<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC
20549
----------------------------
FORM 8-K
----------------------------
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: December 10, 1996
(Date of earliest event reported)
INSIGNIA FINANCIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-19066 13-3591193
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification
Number)
One Insignia Financial Plaza
Post Office Box 1089
Greenville, South Carolina 29602
(Address of Principal Executive Office)
Registrant's telephone number, including area code: (864) 239-1000
-----------------------------------
<PAGE>
Item 7. Financial Statements and Exhibits
(a) National Property Investors II: Financial Statements for the Fiscal
Year ended December 31, 1995
(b) National Property Investors III: Financial Statements for the Fiscal
Year ended December 31, 1995
(c) National Property Investors 4: Financial Statements for the Fiscal
Year ended December 31, 1995
(d) National Property Investors 5: Financial Statements for the Fiscal
Year ended December 31, 1995
(e) National Property Investors 6: Financial Statements for the Fiscal
Year ended December 31, 1995
(f) National Property Investors 7: Financial Statements for the Fiscal
Year ended December 31, 1995
(g) National Property Investors 8: Financial Statements for the Fiscal
Year ended December 31, 1995
(h) Century Properties Fund XIV: Financial Statements for the Fiscal
Year ended December 31, 1995
(i) Century Properties Fund XV: Financial Statements for the Fiscal
Year ended December 31, 1995
(j) Century Properties Fund XVI: Financial Statements for the Fiscal
Year ended December 31, 1995
(k) Century Properties Fund XVII: Financial Statements for the Fiscal
Year ended December 31, 1995
(l) Century Properties Fund XVIII: Financial Statements for the Fiscal
Year ended December 31, 1995
(m) Century Properties Fund XIX: Financial Statements for the Fiscal
Year ended December 31, 1995
(n) Century Properties Growth Fund XXII: Financial Statements for the
Fiscal Year ended December 31, 1995
<PAGE>
NATIONAL PROPERTY INVESTORS II
(a limited partnership)
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995
I N D E X
<TABLE>
<CAPTION>
Page
<S> <C>
PART I. FINANCIAL INFORMATION:
Independent Auditors' report.............................................................................. F - 2
Financial statements - years ended December 31, 1995, 1994 and 1993:
Balance sheets.......................................................................................... F - 3
Statements of operations................................................................................ F - 4
Statements of partners' equity.......................................................................... F - 5
Statements of cash flows................................................................................ F - 6
Notes................................................................................................... F - 7
Financial statement schedule :
Schedule III - Real Estate and Accumulated
Depreciation at December 31, 1995...................................................................... F - 13
</TABLE>
Financial statement schedules not included have been omitted because of the
absence of conditions under which they are required or because the information
is included elsewhere in the financial statements.
F - 1
<PAGE>
To the Partners
National Property Investors II
Greenville, South Carolina
Independent Auditors' Report
We have audited the accompanying balance sheets of National Property Investors
II (a limited partnership) (the "Partnership") as of December 31, 1995 and 1994,
and the related statements of operations, partners' equity and cash flows for
each of the three years in the period ended December 31, 1995. Our audits also
included additional information supplied pursuant to Item 14(a)(2). These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of National Property Investors II
as of December 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles. Also in our opinion,
the related 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.
Certified Public Accountants
New York, N.Y.
January 22, 1996
F - 2
<PAGE>
NATIONAL PROPERTY INVESTORS II
(a limited partnership)
BALANCE SHEETS
DECEMBER 31,
--------------------------
1995 1994
----------- -----------
ASSETS
Real estate, net of accumulated depreciation $ 1,650,000 $ 1,839,000
Cash and cash equivalents 216,000 331,000
Other assets 87,000 84,000
Escrow deposits 140,000 41,000
----------- -----------
Total assets $ 2,093,000 $ 2,295,000
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Mortgage payable $ 1,229,000 $ 1,392,000
Tenants' security deposits payable 63,000 69,000
Accounts payable and accrued expenses 140,000 27,000
----------- -----------
Total liabilities 1,432,000 1,488,000
----------- -----------
Partners' Equity:
Limited partners' equity (45,656 units
outstanding at December 31, 1995 and 1994) 684,000 829,000
General partner's (deficit) (23,000) (22,000)
----------- -----------
Total partners' equity 661,000 807,000
----------- -----------
Total liabilities and partners' equity $ 2,093,000 $ 2,295,000
=========== ===========
See notes to financial statements.
F - 3
<PAGE>
NATIONAL PROPERTY INVESTORS II
(a limited partnership)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Rental income $ 1,075,000 $ 1,071,000 $ 1,053,000
Other income 44,000 43,000 41,000
Interest income 14,000 14,000 12,000
----------- ----------- -----------
1,133,000 1,128,000 1,106,000
----------- ----------- -----------
Expenses (including $264,000, $244,000 and
$241,000 paid to the general partner and
affiliates in 1995, 1994 and 1993):
Operating expenses 766,000 650,000 720,000
Depreciation 211,000 253,000 260,000
Mortgage interest 121,000 148,000 166,000
General and administrative 181,000 178,000 152,000
----------- ----------- -----------
1,279,000 1,229,000 1,298,000
----------- ----------- -----------
Net loss $ (146,000) $ (101,000) $ (192,000)
=========== =========== ===========
Net loss per limited partnership unit $ (3.18) $ (2.19) $ (4.16)
=========== =========== ===========
</TABLE>
See notes to financial statements.
F - 4
<PAGE>
NATIONAL PROPERTY INVESTORS II
(a limited partnership)
STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
General Limited Total
partner's partners' partners'
(deficit) equity equity
----------- ----------- -----------
Balance - January 1, 1993 $ (19,000) $ 1,119,000 $ 1,100,000
Net loss (2,000) (190,000) (192,000)
----------- ----------- -----------
Balance - December 31, 1993 (21,000) 929,000 908,000
Net loss (1,000) (100,000) (101,000)
----------- ----------- -----------
Balance - December 31, 1994 (22,000) 829,000 807,000
Net loss (1,000) (145,000) (146,000)
----------- ----------- -----------
Balance - December 31, 1995 $ (23,000) $ 684,000 $ 661,000
=========== =========== ===========
See notes to financial statements.
F - 5
<PAGE>
NATIONAL PROPERTY INVESTORS II
(a limited partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------
1995 1994 1993
------------- -------------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (146,000) $ (101,000) $ (192,000)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Amortization of mortgage costs 5,000 12,000 13,000
Depreciation 211,000 253,000 260,000
Deferred costs -- (7,000) --
Decrease (increase) in certain assets:
Other assets (8,000) 5,000 (10,000)
Escrow deposits (99,000) (10,000) (10,000)
Increase (decrease) in certain liabilities:
Accounts payable and accrued expenses 113,000 8,000 (10,000)
Due to affiliate -- (20,000) 20,000
Tenants' security deposits payable (6,000) 4,000 3,000
--------- --------- ---------
Net cash provided by operating activities 70,000 144,000 74,000
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate (22,000) (10,000) (11,000)
--------- --------- ---------
Cash (used in) investing activities (22,000) (10,000) (11,000)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Mortgage principal repayments (163,000) (138,000) (123,000)
--------- --------- ---------
Cash (used in) financing activities (163,000) (138,000) (123,000)
--------- --------- ---------
Net (Decrease) in Cash and Cash Equivalents (115,000) (4,000) (60,000)
Cash and Cash Equivalents at Beginning of Year 331,000 335,000 395,000
--------- --------- ---------
Cash and Cash Equivalents at End of Year $ 216,000 $ 331,000 $ 335,000
========= ========= =========
Supplemental Disclosure of Cash Flow Information:
Interest paid in cash $ 115,000 $ 136,000 $ 152,000
========= ========= =========
</TABLE>
See notes to financial statements.
F - 6
<PAGE>
NATIONAL PROPERTY INVESTORS II
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION
National Property Investors II (the "Partnership"), a limited
partnership, was organized under the Uniform Limited Partnership laws of
California on September 15, 1977, for the purposes of acquiring and
operating income producing residential real estate. The Partnership's
remaining real estate property is a garden apartment complex located in
Melbourne, Florida. The Partnership will terminate on December 31, 2005,
unless previously terminated, in accordance with the terms of the
Agreement of Limited Partnership. Limited partners' units are at a stated
value of $500. A total of 45,656 units of the limited partnership were
issued, for an aggregate capital contribution of $22,828,000. In
addition, the general partners contributed a total of $600 to the
Partnership.
2. SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
Fair Value of Financial Instruments
In 1995, the Partnership implemented Statement of Financial Accounting
Standards ("SFAS") No. 107, "Disclosures about Fair Value of Financial
Instruments", as amended by the SFAS No. 119, "Disclosures about
Derivative Financial Instruments and Fair Value of Financial
Instruments", which requires disclosure of fair value information about
financial instruments, whether or not recognized in the balance sheet,
for which it is practicable to estimate fair value. Fair value is defined
in the SFAS as the amount at which the instruments could be exchanged in
a current transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes that the carrying amount of
its financial instruments (except for long term debt) approximates their
fair value due to the short term maturity of these instruments. The fair
value of the Partnership's long term debt, after discounting the
scheduled loan payments to maturity, approximates its carrying balance.
Real Estate
Real estate is stated at cost. Acquisition fees are capitalized as a cost
of real estate. In 1995, the Partnership adopted SFAS No. 121,
"Accounting For the Impairment of Long-Lived Assets and For Long-Lived
Assets to be Disposed Of ", which requires impairment losses to be
recognized for long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows are not sufficient
to recover the assets' carrying amounts. The impairment loss is measured
by comparing the fair value of the asset to its carrying amount. The
adoption of the SFAS had no effect on the Partnership's financial
statements.
F - 7
<PAGE>
NATIONAL PROPERTY INVESTORS II
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Cash Equivalents
The Partnership considers all highly liquid investments with an original
maturity of three months or less at the time of purchase to be cash
equivalents.
Concentration of Credit Risk
The Partnership maintains cash balances at institutions insured up to
$100,000 by the Federal Deposit Insurance Corporation. Balances in excess
of $100,000 are usually invested in money market accounts and repurchase
agreements, which are collateralized by United States Treasury
obligations. Cash balances exceeded these insured levels during the year.
Leases
Leases for rental units are accounted for as operating leases as tenants
are subject to leases which generally do not exceed one year. Rental
income is recorded when due under leasing arrangements and expenses are
charged to operations when incurred.
Income Taxes
Taxable income or loss of the Partnership is reported in the income tax
returns of its partners. Accordingly, no provision for income taxes is
made in the financial statements of the Partnership.
Depreciation
Depreciation is computed by the straight-line method over estimated
useful lives ranging from 15 to 27.5 years for buildings and improvements
and from five to seven years for furnishings.
Deferred Financing Costs
Financing costs are deferred and amortized as interest expense over the
term of the related loan. As of December 31, 1994, the net deferred
financing cost of $5,000 is included in other assets. The accumulated
amortization as of December 31, 1994, was $41,000. Such costs were fully
amortized as of December 31, 1995.
Net Loss Per Limited Partnership Unit
Net loss per limited partnership unit is calculated by dividing the net
loss allocated to the limited partners by the number of units
outstanding.
F - 8
<PAGE>
NATIONAL PROPERTY INVESTORS II
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Reclassification
Certain amounts from 1994 and 1993 have been reclassified to conform to
the 1995 presentation.
3. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
NPI Equity Investments, Inc. ("NPI Equity" or the "Managing General
Partner") is the general partner of the Partnership. NPI Equity is a
wholly owned subsidiary of National Property Investors, Inc. ("NPI,
Inc."). On January 19, 1996, the stockholders of NPI, Inc. sold all of
the issued and outstanding stock of NPI, Inc. to an affiliate of Insignia
Financial Group, Inc. ("Insignia") (see Note 7).
In October 1994 DeForest Ventures II L.P. ("DeForest II") made a tender
offer for limited partnership interests in the partnership, as well as
six affiliated limited partnerships. DeForest Ventures I, L.P. made
tender offers for limited partnership interests in twelve affiliated
limited partnerships. The shareholders who controlled DeForest Capital II
Corporation, the sole general partner of DeForest II, also controlled
NPI, Inc. As of December 31, 1995, DeForest II had acquired approximately
49.9% of total limited partnership units of the Partnership. An affiliate
of Insignia acquired a majority of the limited partnership interests of
the Partnership held by DeForest II and certain of its affiliates (see
Note 7).
As compensation for providing property management services, an affiliate
of NPI Equity is entitled to receive 5% of the gross annual receipts from
all Partnership properties it manages. For the years ended December 31,
1995, 1994, and 1993, an affiliate of NPI Equity received $56,000,
$56,000 and $55,000, respectively. These expenses are included in
operating expenses.
For services relating to the administration of the Partnership and the
operation of its properties, NPI Equity is entitled to receive payment of
non-accountable expenses up to a maximum of $100,000 per year, based upon
the number of Partnership units sold, subject to certain limitations. NPI
Equity was not entitled to receive any non-accountable expense
reimbursements for the years ended December 31, 1995, 1994 and 1993.
NPI Equity is entitled to receive 1% of adjusted cash from operations and
an allocation of 1% of the net income or loss of the Partnership. Upon
sale of the remaining property and termination of the Partnership, the
general partners may be required to contribute certain funds to the
Partnership in accordance with the partnership agreement.
NPI Equity received reimbursement of accountable administrative expenses
amounting to approximately $143,000, $146,000 and $126,000 for the years
ended December 31, 1995, 1994, and 1993, respectively. These
reimbursements are included in general and administrative expenses. NPI
Equity received reimbursement of accountable property administrative
expenses of $20,000, $8,000 and $10,000 for the years ended December 31,
1995, 1994 and 1993, respectively. These expenses are included in
operating expenses.
F - 9
<PAGE>
NATIONAL PROPERTY INVESTORS II
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
3. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (Continued)
Certain amendments to the Partnership Agreement ("Amendments"), as
described in the "Statement Furnished in Connection with the Solicitation
of Consents," provided to each limited partner on September 1, 1992, and
approved by a majority of the limited partners on October 16, 1992 (the
"Approval Date"), retroactive to January 1, 1992, are summarized as
follows:
- Upon sale of the Partnership's property, NPI Equity will be entitled
to an Incentive Compensation Fee equal to a declining percentage of
the difference between the total amount distributed to limited
partners and the appraised value of their investment at February 1,
1992. The percentage amount to be realized by NPI Equity, if any,
will be dependent upon the year in which the property is sold.
Payment of the Incentive Compensation Fee is subordinated to the
receipt by the limited partners, of: (a) distributions from capital
transaction proceeds of an amount equal to their appraised investment
in the Partnership at February 1, 1992; and (b) distributions from
all sources (capital transactions as well as cash flow) of an amount
equal to six percent (6%) per annum cumulative, non-compounded, on
their appraised investment in the Partnership at February 1, 1992.
- In addition, the Amendments authorize payment of a Refinancing Fee
to NPI Equity or an affiliate, if earned; permit NPI Equity or any of
its affiliates to provide construction services or construction
supervisory services to the Partnership; and permit affiliates of NPI
Equity to be paid insurance brokerage commissions in connection with
the sale of insurance to the property under a master policy covering
numerous properties owned or managed by NPI Equity and its
affiliates. Included in operating expenses for the years ended
December 31, 1995, 1994 and 1993, is approximately $40,000, $34,000
and $30,000, respectively, of insurance premiums which were paid to
NPI Equity under a master insurance policy arranged for by NPI
Equity.
- NPI Equity was also paid fees of $5,000 and $20,000 relating to
successful real estate tax appeals on the Partnership's sole property
for the years ended December 31, 1995 and 1993, respectively. The tax
appeal fees are included in operating expenses. NPI Equity was not
paid any other fees in connection with the disposition or provision
of services to the Partnership's property during the years ended
December 31, 1995, 1994 and 1993.
