<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended JUNE 30, 1999
Commission File Number 33-22857
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(A California Limited Partnership)
I.R.S. Employer Identification No. 95-4166241
9090 WILSHIRE BLVD., SUITE 201
BEVERLY HILLS, CALIF. 90211
Registrant's Telephone Number,
Including Area Code (310) 278-2191
Indicate by check mark whether the registrant (1) has filed all documents and
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding twelve months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
<PAGE> 2
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1999
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements and Notes to Financial Statements
Balance Sheets, June 30, 1999 and December 31, 1998 ......................................1
Statements of Operations,
Six and Three Months Ended June 30, 1999 and 1998.................................2
Statement of Partners' Capital (Deficiency)
Six Months Ended June 30, 1999 ...................................................3
Statement of Cash Flows
Six Months Ended June 30, 1999 and 1998...........................................4
Notes to Financial Statements ............................................................5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ..............................................9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.........................................................................9
Item 6. Exhibits and Reports on Form 8-K..........................................................9
Signatures ............................................................................................10
</TABLE>
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CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
JUNE 30, 1999 AND DECEMBER 31, 1998
ASSETS
<TABLE>
<CAPTION>
1999
(Unaudited) 1998
----------- -----------
<S> <C> <C>
RENTAL PROPERTY (Notes 1, 2 and 3) $ - $57,836,152
CASH AND CASH EQUIVALENTS (Note 1) 1,484,752 5,505,534
RESTRICTED CASH (Notes 1 and 5) 158,700 158,700
OTHER ASSETS (Note 5) 35,266 94,363
----------- -----------
$ 1,678,718 $63,594,749
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES (Note 4) $ 3,449 $ 436,035
COMMITMENTS AND CONTINGENCIES (Note 5)
PARTNERS' CAPITAL (Note 1) 1,675,269 63,158,714
----------- -----------
$ 1,678,718 $63,594,749
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE> 4
CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
SIX AND THREE MONTHS ENDED JUNE 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
Six months Three months Six months Three months
ended ended ended ended
June 30, 1999 June 30, 1999 June 30, 1998 June 30, 1998
--------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES
Rental income $ - $ - $3,112,838 $1,620,007
Interest and other income (Note 3) 227,959 18,115 128,431 40,984
--------- ----------- ---------- ----------
227,959 18,115 3,241,269 1,660,991
--------- ----------- ---------- ----------
EXPENSES
Operating (Note 4) 83,248 31,435 671,541 359,792
Property taxes -- -- 253,229 189,162
Management fee (Note 4) -- -- 91,611 46,398
General and administrative (Note 4) 173,804 55,439 194,709 103,621
Depreciation -- -- 352,778 176,389
--------- ----------- ---------- ----------
257,052 86,874 1,563,868 875,362
--------- ----------- ---------- ----------
NET INCOME(LOSS) $ (29,093) $ (68,759) $1,677,401 $ 785,629
========= =========== ========== ==========
NET INCOME(LOSS) PER DEPOSITORY UNIT $ (0) $ (0) $ 0 $ 0
========= =========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 5
CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL (DEFICIENCY)
SIX MONTHS ENDED JUNE 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Special Limited
General Limited Partner
Partners Partners (Note 1) Total
--------- ------------ --------------- ------------
<S> <C> <C> <C> <C>
PARTNERSHIP INTERESTS 7,258,000
============
BALANCE, JANUARY 1, 1999 $ (18,942) $ 61,605,222 $ 1,572,434 $ 63,158,714
DISTRIBUTIONS (Note 7) (228,545) (59,653,373) (1,572,434) (61,454,352)
NET LOSS FOR THE SIX
MONTHS ENDED JUNE 30, 1999 (291) (28,802) -- (29,093)
--------- ------------ ----------- ------------
BALANCE, JUNE 30, 1999 $(247,778) $ 1,923,047 $ -- $ 1,675,269
========= ============ =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 6
CENTURY HILLCRESTE APARTMENTS INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (29,093) $ 1,096,978
Adjustments to reconcile net income (loss) to net
cash (used in) provided by operating activities:
Depreciation -- 352,778
Decrease in other assets 59,097 40,472
Decrease in accounts payable and
accrued liabilities (432,586) (173,242)
Decrease in security deposits -- (17,826)
Decrease in prepaid rent -- (54,239)
------------ -----------
Net cash provided by operating activities (402,582) 1,244,921
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash proceeds from sale 57,836,152 --
Increase in rental property -- (354,534)
------------ -----------
57,836,152 (354,534)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners (61,454,352) (1,169,731)
------------ -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS (4,020,782) (279,344)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 5,505,534 3,490,463
------------ -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,484,752 $ 3,211,119
============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
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, 1998 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 National Partnership Investments Corp. ("NAPICO"),
the accompanying unaudited financial statements contain all adjustments
(consisting primarily of normal recurring accruals) necessary to
present fairly the financial position as of June 30, 1999, and the
results of operations and changes in cash flows for the six and three
months then ended.
ORGANIZATION
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 (collectively, 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.
Prior to December 30, 1998, NAPICO was a wholly owned subsidiary of
Casden Investment Corporation ("CIC"), which is wholly owned by Alan I.
Casden. On December 30, 1998, Casden Properties Operating Partnership,
L.P., (the "Operating Partnership"), a majority owned subsidiary of
Casden Properties Inc., a real estate investment trust organized by
Alan I. Casden, purchased a 95.25% economic interest in NAPICO.
