, with full power of
substitution, to vote all Units held by the undersigned as follows for all
matters set forth in the above referenced Proxy Statement by signing and
returning this Proxy:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
(1) Authorization of Everest to
notify the Managing General Grant Withhold
Partner to call a Special Authority Authority
Meeting of the Limited
Partners [ ] [ ]
(2) Proposal to approve the sale
of the HillCreste Apartments
to Everest and to distribute For Against Abstain
the available proceeds of the
Proposed Sale [ ] [ ] [ ]
Grant Withhold
Authority Authority
(3) Adjournment and reconvening
of the Special Meeting [ ] [ ]
(4) Authorization of Everest to Grant Withhold
vote upon such other matters Authority Authority
as may properly come before
the Special Meeting [ ] [ ]
</TABLE>
THIS PROXY IS SOLICITED ON BEHALF OF EVEREST HILLCRESTE INVESTORS, LLC, WHICH IS
NOT AFFILIATED WITH ANY OF THE GENERAL PARTNERS OF THE PARTNERSHIP. THIS PROXY,
WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED UNITHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2, 3 AND 4.
<TABLE>
<S> <C>
Dated: , 199__
------------------------- ---------------------------------------------------
Signature of Investor
If joint ownership, check one (ALL PARTIES MUST SIGN):
---------------------------------------------------
Print Name of Investor
Joint Tenants with Right of Survivorship
- -----
Tenants in Common
- ----- ---------------------------------------------------
Community Property Signature of Joint Investor (if any)
- -----
---------------------------------------------------
Print Name of Joint Investor (if any)
</TABLE>
<PAGE> 48
PLEASE RETURN THIS PROXY CARD PROMPTLY BY USING THE
ENCLOSED POSTAGE-PAID ENVELOPE.
Place in U.S. Mail or FAX to 818/585-5929
MORROW & CO., INC.
[ADDRESS]