NPI Equity has established a revolving credit facility (the "Partnership
Revolver") to be used to fund deferred maintenance and working capital
needs of the National Property Investor Partnership Series (NPI
Partnerships). The maximum draw available to the Partnership under the
Partnership Revolver is $300,000. Loans under the Partnership Revolver
will have a term of 365 days, be unsecured and bear interest at the rate
of 2% per annum in excess of the prime rate announced from time to time
by Chemical Bank, N.A. The maturity date of such borrowing will be
accelerated in the event of: (i) the removal of the managing general
partner (whether or not For Cause), (ii) the sale or refinancing of the
Partnership's property, or (iii) the liquidation of the Partnership. The
Partnership has not borrowed under the Partnership Revolver, to date.
F - 10
<PAGE>
NATIONAL PROPERTY INVESTORS II
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
4. REAL ESTATE
Real estate, at depreciated cost, is summarized as follows:
December 31,
--------------------------
1995 1994
---- ----
Land $ 352,000 $ 352,000
Buildings and improvements 5,196,000 5,174,000
----------- -----------
5,548,000 5,526,000
Less: Accumulated depreciation 3,898,000 3,687,000
----------- -----------
$1,650,000 $ 1,839,000
========== ===========
The real estate is pledged to collateralize the non-recourse mortgage set
forth in Note 5.
5. MORTGAGE PAYABLE
The mortgage payable, which is non-recourse to the Partnership, is as
follows:
<TABLE>
<CAPTION>
Annual December 31,
Type of Interest Monthly -------------------------------
Property Mortgage Rate Payments Maturity 1995 1994
-------- -------- --------- -------- -------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Sugar Mill First 9.75 % $ 23,000 10/96(a) $1,229,000 $1,392,000
(Melbourne,
Florida)
</TABLE>
(a) As of October 5, 1991, the holder of the mortgage granted an
extension of the maturity date of the loan to October 5, 2001 subject to
the lender's right to call the loan at one year intervals, commencing any
time after the third anniversary of the effective date of the loan
modification. In the event the loan is not called by the lender, the
Partnership is required to pay one-half of one percent (.5%) of the then
outstanding loan balance for each additional year. On October 5, 1995,
the loan was extended for one year.
The interest rate on the loan is adjusted annually to one percent (1%)
over Barnett Bank of Jacksonville's "prime rate" of interest. On October
5, 1995, the interest rate was adjusted to 9.75%.
The final principal payment on the mortgage, due on October 5, 1996,
assuming the lender calls the mortgage, is approximately $1,093,000. The
Managing General Partner anticipates that this mortgage can be extended
or replaced.
F - 11
<PAGE>
NATIONAL PROPERTY INVESTORS II
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
6. RECONCILIATION OF NET LOSS PER FINANCIAL STATEMENTS TO TAX REPORTING
The Partnership files its tax return on an accrual basis. A
reconciliation of net loss from the financial statements to the net
taxable loss to partners is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Net loss per financial statements $ (146,000) $ (101,000) $ (192,000)
Difference between tax depreciation
and financial statement depreciation 30,000 43,000 40,000
----------- ----------- -----------
Net taxable loss to partners $ (116,000) $ (58,000) $ (152,000)
=========== =========== ==========
</TABLE>
7. SUBSEQUENT EVENT
On January 19, 1996, the stockholders of NPI, Inc. sold all of the issued
and outstanding stock of NPI, Inc. to an affiliate of Insignia. In
addition, an affiliate of Insignia acquired a majority of the limited
partnership interests of the Partnership held by DeForest II and certain
of its affiliates (see Note 3). As a result of the transaction, the
Managing General Partner of the Partnership is controlled by Insignia.
Insignia affiliates now provide property and asset management services to
the Partnership, maintain its books and records and oversee its
operations.
F - 12
<PAGE>
NATIONAL PROPERTY INVESTORS II
(a limited partnership)
December 31, 1995
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION SCHEDULE III
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
- -------- -------- -------- -------- -------- --------
Cost capitalized Gross amount
Initial cost subsequent to carried at
to company acquisition close of period
_____________________ ________________________ _______________________________
Buildings and Carrying Buildings and Accumulated
Description Encumbrances Land Improvements Improvements Costs Land Improvements Total Depreciation
- ----------- ------------ ---- ------------ ------------ ----- ---- ------------ ----- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Residential
Property
Sugar Mill
Apartment -
Melbourne,
Florida $ 1,229,000 $350,000 $3,905,000 $1,274,000 $ 19,000 $352,000 $5,196,000 $5,548,000 $3,898,000
----------- -------- ---------- ---------- -------- -------- ---------- ---------- ----------
Totals $ 1,229,000 $350,000 $3,905,000 $1,274,000 $ 19,000 $352,000 $5,196,000 $5,548,000 $3,898,000
=========== ======== ========== ========== ======== ======== ========== ========== ==========
<CAPTION>
Column G Column H Column I
-------- -------- --------
Life
on which
depreciation
is computed
in latest
Date of Date income
Construction Acquired statement
------------ -------- ----------
<S> <C> <C> <C>
Residential
Property
Sugar Mill
Apartment -
Melbourne,
Florida 1974 12/78 5-27 yrs.
Totals
</TABLE>
See notes on following page.
F - 13
<PAGE>
SCHEDULE III
NATIONAL PROPERTY INVESTORS II
(a limited partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------
1995 1994 1993
----------- ----------- ------------
<S> <C> <C> <C>
Note 1. Reconciliation of real estate
Balance at beginning of period $ 5,526,000 $ 5,516,000 $ 5,505,000
Additions during period:
Improvements 22,000 10,000 11,000
---------- ---------- ----------
Balance at end of period $5,548,000 $5,526,000 $5,516,000
========== ========== ==========
Note 2. Reconciliation of accumulated depreciation
Balance at beginning of period $3,687,000 $3,434,000 $3,174,000
Additions during period:
Depreciation expense 211,000 253,000 260,000
---------- ---------- ----------
Balance at end of period $3,898,000 $3,687,000 $3,434,000
========== ========== ==========
Note 3. The aggregate cost for federal income tax purposes at
December 31, 1995, is $5,548,000.
F - 14
<PAGE>
NATIONAL PROPERTY INVESTORS III
(a limited partnership)
CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995
I N D E X
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION:
- -------------------------------
Independent Auditors' report.............................................................................. F - 2
Consolidated financial statements - years ended December 31, 1995, 1994 and 1993:
Balance sheets.......................................................................................... F - 3
Statements of operations................................................................................ F - 4
Statements of partners' deficit......................................................................... F - 5
Statements of cash flows................................................................................ F - 6
Notes to consolidated financial statements.............................................................. F - 7
Financial statement schedule :
Schedule III - Real Estate and Accumulated
Depreciation at December 31, 1995...................................................................... F - 14
</TABLE>
Financial statements and financial statement schedules not included have been
omitted because of the absence of conditions under which they are required or
because the information is included elsewhere in the financial statements.
F - 1
<PAGE>
To the Partners
National Property Investors III
Greenville, South Carolina
Independent Auditors' Report
We have audited the accompanying consolidated balance sheets of National
Property Investors III (a limited partnership) (the "Partnership") and its
subsidiary as of December 31, 1995 and 1994, and the related consolidated
statements of operations, partners' (deficit) and cash flows for each of the
three years in the period ended December 31, 1995. Our audits also included
additional information supplied pursuant to Item 14(a)(2). These consolidated
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
National Property Investors III and its subsidiary as of December 31, 1995 and
1994, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles. Also in our opinion, the related financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
Certified Public Accountants
New York, N.Y.
January 23, 1996
F - 2
<PAGE>
NATIONAL PROPERTY INVESTORS III
(a limited partnership)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION> DECEMBER 31,
-----------------------------
1995 1994
------------ ------------
ASSETS
- ------
<S> <C> <C>
Real estate, net of accumulated depreciation $ 12,513,000 $ 13,434,000
Escrow deposits 290,000 198,000
Other assets 504,000 631,000
Cash and cash equivalents 921,000 205,000
------------ ------------
Total assets $ 14,228,000 $ 14,468,000
============ ============
LIABILITIES AND PARTNERS' DEFICIT
- ---------------------------------
Mortgages payable $ 24,161,000 $ 24,649,000
Accounts payable and accrued expenses 717,000 728,000
Tenants' security deposits payable 213,000 199,000
------------ ------------
Total liabilities 25,091,000 25,576,000
------------ ------------
Partners' Deficit:
Limited partners' deficit (48,049 units
outstanding at December 31, 1995 and 1994) (10,575,000) (10,818,000)
General partner's deficit (288,000) (290,000)
------------ ------------
Total partners' deficit (10,863,000) (11,108,000)
------------ ------------
Total liabilities and partners' deficit $ 14,228,000 $ 14,468,000
============ ============
</TABLE>
See notes to consolidated financial statements.
F - 3
<PAGE>
NATIONAL PROPERTY INVESTORS III
(a limited partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Rental income $ 7,320,000 $ 6,975,000 $ 6,612,000
Other income 401,000 263,000 258,000
Interest income 28,000 22,000 13,000
----------- ----------- -----------
Total revenues 7,749,000 7,260,000 6,883,000
----------- ----------- -----------
Expenses (including $747,000, $733,000 and $688,000
paid to the general partner and affiliates in 1995,
1994, and 1993.)
Operating expenses 3,820,000 4,068,000 4,137,000
Mortgage interest 2,178,000 2,304,000 2,322,000
Depreciation 1,289,000 1,359,000 1,365,000
General and administrative 217,000 216,000 195,000
----------- ----------- -----------
Total expenses 7,504,000 7,947,000 8,019,000
----------- ----------- -----------
Net income (loss) $ 245,000 $ (687,000) $(1,136,000)
=========== =========== ===========
Net income (loss) per limited partnership unit $ 5.05 $ (14.15) $ (23.41)
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
F - 4
<PAGE>
NATIONAL PROPERTY INVESTORS III
(a limited partnership)
CONSOLIDATED STATEMENTS OF PARTNERS' DEFICIT
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
General Limited Total
partner's partners' partners'
(deficit) (deficit) (deficit)
------------ ------------ ------------
<S> <C> <C> <C>
Balance - January 1, 1993 $ (272,000) $ (9,013,000) $ (9,285,000)
Net (loss) (11,000) (1,125,000) (1,136,000)
------------ ------------ ------------
Balance - December 31, 1993 (283,000) (10,138,000) (10,421,000)
Net (loss) (7,000) (680,000) (687,000)
------------ ------------ ------------
Balance - December 31, 1994 $ (290,000) $(10,818,000) $(11,108,000)
Net income 2,000 243,000 245,000
------------ ------------ ------------
Balance - December 31, 1995
$ (288,000) $(10,575,000) $(10,863,000)
============ ============ ============
</TABLE>
See notes to consolidated financial statements.
F - 5
<PAGE>
NATIONAL PROPERTY INVESTORS III
(a limited partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 245,000 $ (687,000) $(1,136,000)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Amortization of mortgage costs 54,000 36,000 16,000
Depreciation 1,289,000 1,359,000 1,365,000
Mortgage costs paid -- (218,000) --
Decrease (increase) in certain assets:
Other assets 73,000 (40,000) (34,000)
Escrow deposits (92,000) (8,000) 43,000
Increase (decrease) in certain liabilities:
Accounts payable and accrued expenses (11,000) (4,000) 5,000
Due to affiliates -- (34,000) 34,000
Tenants' security deposits payable 14,000 6,000 (26,000)
----------- ----------- -----------
Net cash provided by operating activities 1,572,000 410,000 267,000
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate (368,000) (255,000) (200,000)
----------- ----------- -----------
Cash (used in) investing activities (368,000) (255,000) (200,000)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from refinancing of mortgage -- 2,075,000 --
Satisfaction of mortgage payable -- (1,343,000) --
Mortgage principal repayments (488,000) (719,000) (144,000)
----------- ----------- -----------
Net cash (used in) provided by financing activities (488,000) 13,000 (144,000)
----------- ----------- -----------
Net Increase (Decrease) in Cash and Cash Equivalents 716,000 168,000 (77,000)
Cash and Cash Equivalents at Beginning of Year 205,000 37,000 114,000
----------- ----------- -----------
Cash and Cash Equivalents at End of Year $ 921,000 $ 205,000 $ 37,000
============ ============ ============
Supplemental Disclosure of Cash Flow Information:
Interest paid in cash $ 2,124,000 $ 2,281,000 $ 2,306,000
============ ============ ============
Supplemental Disclosure of Non-cash Financing Activities:
Replacement reserve holdback from proceeds of
mortgage refinancing $ -- $ 225,000 $ --
============ ============ ============
</TABLE>
See notes to consolidated financial statements.
F - 6
<PAGE>
NATIONAL PROPERTY INVESTORS III
(a limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION
National Property Investors III (the "Partnership"), a limited
partnership, was organized under the Uniform Limited Partnership Laws of
California as of February 1, 1979, for the purpose of acquiring and
operating income-producing residential real estate. The Partnership
currently owns garden apartments in Charlotte (North Carolina), Lisle
(Illinois) and Winter Park (Florida). The Partnership will terminate on
December 31, 2005, or sooner, in accordance with the terms of the
Agreement of Limited Partnership. Limited partners' units are at a stated
value of $500. A total of 48,049 units of the limited partnership were
issued, for an aggregate capital contribution of $24,025,000. In
addition, the general partners contributed a total of $1,000 to the
Partnership.
2. SIGNIFICANT ACCOUNTING POLICIES
Consolidation
Beginning in 1994, the consolidated financial statements include the
statements of the Partnership and its wholly-owned subsidiary formed in
1994. All significant intercompany transactions and balances have been
eliminated.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
Fair Value of Financial Instruments
In 1995, the Partnership implemented Statement of Financial Accounting
Standards ("SFAS") No. 107, "Disclosures about Fair Value of Financial
Instruments", as amended by the SFAS No. 119, "Disclosures about
Derivative Financial Instruments and Fair Value of Financial
Instruments", which requires disclosure of fair value information about
financial instruments, whether or not recognized in the balance sheet,
for which it is practicable to estimate fair value. Fair value is defined
in the SFAS as the amount at which the instruments could be exchanged in
a current transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes that the carrying amount of
its financial instruments (except for long term debt) approximates their
fair value due to the short term maturity of these instruments. The fair
value of the Partnership's long term debt, after discounting the
scheduled loan payments to maturity, approximates its carrying balance.
Real Estate
Real estate is stated at cost. Acquisition fees are capitalized as a cost
of real estate. In 1995, the Partnership adopted SFAS No. 121,
"Accounting For the Impairment of Long-Lived Assets and For Long-Lived
Assets to be Disposed Of ", which requires impairment losses to be
recognized for long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows are not sufficient
to
F - 7
<PAGE>
NATIONAL PROPERTY INVESTORS III
(a limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Real Estate (Continued)
recover the assets' carrying amounts. The impairment loss is measured by
comparing the fair value of the asset to its carrying amount. The
adoption of the SFAS has no effect on the Partnership's financial
statements.
Cash Equivalents
The Partnership considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
Concentration of Credit Risk
The Partnership maintains cash balances at institutions insured up to
$100,000 by the Federal Deposit Insurance Corporation. Balances in excess
of $100,000 are usually invested in money market accounts and repurchase
agreements, which are collateralized by United States Treasury
obligations. Cash balances exceeded these insured levels during the year.
At December 31, 1995, substantially all of the Partnership's cash was
invested in overnight repurchase agreements, secured by United State
Treasury obligations, which are included in cash and cash equivalents.
Leases
Leases for rental units are accounted for as operating leases as tenants
are subject to leases which generally do not exceed one year. Rental
income is recorded when due under leasing arrangements and expenses are
charged to operations when incurred.