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 and became the Special Limited Partner of the
Partnership.
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.
5
<PAGE> 8
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Upon termination and liquidation of the Partnership, liquidating
distributions are made to the partners in accordance with their
respective capital account balances (as defined in the Partnership
Agreement).
On December 30, 1998, the Partnership sold the Property for $58,500,000
to the Operating Partnership. The partners intend to dissolve the
Partnership in 1999.
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 payments from the seller have been
reflected as a reduction in the carrying amount of the Property.
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. The
Partnership has its cash and cash equivalents on deposit primarily with
one money market mutual fund. Such cash and cash equivalents are
uninsured.
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 during 1998. The Partnership is in process of
having the assignment released.
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
partners.
NET INCOME PER DEPOSITORY UNIT
Net income per depository unit was computed by dividing the limited
partners' share of net income (99 percent) by the number of depository
units outstanding during the year. The number of depository units was
7,258,000 for the periods presented.
6
<PAGE> 9
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
IMPAIRMENT OF LONG-LIVED ASSETS
The Partnership reviews long-lived assets to determine if there has
been any permanent impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be
recoverable. If the sum of the expected future cash flows is less than
the carrying amount of the assets, the Partnership recognizes an
impairment loss.
NOTE 2 - RENTAL PROPERTY
On December 30, 1998, the Partnership sold the Property for $58,500,000
to the Operating Partnership, an affiliate of NAPICO. The sale resulted
in net cash proceeds to the Partnership of $57,916,894 and a gain of
$24,646,417. The cash proceeds were held in escrow at December 31, 1998
and were collected in 1999.
In March 1999, the Partnership made liquidating cash distributions of
$59,653,373 to the limited partners, $1,572,434 to the special limited
partner and $228,545 to the general partners, primarily using proceeds
from the sale of the building.
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) The Managing General Partner is entitled to receive 1 percent
of distributions from operations (as defined in the
Partnership Agreement). This is paid quarterly by the
Partnership to the Managing General Partner.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
a. 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.
7
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CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999
NOTE 4 - COMMITMENTS AND CONTINGENCIES (CONTINUED)
b. The Partnership has assessed the potential impact of the Year
2000 computer systems issue on its operations. The Partnership
believes that no significant actions are required to be taken
by the Partnership to address the issue and that the impact of
the Year 2000 computer systems issue will not materially
affect the Partnership's future operating results or financial
condition.
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 amounts of assets
and liabilities reported on the balance sheets that require such
disclosure approximate fair value due to their short-term maturity.
8
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CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
JUNE 30, 1999
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND
RESULTS OF OPERATIONS
CAPITAL RESOURCES AND LIQUIDITY
The Partnership raised proceeds of $72,580,000 from the sale of
depository units, pursuant to a public offering and received additional
capital contributions from the General Partners of $1,050 and from the
special limited partner of $6,855,000. Currently, the only sources of
Partnership income consist of income from rental operations at the
Property and interest earned on Partnership reserves.
The Partnership pledged a certificate of deposit in the amount of
$158,700 to the City of Los Angeles, to secure an improvement guarantee
on the construction of a storm drain and related improvement, which was
completed in 1998. Upon final inspection, the Partnership will receive
its deposit of $158,700.
RESULTS OF OPERATIONS
Due to the sale of the building on December 30, 1998, operations in 1999
consist of interest and other income and general and administrative
expenses. Included in the interest and other income is interest income
earned on cash and cash equivalents of $223,000 and $128,000 for the six
months ended June 30, 1999 and 1998, respectively. Interest income
increased in 1999 as compared to 1998 as a result of interest earned on
cash proceeds from the sale of the Property held by the Partnership,
prior to its distribution to the partners. The Partnership has its cash
and cash equivalents on deposit primarily with one money market mutual
fund.
The Partnership has assessed the potential impact of the Year 2000
computer systems issue on its operations. The Partnership believes that
no significant actions are required to be taken by the Partnership to
address the issue and that the impact of the Year 2000 computer systems
issue will not materially affect the Partnership's future operating
results or financial condition.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As of June 30, 1999, NAPICO, the Managing General Partner, was a
plaintiff or defendant in several lawsuits, which are unrelated to the
Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) No reports on Form 8-K were filed during the quarter ended June 30,
1999.
9
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CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
JUNE 30, 1999
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CENTURY HILLCRESTE APARTMENT INVESTORS, L.P.
(a California limited partnership)
By: National Partnership Investments Corp.
Managing General Partner
/s/ BRUCE NELSON
------------------------------------
Bruce Nelson
President
Date: August 13, 1999
-------------------------------
/s/ CHARLES H. BOXENBAUM
------------------------------------
Charles H. Boxenbaum
Chief Executive Officer
Date: August 13, 1999
-------------------------------
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
PARTNERSHIP'S STATEMENTS OF EARNINGS AND BALANCE SHEETS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 1,484,752
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,484,752
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,678,718
<CURRENT-LIABILITIES> 3,449
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,675,269
<TOTAL-LIABILITY-AND-EQUITY> 1,678,718
<SALES> 0
<TOTAL-REVENUES> 227,959
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 257,052
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (29,093)
<INCOME-TAX> 0
<INCOME-CONTINUING> (29,093)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (29,093)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