Income Taxes
Taxable income or loss of the Partnership is reported in the income tax
returns of its partners. Accordingly, no provision for income taxes is
made in the financial statements of the Partnership.
Depreciation
Depreciation is computed by the straight-line method over estimated
useful lives ranging from 15 to 27 years for buildings and improvements
and from five to seven years for furnishings.
Deferred Financing Costs
Financing costs incurred in originating financing are deferred and
amortized as interest expense over the term of the related loan, or
expensed, if financing is not obtained. Deferred financing costs, net of
accumulated amortization, of $173,000 and $227,000, at December 31, 1995
and 1994, respectively, are included in other assets. As of December 31,
1995, and December 31, 1994, accumulated amortization amounted to
$126,000 and $72,000, respectively.
F - 8
<PAGE>
NATIONAL PROPERTY INVESTORS III
(a limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Net Income (Loss) Per Limited Partnership Unit
Net income (loss) per limited partnership unit is calculated by dividing
the net income (loss) allocated to the limited partners by the number of
units outstanding.
Reclassification
Certain amounts from 1993 and 1994 have been reclassified to conform to
the 1995 presentation.
3. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
NPI Equity Investments, Inc. ("NPI Equity" or the "Managing General
Partner"), is the general partner of the Partnership. NPI Equity is a
wholly-owned subsidiary of National Property Investors, Inc. ("NPI,
Inc."). On January 19, 1996, the stockholders of NPI, Inc. sold all of
the issued and outstanding stock of NPI, Inc. to an affiliate of Insignia
Financial Group, Inc. ("Insignia").
In October 1994 DeForest Ventures II L.P. ("DeForest II") made a tender
offer for limited partnership interests in the partnership, as well as
six affiliated limited partnerships. DeForest Ventures I, L.P. ("DeForest
I") made tender offers for limited partnership interests in twelve
affiliated limited partnerships. Shareholders who controlled DeForest
Capital II Corporation, the sole general partner of DeForest II, also
controlled NPI, Inc. As of December 31, 1995, DeForest II owned
approximately 44% of total limited partnership units of the Partnership.
An affiliate of Insignia acquired the limited partnership interests of
the Partnership held by DeForest II and certain of its affiliates (see
Note 7).
As compensation for providing property management services, an affiliate
of NPI Equity is entitled to receive 5% of the gross annual receipts from
all Partnership properties it manages. For the years ended December 31,
1995, 1994, and 1993, an affiliate of NPI Equity received $385,000,
$363,000 and $345,000, respectively.
For services relating to the administration of the Partnership and
operation of Partnership properties, NPI Equity is entitled to receive
payment for non-accountable expenses up to a maximum of $100,000 per
year, based upon the number of Partnership units sold, subject to certain
limitations. NPI Equity was not entitled to receive any non-accountable
expense reimbursements for the years ended December 31, 1995, 1994, and
1993.
NPI Equity is entitled to receive 1% of adjusted cash from operations and
an allocation of 1% of the net income or loss of the Partnership. No
distributions were made during the years ended December 31, 1995, 1994,
and 1993.
F - 9
<PAGE>
NATIONAL PROPERTY INVESTORS III
(a limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
3. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (Continued)
NPI Equity received reimbursement of accountable administrative expenses
of $152,000, $144,000 and $143,000 for the years ended December 31, 1995,
1994, and 1993, respectively. These reimbursements are included in
general and administrative expenses. NPI Equity received reimbursement of
accountable property administrative expenses of $35,000, $43,000 and
$39,000, for the years ended December 31, 1995, 1994, and 1993,
respectively. These reimbursements are included in operating expenses.
Certain amendments to the Partnership Agreement ("Amendments"), as
described in the "Statement Furnished in Connection with the Solicitation
of Consents," provided to each limited partner on September 1, 1992, and
approved by a majority of the limited partners on October 16, 1992 (the
"Approval Date"), retroactive to January 1, 1992, are summarized as
follows:
- Upon sale of the Partnership properties, NPI Equity will be entitled to
an Incentive Compensation Fee equal to a declining percentage of the
difference between the total amount distributed to limited partners and
the appraised value of their investment at February 1, 1992. The
percentage amount to be realized by NPI Equity, if any, will be
dependent upon the year in which the property is sold. Payment of the
Incentive Compensation Fee is subordinated to the receipt by the
limited partners, of: (a) distributions from capital transaction
proceeds of an amount equal to their appraised investment in the
Partnership at February 1, 1992; and (b) distributions from all sources
(capital transactions as well as cash flow) of an amount equal to six
percent (6%) per annum cumulative, non-compounded, on their appraised
investment in the Partnership at February 1, 1992.
- In addition, the Amendments authorize payment of a Refinancing Fee to
NPI Equity or an affiliate, if earned; permit NPI Equity or any of its
affiliates to provide construction services or construction supervisory
services to the Partnership; and permit affiliates of NPI Equity to be
paid insurance brokerage commissions in connection with the sale of
insurance to the properties under a master policy covering numerous
properties owned or managed by NPI Equity and its affiliates. Included
in operating expenses for the periods ended December 31, 1995, 1994,
and 1993, respectively, are approximately $175,000, $183,000 and
$152,000, respectively, of insurance premiums, which were paid to NPI
Equity under a master insurance policy arranged for by NPI Equity.
- NPI Equity was paid $9,000 in fees relating to successful real estate
tax appeals on the Partnership's properties during the year ended
December 31, 1993. These fees are included in operating expenses. NPI
Equity was not paid any other fees in connection with the disposition
or provision of services to the Partnership's properties during the
years ended December 31, 1995, 1994, and 1993.
NPI Equity has established a revolving credit facility (the "Partnership
Revolver") to be used to fund deferred maintenance and working capital
needs of the National Property Investors Partnership Series (NPI
Partnerships). The maximum draw available to the Partnership under the
Partnership Revolver is $500,000. Loans under the Partnership Revolver
will have a term of 365 days, be unsecured and bear interest at
F - 10
<PAGE>
NATIONAL PROPERTY INVESTORS III
(a limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
3. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (Continued)
the rate of 2% per annum in excess of the prime rate announced from time
to time by Chemical Bank, N.A. The maturity date of such borrowing will
be accelerated in the event of: (i) the removal of the NPI Equity
(whether or not For Cause); (ii) the sale or refinancing of a property by
the Partnership (whether or not a borrowing under the Partnership
Revolver was made with respect to such property); or (iii) the
liquidation of the Partnership. The Partnership has not borrowed under
the Partnership Revolver, to date.
4. REAL ESTATE
Real estate, at depreciable cost, is summarized as follows:
December 31,
----------------------
1995 1994
------ ------
Land $ 3,023,000 $ 3,023,000
Buildings and improvements 30,426,000 30,058,000
------------- ------------
Less: Accumulated depreciation (20,936,000) (19,647,000)
------------- ------------
$ 12,513,000 $ 13,434,000
============= ============
The real estate is pledged to collateralize non-recourse mortgages set
forth in Note 5.
5. MORTGAGES PAYABLE
a. Mortgages payable, which are non-recourse to the Partnership,
are as follows:
<TABLE>
<CAPTION>
Annual December 31,
Deed of Interest Monthly ----------------------------
Property Trust Rate Payments Maturity 1995 1994
-------- --------- ---------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Pinetree (1) First 9.87% $ 21,000 7/01 $ 2,268,000 $ 2,291,000
(Charlotte,
North
Carolina)
Lake Side First 8.25% $151,000 8/99 17,241,000 17,612,000
(Lisle,
Illinois)
Summerwalk First 9.75% $ 46,000 9/96 4,652,000 4,746,000
(Winter Park, ------------ ------------
Florida)
$24,161,000 $24,649,000
============ =============
</TABLE>
F - 11
<PAGE>
NATIONAL PROPERTY INVESTORS III
(a limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
5. MORTGAGES PAYABLE (Continued)
(1) A balloon payment of approximately $4,582,000 is due in
September 1996. If the loan is not refinanced or extended or
the property is not sold, the property could be lost through
foreclosure. If the property is lost through foreclosure the
Partnership would not recognize a loss for financial
statement purposes.
b. The final payments due on mortgages payable for mortgages which
are not self-liquidating:
Deed of Date of
Property Trust Final Payment Maturity
-------- ------- ------------- --------
Pinetree First $ 2,090,000 7/01
Lake Side First $15,633,000 8/99
Summerwalk First $ 4,582,000 9/96
c. The following is a summary of the anticipated future principal
payments on the mortgages:
Year ending
December 31, Amount
------------ ------
1996 $ 5,080,000
1997 465,000
1998 505,000
1999 5,963,000
2000 37,000
Thereafter 2,111,000
-----------
Total $24,161,000
===========
F - 12
<PAGE>
NATIONAL PROPERTY INVESTORS III
(a limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
6. RECONCILIATION OF NET INCOME (LOSS) PER CONSOLIDATED FINANCIAL
STATEMENTS TO TAX REPORTING
The Partnership files its tax returns on an accrual basis. A
reconciliation of net loss from the consolidated financial statements
to the net taxable loss to partners is as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------
1995 1994 1993
------ ------- ------
<S> <C> <C> <C>
Net income (loss) per consolidated
financial statements $ 245,000 $ (687,000) $(1,136,000)
Difference between income and expenses
for consolidated financial statement
and tax reporting 10,000 4,000 (15,000)
Difference between tax depreciation
and consolidated financial
statement depreciation 95,000 95,000 72,000
----------- ------------ ------------
Net taxable income (loss) to partners $ 350,000 $ (588,000) $(1,079,000)
=========== ============ ============
</TABLE>
7. SUBSEQUENT EVENT
On January 19, 1996, the stockholders of NPI, Inc. sold all of the
issued and outstanding stock of NPI, Inc. to an affiliate of Insignia.
In addition, an affiliate of Insignia acquired the limited partnership
interests of the Partnership held by DeForest II and certain of its
affiliates (see Note 3). As a result of the transaction, the Managing
General Partner of the Partnership is controlled by Insignia. Insignia
affiliates now provide property and asset management services to the
Partnership, maintain its books and records and oversee its operations.
F - 13
<PAGE>
NATIONAL PROPERTY INVESTORS III
(a limited partnership)
December 31, 1995
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION SCHEDULE III
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- -------- -------- -------- -------- --------
Cost capitalized Gross amount
Initial cost subsequent to carried at
to Partnership acquisition close of period
-------------------------- ----------------------- -------------------------------
Buildings and Carrying Buildings and
Description Encumbrances Land Improvements Improvements Costs Land Improvements Total
- ----------- ------------- ---- ------------- ------------- ------ ---- ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Residential
Properties
Pinetree Apartments-
Charlotte, NC $ 2,268,000 $ 493,000 $ 3,873,000 $1,303,000 $ 36,000 $ 499,000 $ 5,206,000 $ 5,705,000
Lakeside Apartments-
Lisle, IL 17,241,000 2,087,000 15,363,000 3,053,000 44,000 2,093,000 18,454,000 20,547,000
Summerwalk Apartments-
Winter Park, FL 4,652,000 427,000 6,347,000 365,000 58,000 431,000 6,766,000 7,197,000
----------- ---------- ---------- ---------- ---------- --------- ----------- ----------
Totals $24,161,000 $3,007,000 $25,583,000 $ 4,721,000 $ 138,000 $3,023,000 $30,426,000 $33,449,000
=========== =========== ============ ============ ========== =========== ============ ===========
<CAPTION>
Column F Column G Column H Column I
-------- -------- -------- --------
Life
on which
depreciation
is computed
in latest
Accumulated Date of Date statement of
Depreciation Construction Acquired operations
------------ ------------ -------- ------------
<S> <C> <C> <C> <C>
Residential
Properties
Pinetree Apartments-
Charlotte, NC $ 3,735,000 1974 7/80 5-27 yrs.
Lakeside Apartments-
Lisle, IL 12,682,000 1973/1975 12/80 5-27 yrs.
Summerwalk Apartments-
Winter Park, FL 4,519,000 1974 12/80 7-27 yrs.
-------------
Totals $20,936,000
=============
</TABLE>
See notes on following page.
F - 14
<PAGE>
SCHEDULE III
NATIONAL PROPERTY INVESTORS III
(a limited partnership)
NOTES TO SCHEDULE III -
REAL ESTATE AND ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------
1995 1994 1993
------------------ -------------------- -------------------
<S> <C> <C> <C>
Note 1. Reconciliation of real estate:
Balance at beginning of period $ 33,081,000 $ 32,826,000 $ 32,626,000
Additions during period:
Improvements 368,000 255,000 200,000
------------------ -------------------- -------------------
Balance at end of period $ 33,449,000 $ 33,081,000 $ 32,826,000
================== ==================== ===================
Note 2. Reconciliation of accumulated depreciation:
Balance at beginning of period $ 19,647,000 $ 18,288,000 $ 16,923,000
Additions during period:
Depreciation expense 1,289,000 1,359,000 1,365,000
------------------ -------------------- -------------------
Balance at end of period $ 20,936,000 $ 19,647,000 $ 18,288,000
================== ==================== ===================
Note 3. The aggregate cost for federal income tax purposes at December 31,
1995, is $33,465,000.
</TABLE>
F-15
<PAGE>
NATIONAL PROPERTY INVESTORS 4
(a limited partnership)
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995
I N D E X
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION:
Independent Auditors' report......................................... F - 2
Financial statements - years ended December 31, 1995, 1994 and 1993:
Balance sheets..................................................... F - 3
Statements of operations........................................... F - 4
Statements of partners' deficit.................................... F - 5
Statements of cash flows........................................... F - 6
Notes.............................................................. F - 7
Financial statement schedule :
Schedule III - Real Estate and Accumulated
Depreciation at December 31, 1995.................................. F - 14
</TABLE>
Financial statement schedules not included have been omitted because of the
absence of conditions under which they are required or because the information
is included elsewhere in the financial statements.
F - 1
<PAGE>
To the Partners
National Property Investors 4
Greenville, South Carolina
Independent Auditors' Report
We have audited the accompanying balance sheets of National Property Investors 4
(a limited partnership) (the "Partnership") as of December 31, 1995 and 1994,
and the related statements of operations, partners' (deficit) and cash flows for
each of the three years in the period ended December 31, 1995. Our audits also
included additional information supplied pursuant to Item 14(a)(2). These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of National Property Investors 4
as of December 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles. Also in our opinion,
the related 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.
Certified Public Accountants
New York, N.Y.
January 30, 1996
F - 2
<PAGE>
NATIONAL PROPERTY INVESTORS 4
(a limited partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Real estate, net of accumulated depreciation $ 8,920,000 $ 9,737,000
Cash and cash equivalents 2,326,000 1,068,000
Security deposits and other assets 656,000 705,000
Escrow deposits 179,000 234,000
------------ ------------
Total assets $ 12,081,000 $ 11,744,000
============ ============
LIABILITIES AND PARTNERS' (DEFICIT)
Mortgage payable $ 16,877,000 $ 17,241,000
Tenants' security deposits payable 375,000 354,000
Accounts payable and accrued expenses 179,000 191,000
------------ ------------
Total liabilities 17,431,000 17,786,000
------------ ------------
Partners' (Deficit):
Limited partners' (deficit) (60,005 units outstanding at
December 31, 1995 and 1994) (5,031,000) (5,716,000)
General partner's (deficit) (319,000) (326,000)
------------ ------------
Total partners' (deficit) (5,350,000) (6,042,000)
------------ ------------
Total liabilities and partners' (deficit) $ 12,081,000 $ 11,744,000
============ ============
</TABLE>
See notes to financial statements.
F - 3
<PAGE>
NATIONAL PROPERTY INVESTORS 4
(a limited partnership)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Rental income $5,866,000 $5,662,000 $5,438,000
Other income 211,000 182,000 218,000
Interest income 87,000 46,000 38,000
---------- ---------- ----------
Total revenues 6,164,000 5,890,000 5,694,000
---------- ---------- ----------
Expenses (including $598,000, $579,000 and
$611,000 paid to the general partner and affiliates
in 1995, 1994 and 1993):
Operating expenses 2,761,000 2,743,000 2,660,000
Mortgage interest 1,538,000 1,597,000 1,678,000
Depreciation 989,000 1,047,000 1,126,000
General and administrative 184,000 188,000 176,000
---------- ---------- ----------
Total expenses 5,472,000 5,575,000 5,640,000
---------- ---------- ----------
Net income $ 692,000 $ 315,000 $ 54,000
========== ========== ==========
Net income per limited partnership unit $ 11.42 $ 5.20 $ 0.88
========== ========== ==========
</TABLE>
See notes to financial statements.
F - 4
<PAGE>
NATIONAL PROPERTY INVESTORS 4
(a limited partnership)
STATEMENTS OF PARTNERS' DEFICIT
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
General Limited Total
partner's partners' partners'
(deficit) (deficit) (deficit)
----------- ----------- -----------
<S> <C> <C> <C>
Balance - January 1, 1993 $ (330,000) $(6,081,000) $(6,411,000)
Net income 1,000 53,000 54,000
----------- ----------- -----------
Balance - December 31, 1993 (329,000) (6,028,000) (6,357,000)
Net income 3,000 312,000 315,000
----------- ----------- -----------
Balance - December 31, 1994 (326,000) (5,716,000) (6,042,000)
Net income 7,000 685,000 692,000
----------- ----------- -----------
Balance - December 31, 1995 $ (319,000) $(5,031,000) $(5,350,000)
=========== =========== ===========
</TABLE>
See notes to financial statements.
F - 5
<PAGE>
NATIONAL PROPERTY INVESTORS 4
(a limited partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 692,000 $ 315,000 $ 54,000
Adjustments to reconcile net income to net cash
provided by operating activities
Amortization of mortgage costs 46,000 46,000 46,000
Depreciation 989,000 1,047,000 1,126,000
Decrease (increase) in certain assets:
Other assets 3,000 27,000 (122,000)
Escrow deposits 55,000 37,000 130,000
Due from affiliate -- 20,000 (20,000)
Increase (decrease) in certain liabilities:
Accounts payable and accrued expenses (12,000) (35,000) 23,000
Tenants' security deposits payable 21,000 6,000 (61,000)
----------- ----------- -----------
Net cash provided by operating activities 1,794,000 1,463,000 1,176,000
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate (172,000) (508,000) (410,000)
----------- ----------- -----------
Cash (used in) investing activities (172,000) (508,000) (410,000)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Mortgage principal repayments (364,000) (1,298,000) (225,000)
----------- ----------- -----------
Cash (used in) financing activities (364,000) (1,298,000) (225,000)
----------- ----------- -----------
Net Increase (Decrease) in Cash and Cash Equivalents 1,258,000 (343,000) 541,000
Cash and Cash Equivalents at Beginning of Year 1,068,000 1,411,000 870,000
----------- ----------- -----------
Cash and Cash Equivalents at End of Year $ 2,326,000 $ 1,068,000 $ 1,411,000
=========== =========== ===========
Supplemental Disclosure of Cash Flow Information:
Interest paid in cash $ 1,494,000 $ 1,560,000 $ 1,633,000
=========== =========== ===========
</TABLE>
See notes to financial statements.
F - 6
<PAGE>
NATIONAL PROPERTY INVESTORS 4
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION
National Property Investors 4 (the "Partnership"), a limited partnership,
was organized under the Uniform Limited Partnership Laws of California on
July 1, 1980 for the purpose of acquiring and operating income-producing
residential real estate. The Partnership currently owns one residential
apartment complex located in Pennsylvania. The Partnership will terminate
on December 31, 2005, or sooner, in accordance with the terms of the
Agreement of Limited Partnership. Limited partners' units are at a stated
value of $500. A total of 60,005 units of the limited partnership were
issued, for aggregate capital contributions of $30,002,500. In addition,
the general partners contributed a total of $1,000 to the Partnership.
2. SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
Fair Value of Financial Instruments
In 1995, the Partnership implemented Statement of Financial Accounting
Standards ("SFAS") No. 107, "Disclosures about Fair Value of Financial
Instruments", as amended by the SFAS No. 119, "Disclosures about
Derivative Financial Instruments and Fair Value of Financial
Instruments", which requires disclosure of fair value information about
financial instruments, whether or not recognized in the balance sheet,
for which it is practicable to estimate fair value. Fair value is defined
in the SFAS as the amount at which the instruments could be exchanged in
a current transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes that the carrying amount of
its financial instruments (except for long term debt) approximates their
fair value due to the short term maturity of these instruments. The fair
value of the Partnership's long term debt, after discounting the
scheduled loan payments to maturity, approximates its carrying balance.
Real Estate
Real estate is stated at cost. Acquisition fees are capitalized as a cost
of real estate. In 1995, the Partnership adopted SFAS No. 121,
"Accounting For the Impairment of Long-Lived Assets and For Long-Lived
Assets to be Disposed Of ", which requires impairment losses to be
recognized for long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows are not sufficient
to recover the assets' carrying amounts. The impairment loss is measured
by comparing the fair value of the asset to its carrying amount. The
adoption of the SFAS has no effect on the Partnership's financial
statements.
F - 7
<PAGE>
NATIONAL PROPERTY INVESTORS 4
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Cash Equivalents
The Partnership considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
Concentration of Credit Risk
The Partnership maintains cash balances at institutions insured up to
$100,000 by the Federal Deposit Insurance Corporation. Balances in excess
of $100,000 are usually invested in money market accounts and repurchase
agreements, which are collateralized by United States Treasury
obligations. Cash balances exceeded these insured levels during the year.
At December 31, 1995, the Partnership had $1,868,000 in overnight
repurchase agreements, secured by United States Treasury obligations,
which are included in cash and cash equivalents.
Leases
Leases for rental units are accounted for as operating leases as tenants
are subject to leases which generally do not exceed one year. Rental
income is recorded when due under leasing arrangements and expenses are
charged to operations when incurred.
Income Taxes
Taxable income or loss of the Partnership is reported in the income tax
returns of its partners. Accordingly, no provision for income taxes is
made in the financial statements of the Partnership.
Depreciation
Depreciation is computed by the straight-line method over estimated
useful lives ranging from 15 to 27.50 years for buildings and
improvements and from five to seven years for furnishings.
Deferred Costs
Financing costs are deferred and amortized as interest expense over the
term of the related loan. Net deferred costs of $73,000 and $119,000 are
included in other assets at December 31, 1995 and 1994, respectively. At
December 31, 1995 and 1994, accumulated amortization of deferred
financing costs totaled $388,000 and $342,000, respectively.
F - 8
<PAGE>
NATIONAL PROPERTY INVESTORS 4
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Net Income Per Limited Partnership Unit
Net income per limited partnership unit is calculated by dividing the net
income allocated to the limited partners by the number of units
outstanding.
Reclassification
Certain amounts from 1994 and 1993 have been reclassified to conform to
the 1995 presentation.
3. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
NPI Equity Investments, Inc. ("NPI Equity" or the "Managing General
Partner"), is the general partner of the Partnership. NPI Equity is a
wholly-owned subsidiary of National Property Investors, Inc. ("NPI,
Inc."). On January 19, 1996, the stockholders of NPI, Inc. sold all of
the issued and outstanding stock of NPI, Inc. to an affiliate of Insignia
Financial Group, Inc. ("Insignia").
In October 1994 DeForest Ventures II L.P. ("DeForest II") made a tender
offer for limited partnership interests in the partnership, as well as
six affiliated limited partnerships. DeForest Ventures I, L.P. ("DeForest
I") made tender offers for limited partnership interests in twelve
affiliated limited partnerships. Shareholders who controlled DeForest
Capital II Corporation, the sole general partner of DeForest II, also
controlled NPI, Inc. As of December 31, 1995 DeForest II had acquired
approximately 49.9% of the total limited partnership units of the
Partnership. An affiliate of Insignia acquired a majority of the limited
partnership interests of the Partnership held by DeForest II and certain
of its affiliates (see Note 7).
As compensation for providing property management services, an affiliate
of NPI Equity is entitled to receive 5% of the gross annual receipts from
all Partnership properties it manages. For the years ended December 31,
1995, 1994, and 1993, an affiliate of NPI Equity received $307,000,
$292,000 and $285,000, respectively. Property management fees are
included in operating expenses.
For services relating to the administration of the Partnership and the
operation of its property, NPI Equity is entitled to receive payment of
non-accountable expenses up to a maximum of $100,000 per year, based upon
the number of Partnership units sold, subject to certain limitations. NPI
Equity was not entitled to receive any non-accountable expense
reimbursements for the years ended December 31, 1995, 1994 and 1993.
F - 9
<PAGE>
NATIONAL PROPERTY INVESTORS 4
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
3. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (Continued)
NPI Equity is entitled to receive 1% of adjusted cash from operations and
an allocation of 1% of the net income or loss of the Partnership.
For managing the affairs of the Partnership, NPI Equity is entitled to
receive a partnership management fee equal to 5% of the Partnership's
adjusted cash from operations, of which 60% is subordinated to the
limited partners receipt of an 8% return on adjusted contributed capital.
NPI Equity was not entitled to receive a fee for the years ended December
31, 1995, 1994 and 1993.
NPI Equity received reimbursement of accountable administrative expenses
of $143,000, $152,000 and $149,000 for the years ended December 31, 1995,
1994, and 1993, respectively. These reimbursements are included in
general and administrative expenses. NPI Equity received reimbursement of
accountable property administrative expenses of $29,000, $26,000 and
$22,000 for the years ended December 31, 1995, 1994 and 1993,
respectively. These reimbursements are included in operating expenses.
Certain amendments to the Partnership Agreement ("Amendments"), as
described in the "Statement Furnished in Connection with the Solicitation
of Consents," provided to each limited partner on September 1, 1992, and
approved by a majority of the limited partners on October 16, 1992 (the
"Approval Date") retroactive to January 1, 1992, are summarized as
follows:
- Upon sale of the Partnership's property, NPI Equity will be entitled
to an Incentive Compensation Fee equal to a declining percentage of
the difference between the total amount distributed to limited
partners and the appraised value of their investment at February 1,
1992. The percentage amount to be realized by NPI Equity, if any,
will be dependent upon the year in which the property is sold.
Payment of the Incentive Compensation Fee is subordinated to the
receipt by the limited partners, of: (a) distributions from capital
transaction proceeds of an amount equal to their appraised investment
in the Partnership at February 1, 1992; and (b) distributions from
all sources (capital transactions as well as cash flow) of an amount
equal to six percent (6%) per annum cumulative, non-compounded, on
their appraised investment in the Partnership at February 1, 1992.
- In addition, the Amendments authorize payment of a Refinancing Fee
to NPI Equity or an affiliate, if earned; permit NPI Equity or any of
its affiliates to provide construction services or construction
supervisory services to the Partnership; and permit affiliates of NPI
Equity to be paid an insurance brokerage commission in connection
with the sale of insurance to the property under a master policy
covering numerous properties owned or managed by NPI Equity and its
affiliates. Included in operating expenses for the years ended
December 31, 1995, 1994 and 1993 is approximately $119,000, $109,000
and $98,000, respectively, of insurance premiums, which were paid to
NPI Equity under a master insurance policy arranged for by NPI
Equity.
F - 10
<PAGE>
NATIONAL PROPERTY INVESTORS 4
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
3. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (Continued)
NPI Equity was paid a $57,000 fee relating to a successful real estate
tax appeal on the Partnership's sole property during the year ended
December 31, 1993. This fee is included in operating expenses. NPI Equity
was not paid any other fees in connection with the disposition or
provision of services to the Partnership's property during the years
ended December 31, 1995, 1994 and 1993.
NPI Equity has established a revolving credit facility (the "Partnership
Revolver") to be used to fund deferred maintenance and working capital
needs of the National Properties Investor Partnership Series (NPI
Partnerships). The maximum draw available to the Partnership under the
Partnership Revolver is $300,000. Loans under the Partnership Revolver
will have a term of 365 days, be unsecured and bear interest at the rate
of 2% per annum in excess of the prime rate announced from time to time
by Chemical Bank, N.A. The maturity date of such borrowing will be
accelerated in the event of: (i) the removal of the managing general
partner (whether or not For Cause), (ii) the sale or refinancing of the
Partnership's property, or (iii) the liquidation of the Partnership. The
Partnership has not borrowed under the Partnership Revolver, to date.
4. REAL ESTATE
Real estate, at depreciated cost, is summarized as follows:
<TABLE>
<CAPTION>
December 31,
-------------------------------------
1995 1994
------------ --------------
<S> <C> <C>
Land $ 1,980,000 $ 1,980,000
Buildings and improvements 23,009,000 22,837,000
------------ --------------
24,989,000 24,817,000
Less: Accumulated depreciation 16,069,000 15,080,000
------------ --------------
$ 8,920,000 $ 9,737,000
============ ==============
</TABLE>
The real estate is pledged to collateralize a non-recourse mortgage, as
set forth in Note 5 below.
F - 11
<PAGE>
NATIONAL PROPERTY INVESTORS 4
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
5. MORTGAGE PAYABLE
a. The mortgage payable, which is non-recourse to the Partnership, is
as follows:
<TABLE>
<CAPTION>
Annual December 31,
Deed of Interest Monthly -------------------------------
Property Trust Rate Payment Maturity 1995 1994
-------- ------- -------- ------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Village of First 8.75% $155,000 8/97 $16,877,000 $17,241,000
Pennbrook, =========== ===========
(Falls Township,
Pennsylvania)
</TABLE>
On April 29, 1994, the Partnership prepaid $1,000,000 of the principal
balance of the mortgage encumbering the Partnership's sole property.
b. The following is the final payment due on the mortgage payable which
is not self-liquidating:
<TABLE>
<CAPTION>
Deed of Date of
Property Trust Final Payment Maturity
----------- ------- ------------- --------
<S> <C> <C> <C>
Village of
Pennbrook First $ 16,232,000 8/97
</TABLE>
c. The following is a summary of the anticipated future principal
payments on the mortgage:
<TABLE>
<CAPTION>
Year ending
December 31, Amount
------------ ------------
<S> <C>
1996 $ 397,000
1997 16,480,000
------------
Total $16,877,000
============
</TABLE>
F - 12
<PAGE>
NATIONAL PROPERTY INVESTORS 4
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
6. RECONCILIATION OF NET INCOME (LOSS) PER FINANCIAL STATEMENTS
TO TAX REPORTING
The Partnership files its tax return on an accrual basis and has computed
depreciation for tax purposes using accelerated methods, which are not in
accordance with generally accepted accounting principles. A
reconciliation of the net income per the financial statements to the net
taxable income to partners is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------
1995 1994 1993
------------ ----------- ----------
<S> <C> <C> <C>
Net income per financial statements $ 692,000 $ 315,000 $ 54,000
Difference between expenses for
financial statement and tax reporting 6,000 32,000 2,000
Difference between tax depreciation
and financial statement depreciation (30,000) (16,000) 54,000
------------ ----------- ----------
Net taxable income to partners $ 668,000 $ 331,000 $ 110,000
============ =========== ==========
</TABLE>
7. SUBSEQUENT EVENT
On January 19, 1996, the stockholders of NPI, Inc. sold all of the issued
and outstanding stock of NPI, Inc. to an affiliate of Insignia. In
addition, an affiliate of Insignia acquired the majority of the limited
partnership interests of the Partnership held by DeForest II and certain
of its affiliates (see Note 3). As a result of the transaction, the
Managing General Partner of the Partnership is controlled by Insignia.
Insignia affiliates now provide property and asset management services to
the Partnership, maintain its books and records and oversee its
operations.
F - 13
<PAGE>
NATIONAL PROPERTY INVESTORS 4
(a limited partnership)
December 31, 1995
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
-------------------------------------------------------
<TABLE>
<CAPTION>
Column A Column B Column C Column D
- -------- -------- -------- --------
Cost capitalized
Initial cost subsequent to
to company acquisition
----------------------- --------------------------
Buildings and Carrying
Description Encumbrances Land Improvements Improvements Costs
- ----------- ------------ ---- ------------ ------------ -----
<S> <C> <C> <C> <C> <C>
Residential
Properties
- ----------
Village of Pennbrook
Apartments -
Falls Township, PA $ 16,877,000 $1,972,000 $18,245,000 $4,691,000 $81,000
------------ ---------- ----------- ---------- -------
Totals $ 16,877,000 $1,972,000 $18,245,000 $4,691,000 $81,000
============ ========== =========== ========== =======
<CAPTION>
SCHEDULE III
Column A Column E Column F Column G Column H Column I
- -------- -------- -------- -------- -------- --------
Life
Gross amount on which
carried at depreciation
close of period is computed
--------------------------------- in latest
Buildings and Accumulated Date of Date income
Description Land Improvements Total Depreciation Construction Acquired statement
- ----------- ---- ------------ ----- ------------ ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Residential
Properties
- ----------
Village of Pennbrook
Apartments -
Falls Township, PA $1,980,000 $23,009,000 $24,989,000 $16,069,000 1973 12/81 5-27 yrs.
---------- ----------- ----------- -----------
Totals $1,980,000 $23,009,000 $24,989,000 $16,069,000
========== =========== =========== ===========
</TABLE>
See notes on following page
F - 14
<PAGE>
SCHEDULE III
NATIONAL PROPERTY INVESTORS 4
(a limited partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Note 1 Reconciliation of real estate
Balance at beginning of period $24,817,000 $24,309,000 $23,899,000
Additions during period:
Improvements 172,000 508,000 410,000
----------- ----------- -----------
Balance at end of period $24,989,000 $24,817,000 $24,309,000
=========== =========== ===========
Note 2 Reconciliation of accumulated depreciation
Balance at beginning of period $15,080,000 $14,033,000 $12,907,000
Additions during period:
Depreciation expense 989,000 1,047,000 1,126,000
----------- ----------- -----------
Balance at end of period $16,069,000 $15,080,000 $14,033,000
=========== =========== ===========
</TABLE>
Note 3. The aggregate cost for federal income tax purposes at December 31,
1995 is $24,420,000.
F - 15
<PAGE>
NATIONAL PROPERTY INVESTORS 5
(a limited partnership)
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995
I N D E X
<TABLE>
<CAPTION>
Page
<S> <C>
PART I. FINANCIAL INFORMATION:
Auditors' report............................................................................................ F - 2
Financial statements - years ended December 31, 1995, 1994 and 1993:
Balance sheets............................................................................................ F - 3
Statements of operations.................................................................................. F - 4
Statements of partners' (deficit) equity.................................................................. F - 5
Statements of cash flows.................................................................................. F - 6
Notes..................................................................................................... F - 7
Financial statement schedule :
Schedule III - Real Estate and Accumulated Depreciation at December 31, 1995.............................. F - 16
</TABLE>
Financial statement schedules not included have been omitted because of
the absence of conditions under which they are required or because the
information is included elsewhere in the financial statements.
F - 1
<PAGE>
To the Partners
National Property Investors 5
Greenville, South Carolina
Independent Auditors' Report
We have audited the accompanying balance sheets of National Property Investors 5
(a limited partnership) (the "Partnership") as of December 31, 1995 and 1994,
and the related statements of operations, partners' (deficit) equity and cash
flows for each of the three years in the period ended December 31, 1995. Our
audits also included additional information supplied pursuant to Item 14(a)(2).
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of National Property Investors 5
as of December 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles. Also in our opinion,
the related financial statement schedule, when considered in relation to the
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
Certified Public Accountants
New York, N.Y.
January 22, 1996
F - 2
<PAGE>
NATIONAL PROPERTY INVESTORS 5
(a limited partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Real estate, net of accumulated depreciation $ 11,768,000 $ 12,912,000
Cash and cash equivalents 1,802,000 1,325,000
Other assets 1,065,000 1,295,000
------------ ------------
Total assets $ 14,635,000 $ 15,532,000
============ ============
LIABILITIES AND PARTNERS' EQUITY
Mortgage payable $ 14,729,000 $ 14,906,000
Accounts payable and accrued expenses 249,000 230,000
Tenants' security deposits payable 124,000 138,000
------------ ------------
Total liabilities 15,102,000 15,274,000
------------ ------------
Partners' (Deficit) Equity:
General partner's (deficit) (1,215,000) (1,193,000)
Limited partners equity (82,513 units outstanding at
December 31, 1995 and 1994) 748,000 1,451,000
------------ ------------
Total partners' (deficit) equity (467,000) 258,000
------------ ------------
Total liabilities and partners' (deficit) equity $ 14,635,000 $ 15,532,000
============ ============
</TABLE>
See notes to financial statements.
F - 3
<PAGE>
NATIONAL PROPERTY INVESTORS 5
(a limited partnership)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Rental income $ 5,224,000 $ 5,175,000 $ 5,055,000
Other income 244,000 231,000 200,000
Interest income 89,000 43,000 11,000
----------- ----------- -----------
Total revenues 5,557,000 5,449,000 5,266,000
----------- ----------- -----------
Expenses (including $688,000, $664,000 and
$612,000 paid to the general partner and affiliates
in 1995, 1994, and 1993):
Operating expenses 3,353,000 3,311,000 3,063,000
Depreciation 1,339,000 1,471,000 1,488,000
Mortgage interest 1,369,000 1,491,000 1,442,000
General and administrative 221,000 252,000 211,000
----------- ----------- -----------
Total expenses 6,282,000 6,525,000 6,204,000
----------- ----------- -----------
Net loss $ (725,000) $(1,076,000) $ (938,000)
=========== =========== ===========
Net loss per limited partnership unit $ (8.52) $ (12.65) $ (11.03)
=========== =========== ===========
</TABLE>
See notes to financial statements.
F - 4
<PAGE>
NATIONAL PROPERTY INVESTORS 5
(a limited partnership)
STATEMENTS OF PARTNERS' (DEFICIT) EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
General Limited Total
partner's partners' partners'
(deficit) equity equity
----------- ----------- -----------
Balance - January 1, 1993 $(1,133,000) $ 3,405,000 $ 2,272,000
Net loss (28,000) (910,000) (938,000)
----------- ----------- -----------
Balance - December 31, 1993 (1,161,000) 2,495,000 1,334,000
Net loss (32,000) (1,044,000) (1,076,000)
----------- ----------- -----------
Balance - December 31, 1994 (1,193,000) 1,451,000 258,000
Net loss (22,000) (703,000) (725,000)
----------- ----------- -----------
Balance - December 31, 1995 $(1,215,000) $ 748,000 $ (467,000)
=========== =========== ===========
See notes to financial statements.
F - 5
<PAGE>
NATIONAL PROPERTY INVESTORS 5
(a limited partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (725,000) $(1,076,000) $ (938,000)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Amortization of mortgage costs 79,000 117,000 39,000
Depreciation 1,339,000 1,471,000 1,488,000
Mortgage costs paid -- (223,000) (443,000)
Decrease (increase) in certain assets:
Other assets 151,000 (143,000) (127,000)
Increase (decrease) in certain liabilities:
Accounts payable and accrued expenses 19,000 (36,000) 23,000
Tenants' security deposits payable (14,000) (10,000) 1,000
----------- ----------- -----------
Net cash provided by operating activities 849,000 100,000 43,000
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate (195,000) (440,000) (247,000)
----------- ----------- -----------
Cash used in investing activities (195,000) (440,000) (247,000)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Mortgage principal repayments (177,000) (154,000) (319,000)
Proceeds from refinancing of mortgages -- 7,144,000 7,835,000
Satisfaction of mortgages payable -- (6,293,000) (6,506,000)
Due to affiliate -- (103,000) 103,000
----------- ----------- -----------
Net cash (used in) provided by financing activities (177,000) 594,000 1,113,000
----------- ----------- -----------
Net Increase in Cash and Cash Equivalents 477,000 254,000 909,000
Cash and Cash Equivalents at Beginning of Year 1,325,000 1,071,000 162,000
----------- ----------- -----------
Cash and Cash Equivalents at End of Year $ 1,802,000 $ 1,325,000 $ 1,071,000
=========== =========== ===========
Supplemental Information:
Interest paid in cash $ 1,347,000 $ 1,394,000 $ 1,377,000
=========== =========== ===========
Supplemental Disclosure of Non-Cash
Financing Activities:
Repair reserves funded by holdback
of proceeds from mortgage refinancings $ -- $ -- $ 118,000
=========== =========== ===========
</TABLE>
See notes to financial statements.
F - 6
<PAGE>
NATIONAL PROPERTY INVESTORS 5
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION
National Property Investors 5 (the "Partnership"), a limited partnership,
was organized under the Uniform Limited Partnership Laws of California as
of July 15, 1981, for the purpose of acquiring and operating income
producing residential real estate. The Partnership currently owns two
apartment complexes located in Florida and one complex located in
Alabama. The Partnership also owns a 24.028 percent interest (as a
tenant-in-common with an affiliate of the managing general partner) in an
apartment complex located in New Jersey. The Partnership will terminate
on December 31, 2005, unless previously terminated, in accordance with
the terms of the Agreement of Limited Partnership. Limited partners'
units are at a stated value of $500. A total of 82,513 units of the
limited partnership were issued for aggregate capital contributions of
$41,256,500. In addition, the general partners contributed a total of
$1,000 to the Partnership.
2. SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
Fair Value of Financial Instruments
In 1995, the Partnership implemented Statement of Financial Accounting
Standards ("SFAS") No. 107, "Disclosures about Fair Value of Financial
Instruments", as amended by the SFAS No. 119, "Disclosures about
Derivative Financial Instruments and Fair Value of Financial
Instruments", which requires disclosure of fair value information about
financial instruments, whether or not recognized in the balance sheet,
for which it is practicable to estimate fair value. Fair value is defined
in the SFAS as the amount at which the instruments could be exchanged in
a current transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes that the carrying amount of
its financial instruments (except for long term debt) approximates their
fair value due to the short term maturity of these instruments. The fair
value of the Partnership's long term debt, after discounting the
scheduled loan payments to maturity, approximates its carrying balance.
Real Estate
Real estate is stated at cost. Acquisition fees are capitalized as a cost
of real estate. In 1995, the Partnership adopted SFAS No. 121,
"Accounting For the Impairment of Long-Lived Assets and For Long-Lived
Assets to be Disposed Of ", which requires impairment losses to be
recognized for long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows are not sufficient
to recover the assets' carrying amounts. The impairment loss is measured
by comparing the fair value of the asset to its carrying amount. The
adoption of the SFAS has no effect on the Partnership's financial
statements.
F - 7
<PAGE>
NATIONAL PROPERTY INVESTORS 5
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
For real estate purchased in joint ownership with an affiliated
partnership, the assets, liabilities, revenues, and expenses are
allocated on a pro-rata basis to each partnership in accordance with its
percentage of ownership.
Cash Equivalents
The Partnership considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
Concentration of Credit Risk
The Partnership maintains cash balances at institutions insured up to
$100,000 by the Federal Deposit Insurance Corporation. Balances in excess
of $100,000 are usually invested in money market accounts and repurchase
agreements, which are collateralized by United States Treasury
obligations. Cash balances exceeded these insured levels. At December 31,
1995, the Partnership had $1,422,000 in overnight repurchase agreements,
secured by United States Treasury obligations, which are included in cash
and cash equivalents.
Leases
Leases for rental units are accounted for as operating leases as tenants
are subject to leases which generally do not exceed one year. Rental
income is recorded when due under leasing arrangements and expenses are
charged to operations when incurred.
Depreciation
Depreciation is computed by the straight-line method over estimated
useful lives ranging from 15 to 27.5 years for buildings and improvements
and from five to seven years for furnishings.
Deferred Costs
Financing costs are deferred and amortized as interest expense over the
term of the related loan. Net deferred costs of $443,000 and $522,000 are
included in other assets at December 31, 1995 and 1994, respectively. At
December 31, 1995 and 1994, accumulated amortization of deferred
financing costs totaled $277,000 and $198,000, respectively.
Reclassification
Certain amounts from 1994 and 1993 have been reclassified to conform to
the 1995 presentation.
Income Taxes
Taxable income or loss of the Partnership is reported in the income tax
returns of its partners. Accordingly, no provision for income taxes is
made in the financial statements of the Partnership.
F - 8
<PAGE>
NATIONAL PROPERTY INVESTORS 5
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
3. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
NPI Equity Investments, Inc. ("NPI Equity" or the "Managing General
Partner"), is the general partner of the Partnership. NPI Equity is a
wholly-owned subsidiary of National Property Investors, Inc. ("NPI,
Inc."). On January 19, 1996, the stockholders of NPI, Inc. sold all of
the issued and outstanding stock of NPI, Inc. to an affiliate of Insignia
Financial Group, Inc. ("Insignia").
In October 1994, DeForest Ventures II L.P. ("DeForest II") made a tender
offer for limited partnership interests in the partnership, as well as
six affiliated limited partnerships. DeForest Ventures I, L.P. made
tender offers for limited partnership interests in twelve affiliated
limited partnerships. Shareholders who controlled DeForest Capital II
Corporation, the sole general partner of DeForest II, also controlled
NPI, Inc. As of December 31, 1995, DeForest II had acquired approximately
45% of total limited partnership units of the Partnership. An affiliate
of Insignia also acquired the limited partnership interests of the
Partnership held by DeForest II and certain of its affiliates (see
Note 8).
As compensation for providing property management services, an affiliate
of NPI Equity is entitled to receive 5% of the gross annual receipts from
all Partnership properties it manages. For the years ended December 31,
1995, 1994 and 1993, an affiliate of NPI Equity received $278,000,
$272,000 and $265,000, respectively. Property management fees are
included in operating expenses.
For services relating to the administration of the Partnership and the
operation of its properties, NPI Equity is entitled to receive payment of
non-accountable expenses up to a maximum of $100,000 per year, based upon
the number of Partnership units sold, subject to certain limitations. NPI
Equity was not entitled to any reimbursement for the years ended December
31, 1995, 1994 and 1993.
For managing the affairs of the Partnership, NPI Equity is entitled to
receive a partnership management fee. The fee is to be equal to 5% of the
Partnership's adjusted cash from operations, of which 60% is subordinated
to the limited partners receipt of an 8% return on contributed capital.
NPI Equity was not entitled to receive any fees for the years ended
December 31, 1995, 1994 and 1993.
NPI Equity is entitled to receive 3% of adjusted cash from operations and
an allocation of 3% of the net income or loss of the Partnership. There
was no adjusted cash from operations distributed for the years ended
December 31, 1995, 1994 and 1993. Upon sale of all properties and
termination of the Partnership, the general partners may be required to
contribute certain funds to the Partnership in accordance with the
partnership agreement.
NPI Equity received reimbursement of accountable administrative expenses
amounting to $158,000, $187,000 and $149,000 for the years ended December
31, 1995, 1994 and 1993, respectively. These reimbursements are included
in general and administrative expenses. NPI Equity received reimbursement
of accountable property administrative expenses of $46,000, $38,000 and
$43,000 for the years ended December 31, 1995, 1994 and 1993,
respectively. These reimbursements are included in operating expenses.
F - 9
<PAGE>
NATIONAL PROPERTY INVESTORS 5
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
3. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (Continued)
The Partnership owns a 24.028% undivided interest in Village Apartments,
a garden apartment development located in Voorhees Township, New Jersey.
The remaining 75.972% undivided interest is owned by National Property
Investors 6, an affiliated public limited partnership.
Certain amendments to the Partnership Agreement ("Amendments"), as
described in the "Statement Furnished in Connection with the Solicitation
of Consents", provided to each limited partner on September 1, 1992, and
approved by a majority of the limited partners on October 16, 1992 (the
"Approval Date"), retroactive to January 1, 1992, are summarized as
follows:
- Upon sale of Partnership properties, NPI Equity will be entitled to
an Incentive Compensation Fee equal to a declining percentage of the
difference between the total amount distributed to limited partners and
the appraised value of their investment at February 1, 1992. The
percentage amount to be realized by NPI Equity, if any, will be
dependent upon the year in which the property is sold. Payment of the
Incentive Compensation Fee is subordinated to the receipt by the
limited partners, of: (a) distributions from capital transaction
proceeds of an amount equal to their appraised investment in the
Partnership at February 1, 1992, and (b) distributions from all sources
(capital transactions as well as cash flow) of an amount equal to six
percent (6%) per annum cumulative, non-compounded, on their appraised
investment in the Partnership at February 1, 1992.
- In addition, the Amendments authorize payment of a Refinancing Fee to
NPI Equity or an affiliate, if earned; permit NPI Equity or any of its
affiliates to provide construction services or construction supervisory
services to the Partnership, and permit affiliates of NPI Equity to be
paid an insurance brokerage commission in connection with the sale of
insurance to properties under a master policy covering numerous
properties owned or managed by NPI Equity and its affiliates. Included
in operating expenses for the years ended December 31, 1995, 1994 and
1993, is approximately $206,000, $167,000 and $145,000 of insurance
premiums, which were paid to NPI Equity under a master insurance policy
arranged by NPI Equity. NPI Equity was paid fees of $57,000 relating
to the refinancing and extension of mortgages encumbering all of the
Partnership's properties during 1993. These fees are included in other
assets and are being amortized over the term of each respective loan.
NPI Equity was also paid $10,000 relating to successful real estate tax
appeals on the Partnership's Altamonte Springs and Orlando, Florida
properties during the year ended December 31, 1993. The tax appeal fees
are included in operating expenses. NPI Equity was not paid any other
fees in connection with the disposition or provision of services to the
Partnership's properties during the years ended December 31, 1995, 1994
and 1993.
F - 10
<PAGE>
NATIONAL PROPERTY INVESTORS 5
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
3. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (Continued)
NPI Equity has established a revolving credit facility (the "Partnership
Revolver") to be used to fund deferred maintenance and working capital
needs of the National Property Investors Partnership Series (NPI
Partnerships). The maximum draw available to the Partnership under the
Partnership Revolver is $500,000. Loans under the Partnership Revolver
will have a term of 365 days, be unsecured and bear interest at the rate
of 2% per annum in excess of the prime rate announced from time to time
by Chemical Bank, N.A. The maturity date of such borrowing will be
accelerated in the event of: (i) the removal of the managing general
partner (whether or not For Cause, as defined in the Partnership
Agreement); (ii) the sale or refinancing of a property by the
Partnership, or; (iii) the liquidation of the Partnership. The
Partnership has not borrowed under the Partnership Revolver, to date.
4. REAL ESTATE
Real estate, at depreciated cost, is summarized as follows:
December 31,
----------------------------
1995 1994
---- ----
Land $ 2,457,000 $ 2,457,000
Buildings and improvements 30,056,000 29,861,000
------------ -----------
32,513,000 32,318,000
Less: Accumulated depreciation 20,745,000 19,406,000
------------ -----------
$11,768,000 $12,912,000
============ ============
The real estate is pledged to collateralize the non-recourse mortgages
set forth in Note 5.
F - 11
<PAGE>
NATIONAL PROPERTY INVESTORS 5
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
5. MORTGAGES PAYABLE
a. Mortgages payable, which are non-recourse to the Partnership, are
as follows:
<TABLE>
<CAPTION>
Annual December 31,
Type of Interest Monthly -------------------------
Property Mortgage Rate Payments Maturity 1995 1994
-------- -------- ---- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Oakwood First (1) 8.56% $ 32,000 2/01 $ 4,048,000 $ 4,081,000
Village at Lake Nan
(Orlando, Florida)
The Springs of First (1) 8.56% $ 23,000 2/01 (3) 2,994,000 3,019,000
Altamonte (2)
(Altamonte Springs,
Florida)
The Palisades (3) First (1) 9.00% $ 45,000 7/03 4,997,000 5,086,000
Apartments
(Montgomery, Alabama)
Village First (1) 8.50% $ 22,000 9/00 2,690,000 2,720,000
(Voorhees Township, ----------- -----------
New Jersey)
$14,729,000 $14,906,000
----------- -----------
----------- -----------
</TABLE>
F - 12
<PAGE>
NATIONAL PROPERTY INVESTORS 5
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
5. MORTGAGES PAYABLE (Continued)
(1) The loan may not be prepaid without penalty.
(2) Formerly The Meadows Apartments.
(3) Formerly The Seasons Apartments and Townhouses.
b. The following are the final payments due on mortgages payable:
Final Date of
Property Mortgage Payment Maturity
-------- -------- ------- --------
Oakwood Village at
Lake Nan First $3,829,000 2/01
The Springs of
Altamonte First 2,833,000 2/01
The Palisades First 3,996,000 7/03
Village First 2,505,000 9/00
c. The following is a summary of anticipated future principal payments:
Year ending
December 31, Amount
------------ ------
1996 $ 193,000
1997 211,000
1998 230,000
1999 251,000
2000 2,767,000
Thereafter 11,077,000
-----------
Total $14,729,000
-----------
-----------
The above does not include approximately $163,000 annually that is
required to be deposited in replacement reserve accounts, for certain
repairs and replacements, in accordance with various mortgage agreements.
6. JOINT VENTURE
The Partnership currently owns The Village Apartments, as a
tenant-in-common with National Property Investors 6 ("NPI-6"), an
affiliated public limited partnership. NPI-6 acquired a 75.972 percent
undivided interest with the Partnership owning the remaining 24.028
percent. The property is accounted for using the proportionate
consolidation method. The financial statements and supplementary data
reflect the Partnership's 24.028 percent proportionate share of
historical cost of this property.
F - 13
<PAGE>
NATIONAL PROPERTY INVESTORS 5
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
6. JOINT VENTURE (Continued)
The condensed, combined balance sheets of The Village Apartments and the
Partnership's proportionate share of assets, liabilities and equity at
December 31, 1995 and 1994, and the condensed, combined statements of
operations of Village Apartments and the Partnership's proportionate share
of revenues and expenses for the years ended December 31, 1995, 1994, and
1993, are summarized as follows:
<TABLE>
<CAPTION>
COMBINED PROPORTIONATE SHARE
--------------------------- ---------------------------
1995 1994 1995 1994
--------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
Total assets, primarily real estate $12,895,000 $12,773,000 $ 3,039,000 $ 3,009,000
=========== =========== =========== ===========
Liabilities, primarily mortgages payable $11,561,000 $11,594,000 $ 2,779,000 $ 2,786,000
Equity 1,334,000 1,179,000 260,000 223,000
----------- ----------- ----------- -----------
Total liabilities and equity $12,895,000 $12,773,000 $ 3,039,000 $ 3,009,000
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
COMBINED PROPORTIONATE SHARE
---------------------------------------- ------------------------
1995 1994 1993 1995 1994 1993
------------ ------------ ------------ ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Total revenues $4,309,000 $4,105,000 $3,852,000 $1,035,000 $ 986,000 $ 925,000
---------- ---------- ---------- ---------- ---------- ----------
Operating and other expenses 2,409,000 2,338,000 2,268,000 578,000 562,000 546,000
Depreciation 733,000 746,000 747,000 176,000 179,000 179,000
Mortgage interest 1,012,000 1,019,000 799,000 244,000 245,000 192,000
----------- ---------- ----------- ----------- ----------- ----------
Total expenses 4,154,000 4,103,000 3,814,000 998,000 986,000 917,000
----------- ----------- ----------- ----------- ----------- ----------
Net income $ 155,000 $ 2,000 $ 38,000 $ 37,000 $ - $ 8,000
========== =========== ============ =========== =========== ==========
</TABLE>
F - 14
<PAGE>
NATIONAL PROPERTY INVESTORS 5
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
7. RECONCILIATION OF NET LOSS PER FINANCIAL STATEMENTS TO TAX REPORTING
The Partnership files its tax return on an accrual basis and has computed
depreciation for tax purposes using accelerated methods which are not in
accordance with generally accepted accounting principles. A
reconciliation of the net loss per the financial statements to the net
taxable loss to partners is as follows:
<TABLE>
<CAPTION>
YEARS ENDED
-----------------------------------------------
1995 1994 1993
---------- ----------- ---------
<S> <C> <C> <C>
Net loss per financial statements $ (725,000) $ (1,076,000) $ (938,000)
Difference in income and expenses
for financial statement and tax reporting 3,000 3,000 -
Difference between tax depreciation and
financial statement depreciation (38,000) 93,000 90,000
---------- ------------- -----------
Net taxable loss to partners $ (760,000) $ (980,000) $ (848,000)
========== ============= ===========
</TABLE>
8. SUBSEQUENT EVENT
On January 19, 1996, the stockholders of NPI, Inc. sold all of the issued
and outstanding stock of NPI, Inc. to an affiliate of Insignia. In
addition, an affiliate of Insignia acquired the limited partnership
interests of the Partnership held by DeForest II and certain of its
affiliates (see Note 3). As a result of the transaction, the Managing
General Partner of the Partnership is controlled by Insignia. Insignia
affiliates now provide property and asset management services to the
Partnership, maintain its books and records and oversee its operations.
F - 15
<PAGE>
NATIONAL PROPERTY INVESTORS 5
(a limited partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
SCHEDULE III
DECEMBER 31, 1994
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- -------- -------- -------- -------- --------
Cost capitalized Gross amount
Initial cost subsequent to carried at
to company acquisition close of period
_______________________ _______________________ ________________________________
Buildings and Carrying Buildings and
Description Encumbrances Land Improvements Improvements Costs Land Improvements Total
- ----------- ------------ ---- ------------ ------------ ----- ---- ------------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Residential
Properties
Oakwood Village at
Lake Nan Apartments-
Orlando, FL $ 4,048,000 $ 589,000 $ 7,181,000 $ 1,401,000 $ 73,000 $ 595,000 $ 8,649,000 $ 9,244,000
The Meadows Apartments-
Altamonte Springs, FL 2,994,000 567,000 5,218,000 886,000 73,000 574,000 6,170,000 6,744,000
The Palisades Apartments-
Montgomery, AL 4,997,000 970,000 8,448,000 2,169,000 55,000 976,000 10,666,000 11,642,000
Village Apartments-
Voorhees Township, NJ 2,690,000 307,000 4,018,000 527,000 31,000 312,000 4,571,000 4,883,000
----------- ---------- ---------- ----------- --------- ---------- ----------- -----------
Totals $14,729,000 $2,433,000 $24,865,000 $ 4,983,000 $ 232,000 $2,457,000 $30,056,000 $32,513,000
=========== ========== =========== =========== ========= ========== =========== ===========
<CAPTION>
Column F Column G Column H Column I
-------- -------- -------- --------
Life
on which
depreciation
is computed
in latest
Accumulated Date of Date income
Depreciation Construction Acquired statement
------------ ------------ -------- -----------
<S> <C> <C> <C> <C>
Residential
Properties
Oakwood Village at
Lake Nan Apartments-
Orlando, FL $ 6,122,000 1973 8/82 5 - 27.5 yrs.
The Meadows Apartments-
Altamonte Springs, FL 4,273,000 1973 12/82 5 - 27.5 yrs.
The Palisades Apartments-
Montgomery, AL 8,001,000 1968-1972 6/83 5 - 27.5 yrs.
Village Apartments-
Voorhees Township, NJ 2,349,000 1979-1980 1/84 5 - 27.5 yrs.
----------
Totals $20,745,000
===========
</TABLE>
See notes on following page.
F - 16
<PAGE>
SCHEDULE III
NATIONAL PROPERTY INVESTORS 5
(a limited partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Note 1 Reconciliation of real estate
Balance at beginning of period $32,318,000 $31,878,000 $31,631,000
Additions during period:
Improvements 195,000 440,000 247,000
------------- ------------ -------------
Balance at end of period $32,513,000 $32,318,000 $31,878,000
============== ============= =============
Note 2 Reconciliation of accumulated depreciation
Balance at beginning of period $19,406,000 $17,935,000 $16,447,000
Additions during period:
Depreciation expense 1,339,000 1,471,000 1,488,000
------------- ------------ -------------
Balance at end of period $20,745,000 $19,406,000 $17,935,000
============== ============= =============
Note 3. The aggregate cost for federal income tax purposes at
December 31, 1995, is $31,759,000.
</TABLE>
F - 17
<PAGE>
NATIONAL PROPERTY INVESTORS 6
(a limited partnership)
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995
I N D E X
<TABLE>
<CAPTION>
Page
<S> <C>
PART I. FINANCIAL INFORMATION:
Independent Auditors' report................................................................................F - 2
Financial statements - years ended December 31, 1995, 1994 and 1993:
Balance sheets............................................................................................F - 3
Statements of operations..................................................................................F - 4
Statements of partners' equity............................................................................F - 5
Statements of cash flows..................................................................................F - 6
Notes.....................................................................................................F - 7
Financial statement schedule :
Schedule III - Real Estate and Accumulated
Depreciation at December 31, 1995........................................................................F - 17
</TABLE>
Financial statement schedules not included have been omitted because of the
absence of conditions under which they are required or because the information
is included elsewhere in the financial statements.
F - 1
<PAGE>
To the Partners
National Property Investors 6
Greenville, South Carolina
Independent Auditors' Report
We have audited the accompanying balance sheets of National Property Investors 6
(a limited partnership) (the "Partnership") as of December 31, 1995 and 1994,
and the related statements of operations, partners' equity and cash flows for
each of the three years in the period ended December 31, 1995. Our audits also
included additional information supplied pursuant to Item 14(a)(2). These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of National Property Investors 6
as of December 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles. Also in our opinion,
the related 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.
Certified Public Accountants
New York, N.Y.
January 31, 1996
F - 2
<PAGE>
NATIONAL PROPERTY INVESTORS 6
(a limited partnership)
BALANCE SHEETS
DECEMBER 31,
-----------------------------
1995 1994
------------ ------------
ASSETS
Real estate, net of accumulated depreciation $ 32,727,000 $ 35,199,000
Cash and cash equivalents 5,450,000 2,436,000
Other assets 1,021,000 1,291,000
Escrow deposits 274,000 246,000
------------ ------------
Total assets $ 39,472,000 $ 39,172,000
============ ============
LIABILITIES AND PARTNERS' EQUITY
Mortgages payable $ 24,721,000 $ 25,042,000
Tenants' security deposits payable 392,000 474,000
Accounts payable and accrued expense 473,000 382,000
------------ ------------
Total liabilities 25,586,000 25,898,000
------------ ------------
Partners' Equity:
Limited partners' equity (109,600 units
outstanding at
December 31, 1995 and 1994) 14,295,000 13,689,000
General partner's (deficit) (409,000) (415,000)
----------- ------------
Total partners' equity 13,886,000 13,274,000
----------- ------------
Total liabilities and partners' equity $39,472,000 $ 39,172,000
=========== ============
See notes to financial statements.
F - 3
<PAGE>
NATIONAL PROPERTY INVESTORS 6
(a limited partnership)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Rental income $ 12,634,000 $ 12,158,000 $ 11,974,000
Other income 577,000 522,000 515,000
Interest income 231,000 106,000 96,000
------------ ------------ ------------
Total revenues 13,442,000 12,786,000 12,585,000
------------ ------------ ------------
Expenses (including $1,469,000, $1,387,000
and $1,338,000 paid to the general partner and
affiliates in 1995, 1994 and 1993):
Operating expenses 6,719,000 6,487,000 6,748,000
Depreciation 3,280,000 3,461,000 3,706,000
Mortgage interest 2,431,000 2,589,000 2,979,000
General and administrative 400,000 406,000 348,000
------------ ------------ ------------
Total expenses 12,830,000 12,943,000 13,781,000
------------ ------------ ------------
Income (loss) from operations before
extraordinary item 612,000 (157,000) (1,196,000)
Extraordinary Item:
Gain on extinguishment of debt -- -- 391,000
------------ ------------ ------------
Net income (loss) $ 612,000 $ (157,000) $ (805,000)
============ ============ ============
Net income (loss) per limited partnership unit:
Income (loss) before extraordinary item $ 5.53 $ (1.41) $ (10.80)
Extraordinary item - Gain on extinguishment
of debt -- -- 3.53
------------ ------------ ------------
Net income (loss) $ 5.53 $ (1.41) $ (7.27)
============ ============ ============
</TABLE>
See notes to financial statements.
F - 4
<PAGE>
NATIONAL PROPERTY INVESTORS 6
(a limited partnership)
STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
General Limited Total
partner's partners' partners'
(deficit) equity equity
------------ ------------ ------------
Balance - January 1, 1993 $ (405,000) $ 14,641,000 $ 14,236,000
Net loss (8,000) (797,000) (805,000)
------------ ------------ ------------
Balance - December 31, 1993 (413,000) 13,844,000 13,431,000
Net loss (2,000) (155,000) (157,000)
------------ ------------ ------------
Balance - December 31, 1994 (415,000) 13,689,000 13,274,000
Net income 6,000 606,000 612,000
------------ ------------ ------------
Balance - December 31, 1995 $ (409,000) $ 14,295,000 $ 13,886,000
============ ============ ============
See notes to financial statements.
F - 5
<PAGE>
NATIONAL PROPERTY INVESTORS 6
(a limited partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 612,000 $ (157,000) $ (805,000)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Extraordinary gain on extinguishment of debt -- -- (391,000)
Amortization of mortgage costs 106,000 106,000 77,000
Depreciation 3,280,000 3,461,000 3,706,000
Mortgage costs -- (4,000) (300,000)
Decrease (increase) in certain assets:
Other assets 164,000 69,000 225,000
Escrow deposits (28,000) 99,000 (129,000)
Due from affiliate -- 103,000 (103,000)
Increase (decrease) in certain liabilities:
Tenants' security deposits payable (82,000) 24,000 (21,000)
Deferred interest payable -- -- (107,000)
Accounts payable and accrued expenses 91,000 (50,000) (203,000)
----------- ----------- -----------
Net cash provided by operating activities 4,143,000 3,651,000 1,949,000
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate (808,000) (935,000) (470,000)
----------- ----------- -----------
Cash used in investing activities (808,000) (935,000) (470,000)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Mortgage principal repayments (321,000) (365,000) (516,000)
Proceeds from mortgage refinancing -- -- 8,521,000
Satisfaction of mortgages payable -- (3,231,000) (8,805,000)
----------- ----------- -----------
Net cash used in financing activities (321,000) (3,596,000) (800,000)
----------- ----------- -----------
Net Increase (Decrease) in Cash and Cash Equivalents 3,014,000 (880,000) 679,000
Cash and Cash Equivalents at Beginning of Year 2,436,000 3,316,000 2,637,000
----------- ----------- -----------
Cash and Cash Equivalents at End of Year $ 5,450,000 $ 2,436,000 $ 3,316,000
=========== =========== ===========
Supplemental Information:
Interest paid in cash $ 2,326,000 $ 2,510,000 $ 3,027,000
=========== =========== ===========
Supplemental Disclosure of Non-Cash Investing
and Financing Activities:
Repair reserve funded by holdback of
proceeds from mortgage refinancing $ -- $ -- $ 182,000
=========== =========== ===========
Fixed asset additions funded by
accounts payable $ -- $ -- $ 63,000
=========== =========== ===========
</TABLE>
See notes to financial statements.
F - 6
<PAGE>
NATIONAL PROPERTY INVESTORS 6
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION
National Property Investors 6 (the "Partnership"), a limited partnership,
was organized under the Uniform Limited Partnership Laws of California as
of October 15, 1982, for the purpose of acquiring and operating
income-producing residential real estate. The Partnership currently owns
three apartment complexes in Alabama, two apartment complexes in
Louisiana and one apartment complex in Maryland. The Partnership also
owns a 75.972 percent interest (as a tenant-in-common with an affiliate
of the general partner) in an apartment complex located in New Jersey.
The Partnership will terminate on December 31, 2006, unless previously
terminated, in accordance with the terms of the Agreement of Limited
Partnership. Limited partners' units are at a stated value of $500. A
total of 109,600 units of the limited partnership were issued, for
aggregate capital contributions of $54,800,000. In addition, the general
partners contributed a total of $1,000 to the Partnership.
2. SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
Fair Value of Financial Instruments
In 1995, the Partnership implemented Statement of Financial Accounting
Standards ("SFAS") No. 107, "Disclosures about Fair Value of Financial
Instruments," as amended by SFAS No. 119, "Disclosures about Derivative
Financial Instruments and Fair Value of Financial Instruments," which
requires disclosure of fair value information about financial
instruments, whether or not recognized in the balance sheet, for which it
is practicable to estimate fair value. Fair value is defined in the SFAS
as the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes that the carrying amount of
its financial instruments (except for long term debt) approximates fair
value due to the short term maturity of these instruments. The debt with
a carrying balance of $24,721,000 has been calculated to have a fair
value of approximately $26,867,000 after discounting the scheduled loan
payments to maturity.
F - 7
<PAGE>
NATIONAL PROPERTY INVESTORS 6
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Real Estate
Real estate is stated at cost. Acquisition fees are capitalized as a cost
of real estate. In 1995, the Partnership adopted SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of", which requires impairment losses to be
recognized for long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows are not sufficient
to recover the asset's carrying amount. The impairment loss is measured
by comparing the fair value of the asset to its carrying amount. The
adoption of the SFAS had no effect on the Partnership's financial
statements.
For real estate purchased in joint ownership with an affiliated
Partnership, the assets, liabilities, revenues, costs and expenses are
allocated on a pro-rata basis to each partnership in accordance with
their percentage of ownership.
Cash and Cash Equivalents
The Partnership considers all highly liquid investments with an original
maturity of three months or less at the time of purchase to be cash
equivalents.
Concentration of Credit Risk
The Partnership maintains cash balances at institutions insured up to
$100,000 by the Federal Deposit Insurance Corporation. Balances in excess
of $100,000 are usually invested in repurchase agreements, which are
collateralized by United States Treasury obligations. Cash balances
exceeded these insured levels during the year. At December 31, 1995, the
Partnership had approximately $4,300,000 invested in overnight repurchase
agreements, secured by United States Treasury obligations, which are
included in cash and cash equivalents.
Leases
Leases for rental units are accounted for as operating leases as tenants
are subject to leases which generally do not exceed one year. Rental
income is recorded when due under leasing arrangements and expenses are
charged to operations when incurred.
Income Taxes
Taxable income or loss of the Partnership is reported in the income tax
returns of its partners. Accordingly, no provision for income taxes is
made in the financial statements of the Partnership.
F - 8
<PAGE>
NATIONAL PROPERTY INVESTORS 6
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Depreciation
Depreciation is computed by the straight-line method over estimated
useful lives ranging from 15 to 27.5 years for buildings and improvements
and from five to seven years for furnishings.
Deferred Costs
Financing costs are deferred and amortized as interest expense over the
term of the related loan. Net deferred costs of $326,000 and $432,000 are
included in other assets at December 31, 1995 and 1994, respectively. At
December 31, 1995 and 1994, accumulated amortization of deferred
financing costs totaled $380,000 and $274,000, respectively.
Net Income (Loss) Per Limited Partnership Unit
Net income (loss) per limited partnership unit is calculated by dividing
the net income (loss) allocated to the limited partners by the number of
units outstanding.
Reclassification
Certain amounts from 1994 and 1993 have been reclassified to conform to
the 1995 presentation.
3. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
NPI Equity Investments, Inc. ("NPI Equity" or the "Managing General
Partner") is the general partner of the Partnership. NPI Equity is a
wholly owned subsidiary of National Property Investors, Inc. ("NPI,
Inc."). On January 19, 1996, the stockholders of NPI, Inc. sold all of
the issued and outstanding stock of
NPI, Inc. to an affiliate of Insignia Financial Group, Inc. ("Insignia")
(see Note 9).
In October 1994 DeForest Ventures II L.P. ("DeForest II") made a tender
offer for limited partnership interests in the partnership, as well as
six affiliated limited partnerships. DeForest Ventures I, L.P. made
tender offers for limited partnership interests in twelve affiliated
limited partnerships. The shareholders who controlled DeForest Capital II
Corporation, the sole general partner of DeForest II, also controlled
NPI, Inc. As of December 31, 1995, DeForest II had acquired approximately
43% of total limited partnership units of the Partnership. An affiliate
of Insignia acquired the limited partnership interests of the Partnership
held by DeForest II and certain of its affiliates (see Note 9).
F - 9
<PAGE>
NATIONAL PROPERTY INVESTORS 6
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
3. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (Continued)
As compensation for providing property management services, an affiliate
of NPI Equity is entitled to receive 5% of the gross annual receipts from
all Partnership properties it manages. For the years ended December 31,
1995, 1994 and 1993, an affiliate of NPI Equity received $669,000,
$637,000 and $629,000, respectively. Property management fees are
included in operating expenses.
For services relating to the administration of the Partnership and
operation of Partnership properties, NPI Equity is entitled to receive
payment for non-accountable expenses up to a maximum of $150,000 per
year, based upon the number of Partnership units sold, subject to certain
limitations. NPI Equity was not entitled to any reimbursement for the
years ended December 31, 1995, 1994 and 1993.
For managing the affairs of the Partnership, NPI Equity is entitled to
receive a partnership management fee equal to 4% of the Partnership's
adjusted cash from operations, of which 50% is subordinated to the
limited partners receipt of an 8% return on adjusted contributed capital
and 50% of which is subordinated to the limited partners receipt of a 5%
return on contributed capital. NPI Equity was not entitled to receive a
fee for the years ended December 31, 1995, 1994 and 1993.
NPI Equity is entitled to receive 1% of adjusted cash from operations and
an allocation of 1% of the net income or loss of the Partnership. NPI
Equity is also entitled to 1% of the distribution arising from sales or
refinancing of the Partnership's properties. NPI Equity was not entitled
to any cash distributions for the years ended December 31, 1995, 1994 and
1993.
NPI Equity received reimbursement of accountable administrative expenses
amounting to approximately $328,000, $348,000 and $293,000 for the years
ended December 31, 1995, 1994 and 1993, respectively. These
reimbursements are included in general and administrative expenses. NPI
Equity received reimbursement of accountable property administrative
expenses of $87,000, $80,000, and $85,000 for the years ended December
31, 1995, 1994 and 1993, respectively. These expenses are included in
operating expenses.
The Partnership owns a 75.972% undivided interest as a tenant in common
in Village Apartments, a garden apartment complex located in Voorhees
Township, New Jersey. The remaining 24.028% undivided interest is owned
by National Property Investors 5, an affiliated public limited
partnership (see Note 6).
F - 10
<PAGE>
NATIONAL PROPERTY INVESTORS 6
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
3. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (Continued)
Certain amendments to the Partnership Agreement ("Amendments"), as
described in the "Statement Furnished in Connection with the Solicitation
of Consents," provided to each limited partner on September 1, 1992, and
approved by a majority of the limited partners on October 16, 1992 (the
"Approval Date") retroactive to January 1, 1992, are summarized as
follows:
- Upon sale of the Partnership's property, NPI Equity will be entitled
to an Incentive Compensation Fee equal to a declining percentage of
the difference between the total amount distributed to limited
partners and the appraised value of their investment at February 1,
1992. The percentage amount to be realized by NPI Equity, if any,
will be dependent upon the year in which the property is sold.
Payment of the Incentive Compensation Fee is subordinated to the
receipt by the limited partners, of: (a) distributions from capital
transaction proceeds of an amount equal to their appraised investment
in the Partnership at February 1, 1992; and (b) distributions from
all sources (capital transactions as well as cash flow) of an amount
equal to six percent (6%) per annum cumulative, non-compounded, on
their appraised investment in the Partnership at February 1, 1992.
- In addition, the Amendments authorize payment of a Refinancing Fee
to NPI Equity or an affiliate, if earned; permit NPI Equity or any of
its affiliates to provide construction services or construction
supervisory services to the Partnership, and permit affiliates of NPI
Equity to be paid insurance brokerage commission in connection with
the sale of insurance to the properties under a master policy
covering numerous properties owned or managed by NPI Equity and its
affiliates. Included in operating expenses for the years ended
December 31, 1995, 1994 and 1993 is approximately $355,000, $312,000
and $316,000 respectively, of insurance premiums, which were paid to
NPI Equity under a master insurance policy arranged for by NPI
Equity. In 1993, NPI Equity was paid an $87,000 fee relating to the
refinancing of the Partnership's Voorhees Township, New Jersey
property. This fee is included in other assets and is being
amortized over the term of the loan.
NPI Equity was also paid fees of $30,000, $10,000 and $15,000
relating to successful real estate tax appeals on the Partnership's
properties for the years ended December 31, 1995, 1994 and 1993
respectively. The tax appeal fees are included in operating expenses.
NPI Equity was not paid any other fees in connection with the
disposition or provision of services to the Partnership's properties
during the years ended December 31, 1995, 1994 and 1993.
F - 11
<PAGE>
NATIONAL PROPERTY INVESTORS 6
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
3. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (Continued)
NPI Equity has established a revolving credit facility (the "Partnership
Revolver") to be used to fund deferred maintenance and working capital needs of
the National Property Investors Partnership Series (NPI Partnerships). The
maximum draw available to the Partnership under the Partnership Revolver is
$500,000. Loans under the Partnership Revolver will have a term of 365 days, be
unsecured and bear interest at the rate of 2% per annum in excess of the prime
rate announced from time to time by Chemical Bank, N.A. The maturity date of
such borrowing will be accelerated in the event of: (i) the removal of the
managing general partner (whether or not For Cause); (ii) the sale or
refinancing of the Partnership's property or (iii) the liquidation of the
Partnership. The Partnership has not borrowed under the Partnership Revolver, to
date.
4. REAL ESTATE
Real estate, at depreciated cost, is summarized as follows:
December 31,
---------------------------
1995 1994
------------ ------------
Land $ 5,367,000 $ 5,367,000
Buildings and improvements 71,568,000 70,760,000
----------- ------------
76,935,000 76,127,000
Less: Accumulated depreciation 44,208,000 40,928,000
----------- ------------
$32,727,000 $35,199,000
=========== ===========
The real estate is pledged to collateralize the non-recourse mortgages
set forth in Note 5.
F - 12
<PAGE>
NATIONAL PROPERTY INVESTORS 6
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
5. MORTGAGES PAYABLE
a. Mortgages payable, which are non-recourse to the Partnership,
are as follows:
<TABLE>
<CAPTION>
Annual
Type of Interest Monthly December 31,
Property Mortgage Rate Payments Maturity 1995 1994
-------- -------- --------- -------- -------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
Colony First 9.375% 72,000 6/97 $ 8,013,000 $ 8,123,000
(Towson,
Maryland)
Fairway View First 9.85% 23,000 9/99 2,393,000 2,435,000
(Baton Rouge,
Louisiana)
Place du First 9.85% 23,000 9/99 2,393,000 2,435,000
Plantier
(Baton Rouge,
Louisiana)
Ski Lodge First (1) - - - - -
(Montgomery, First (1) - - - - -
Alabama)
Alpine Village First 10.635% 18,000 6/99 1,909,000 1,926,000
(Birmingham,
Alabama)
Rocky Ridge First 10.635% 15,000 6/99 1,507,000 1,521,000
(Birmingham,
Alabama)
Village First (2) 8.50% 69,000 9/00 8,506,000 8,602,000
(Voorhees
Township,
New Jersey)
----------- -----------
$24,721,000 $25,042,000
=========== ===========
</TABLE>
(1) The Partnership satisfied both mortgages during May 1994.
(2) See Note 6.
F - 13
<PAGE>
NATIONAL PROPERTY INVESTORS 6
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
5. MORTGAGES PAYABLE (Continued)
b. The final payments due on the mortgages payable for mortgages which
are not self-liquidating:
Date of
Property Mortgage Final Payment Maturity
-------- -------- ------------- --------
Colony First $ 7,839,000 6/97
Fairway View First 2,192,000 9/99
Place du Plantier First 2,192,000 9/99
Alpine Village First 1,834,000 6/99
Rocky Ridge First 1,448,000 6/99
Village First 7,920,000 9/00
c. The following is a summary of the anticipated future principal
payments on the mortgages:
Year ending
December 31, Amount
------------ ----------
1996 $ 353,000
1997 8,148,000
1998 280,000
1999 7,911,000
2000 8,029,000
------------
Total $ 24,721,000
============
6. JOINT VENTURE
The Partnership currently owns the Village Apartments, as a
tenant-in-common with National Property Investors 5 ("NPI-5"), an
affiliated public limited partnership. NPI-5 acquired a 24.028 percent
undivided interest with the partnership owning the remaining 75.972
percent. The property is accounted for using the proportionate
consolidation method. The financial statements and supplementary data
reflect the Partnership's 75.972 percent proportionate share of
historical cost of this property.
The condensed, combined balance sheets of the Village Apartments and the
Partnership's proportionate share of assets, liabilities and equity at
December 31, 1995 and 1994 and the condensed, combined statements of
operations of Village Apartments and the Partnership's proportionate
share of revenues and expenses for the years ended December 31, 1995,
1994 and 1993, are summarized as follows:
F - 14
<PAGE>
NATIONAL PROPERTY INVESTORS 6
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
6. TENANT-IN-COMMON PROPERTY (Continued)
<TABLE>
<CAPTION>
COMBINED PROPORTIONATE SHARE
------------------------------- ---------------------------------
1995 1994 1995 1994
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Total assets, primarily real estate $12,895,000 $12,773,000 $ 9,856,000 $ 9,764,000
=========== =========== =========== ===========
Liabilities, primarily mortgages payable $11,561,000 $11,594,000 $ 8,782,000 $ 8,808,000
Equity 1,334,000 1,179,000 1,074,000 956,000
------------ ------------ ------------ ------------
Total liabilities and equity $12,895,000 $12,773,000 $ 9,856,000 $ 9,764,000
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
COMBINED PROPORTIONATE SHARE
---------------------------------------- --------------------------------------
1995 1994 1993 1995 1994 1993
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Total revenues $4,309,000 $4,105,000 $3,852,000 $3,274,000 $3,119,000 $2,927,000
---------- ---------- ---------- ---------- ---------- ----------
Operating and other expenses 2,409,000 2,338,000 2,268,000 1,831,000 1,776,000 1,722,000
Depreciation 733,000 746,000 747,000 557,000 567,000 568,000
Mortgage interest 1,012,000 1,019,000 799,000 768,000 774,000 607,000
----------- ---------- ----------- ----------- ----------- ----------
Total expenses 4,154,000 4,103,000 3,814,000 3,156,000 3,117,000 2,897,000
----------- ---------- ---------- ---------- ---------- ----------
Net income $ 155,000 $ 2,000 $ 38,000 $ 118,000 $ 2,000 $ 30,000
=========== ============ =========== ============ =========== ==========
7. EXTRAORDINARY GAIN ON EXTINGUISHMENT OF DEBT
The $391,000 extraordinary gain on extinguishment of debt during the year
ended December 1993 relates to the disposition of the Partnership's Tempe
Arizona property during that year.
8. RECONCILIATION OF NET INCOME (LOSS) PER FINANCIAL STATEMENTS TO TAX
REPORTING
The Partnership files its tax return on an accrual basis and has computed
depreciation for tax purposes using accelerated methods, which are not in
accordance with generally accepted accounting principles. A
reconciliation of the net loss per the financial statements to the net
taxable income (loss) to partners is as follows:
F - 15
<PAGE>
NATIONAL PROPERTY INVESTORS 6
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
8. RECONCILIATION OF NET INCOME (LOSS) PER FINANCIAL STATEMENTS TO TAX
REPORTING (Continued)
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Net income (loss) per financial statements $ 612,000 $ (157,000) $ (805,000)
Tax depreciation less than
financial statement depreciation 52,000 175,000 264,000
Interest capitalized for income
tax reporting 34,000 15,000 1,000
Difference in gain on disposition
of property between financial
statement and tax reporting - - 1,497,000
----------- ---------- -----------
Net taxable income to partners $ 698,000 $ 33,000 $ 957,000
========== ========== ===========
</TABLE>
9. SUBSEQUENT EVENT
On January 19, 1996, the stockholders of NPI, Inc. sold all of the issued
and outstanding stock of NPI, Inc. to an affiliate of Insignia. In
addition, an affiliate of Insignia acquired the limited partnership
interests of the Partnership held by DeForest II and certain of its
affiliates (see Note 3). As a result of the transaction, the Managing
General Partner of the Partnership is controlled by Insignia. Insignia
affiliates now provide property and asset management services to the
Partnership, maintain its books and records and oversee its operations.
F - 16
<PAGE>
NATIONAL PROPERTY INVESTORS 6
(a limited partnership)
December 31, 1995
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
SCHEDULE III
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- --------- -------- -------- -------- --------
Cost capitalized Gross amount
Initial cost subsequent to carried at
to company acquisition close of period
_______________________ _____________________________ __________________________________
Buildings and Carrying Building and
Description Encumbrances Land Improvements Improvements Costs Land Improvements Total
- ----------- ------------ ---- ------------ ------------ ----- ---- ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Residential
Properties
Colony
Apartments -
Towson,
Maryland 8,013,000 $1,306,000 $13,187,000 $ 4,321,000 $217,000 $1,366,000 $17,665,000 $19,031,000
Fairway View
Apartments-
Baton Rouge,
Louisiana 2,393,000 762,000 7,048,000 895,000 45,000 767,000 7,983,000 8,750,000
Place Du Plantier
Apartments-
Baton Rouge,
Louisiana 2,393,000 840,000 7,773,000 1,046,000 46,000 844,000 8,861,000 9,705,000
Ski Lodge
Apartments-
Montgomery,
Alabama - 672,000 11,587,000 2,283,000 76,000 676,000 13,942,000 14,618,000
Alpine Village
Apartments-
Birmingham,
Alabama 1,909,000 359,000 3,515,000 842,000 72,000 366,000 4,422,000 4,788,000
Rocky Ridge Manor
Apartments-
Birmingham,
Alabama 1,507,000 323,000 2,972,000 815,000 65,000 330,000 3,845,000 4,175,000
Village
Apartments -
Voorhees
Township,
New Jersey 8,506,000 1,000,000 13,103,000 1,665,000 100,000 1,018,000 14,850,000 15,868,000
----------- ---------- ----------- ----------- -------- ---------- ----------- -----------
$24,721,000 $5,262,000 $59,185,000 $11,867,000 $621,000 $5,367,000 $71,568,000 $76,935,000
=========== ========== =========== =========== ======== ========== =========== ===========
<CAPTION>
Column A Column F Column G Column H Column I
- -------- -------- -------- ------------ ------------
Life
on which
depreciation
is computed
in latest
Accumulated Date of Date income
Description Depreciation Construction Acquired statement
- ----------- ------------ ------------ --------- --------------
<S> <C> <C> <C> <C>
Residential
Properties
Colony
Apartments-
Towson,
Maryland $11,436,000 1967 3/84 5-27 yrs.
Fairway View
Apartments-
Baton Rouge,
Louisiana 5,240,000 1974 5/84 5-27 yrs.
Place Du Plantier
Apartments-
Baton Rouge,
Louisiana 5,818,000 1974 5/84 5-27 yrs.
Ski Lodge
Apartments-
Birmingham,
Alabama 8,716,000 1977 7/84 5-27 yrs.
Alpine Village
Apartments-
Birmingham,
Alabama 2,900,000 1972 10/84 5-27 yrs.
Rocky Ridge Manor
Apartments-
Birmingham,
Alabama 2,489,000 1973 10/84 5-27 yrs.
Village
Apartments-
Voorhees
Township,
New Jersey 7,609,000 1960 1/84 5-27 yrs.
-----------
$44,208,000
===========
</TABLE>
See notes on following page.
F - 17
<PAGE>
SCHEDULE III
NATIONAL PROPERTY INVESTORS 6
(a limited partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Note 1 Reconciliation of real estate
Balance at beginning of period $ 76,127,000 $ 75,192,000 $ 83,628,000
Additions during period:
Improvements 808,000 935,000 533,000
Subtractions during the period:
Disposition of Coronado -- -- (8,969,000)
------------ ------------ ------------
Balance at end of period $ 76,935,000 $ 76,127,000 $ 75,192,000
============ ============ ============
Note 2 Reconciliation of accumulated
depreciation
Balance at beginning of period $ 40,928,000 $ 37,467,000 $ 38,149,000
Additions during period:
Depreciation expense 3,280,000 3,461,000 3,706,000
Subtractions during the period:
Disposition of Coronado -- -- (4,388,000)
------------ ------------ ------------
Balance at end of period $ 44,208,000 $ 40,928,000 $ 37,467,000
============ ============ ============
</TABLE>
Note 3. The aggregate cost for federal income tax purposes at
December 31, 1995 is $74,022,000.
F - 18
<PAGE>
NATIONAL PROPERTY INVESTORS 7
(a limited partnership)
CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995
I N D E X
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION:
Independent Auditors' report............................................................................ F - 2
Consolidated financial statements - years ended December 31, 1995, 1994 and 1993:
Balance sheets........................................................................................ F - 3
Statements of operations.............................................................................. F - 4
Statements of partners' equity........................................................................ F - 5
Statements of cash flows.............................................................................. F - 6
Notes to consolidated financial statements............................................................ F - 7
Financial statement schedule :
Schedule III - Real Estate and Accumulated
Depreciation at December 31, 1995..................................................................... F - 18
</TABLE>
Financial statements and financial statement schedules not included have
been omitted because of the absence of conditions under which they are
required or because the information is included elsewhere in the
financial statements.
F - 1
<PAGE>
To the Partners
National Property Investors 7
Greenville, South Carolina
Independent Auditors' Report
We have audited the accompanying consolidated balance sheets of National
Property Investors 7 (a limited partnership) (the "Partnership") and its
subsidiaries as of December 31, 1995 and 1994, and the related consolidated
statements of operations, partners' equity and cash flows for each of the three
years in the period ended December 31, 1995. Our audits also included additional
information supplied pursuant to Item 14(a)(2). These consolidated financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of National Property
Investors 7 and its subsidiaries as of December 31, 1995 and 1994, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1995, in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.
Certified Public Accountants
New York, N.Y.
January 22, 1996
F - 2
<PAGE>
NATIONAL PROPERTY INVESTORS 7
(a limited partnership)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Real estate, net of accumulated depreciation $ 23,946,000 $ 25,534,000
Cash and cash equivalents 2,277,000 1,622,000
Other assets 616,000 440,000
Escrow deposits 591,000 424,000
Restricted cash 149,000 178,000
------------ ------------
Total assets $ 27,579,000 $ 28,198,000
============ ============
LIABILITIES AND PARTNERS' EQUITY
Mortgages payable $ 18,324,000 $ 18,636,000
Deferred interest payable -- 456,000
Accounts payable and accrued expenses 219,000 211,000
Tenants' security deposits payable 173,000 180,000
Note payable -- 50,000
------------ ------------
Total liabilities 18,716,000 19,533,000
------------ ------------
Partners' Equity:
Limited partners' equity (60,517 units outstanding at
December 31, 1995 and 1994) 9,076,000 8,880,000
General partner's (deficit) (213,000) (215,000)
------------ ------------
Total partners' equity 8,863,000 8,665,000
------------ ------------
Total liabilities and partners' equity $ 27,579,000 $ 28,198,000
============ ============
</TABLE>
See notes to consolidated financial statements.
F - 3
<PAGE>
NATIONAL PROPERTY INVESTORS 7
(a limited partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Rental income $ 6,747,000 $ 6,418,000 $ 6,609,000
Other income 193,000 172,000 173,000
Interest income 71,000 50,000 36,000
Gain on sale of property -- 105,000 --
----------- ----------- -----------
Total revenues 7,011,000 6,745,000 6,818,000
----------- ----------- -----------
Expenses (including $759,000, $738,000 and $710,000
paid to the general partner and affiliates in
1995, 1994 and 1993):
Operating expenses 3,349,000 3,310,000 3,592,000
Depreciation 1,713,000 1,773,000 1,983,000
Mortgage interest 1,503,000 1,598,000 1,943,000
General and administrative 248,000 253,000 216,000
----------- ----------- -----------
Total expenses 6,813,000 6,934,000 7,734,000
----------- ----------- -----------
Income (loss) from operations before extraordinary item 198,000 (189,000) (916,000)
Extraordinary item:
Gain on extinguishment of debt -- -- 499,000
----------- ----------- -----------
Net income (loss) $ 198,000 $ (189,000) $ (417,000)
=========== =========== ===========
Net income (loss) per limited partnership unit:
Net income (loss) before extraordinary item $ 3.24 $ (3.09) $ (14.98)
Extraordinary item -- -- 8.16
----------- ----------- -----------
Net income (loss) $ 3.24 $ (3.09) $ (6.82)
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
F - 4
<PAGE>
NATIONAL PROPERTY INVESTORS 7
(a limited partnership)
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
General Limited Total
partner's partners' partners'
(deficit) equity equity
----------- ----------- -----------
<S> <C> <C> <C>
Balance - January 1, 1993 $ (209,000) $ 9,480,000 $ 9,271,000
Net (loss) (4,000) (413,000) (417,000)
----------- ----------- -----------
Balance - December 31, 1993 (213,000) 9,067,000 8,854,000
Net (loss) (2,000) (187,000) (189,000)
----------- ----------- -----------
Balance - December 31, 1994 (215,000) 8,880,000 8,665,000
Net income 2,000 196,000 198,000
----------- ----------- -----------
Balance - December 31, 1995 $ (213,000) $ 9,076,000 $ 8,863,000
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
F - 5
<PAGE>
NATIONAL PROPERTY INVESTORS 7
(a limited partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 198,000 $ (189,000) $ (417,000)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Gain on extinguishment of debt -- -- (499,000)
Amortization of mortgage costs 49,000 16,000 --
Depreciation 1,713,000 1,773,000 1,983,000
Deferred interest expense -- 21,000 21,000
Deferred costs paid (44,000) (77,000) --
Gain on sale of property -- (105,000) --
Decrease (increase) in certain assets:
Other assets (181,000) 112,000 (61,000)
Escrow deposits (167,000) 77,000 100,000
(Decrease) increase in certain liabilities:
Accounts payable and accrued expenses 8,000 (89,000) 25,000
Tenants' security deposits payable (7,000) (37,000) (11,000)
----------- ----------- -----------
Net cash provided by operating activities 1,569,000 1,502,000 1,141,000
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net proceeds from sale of property -- 516,000 --
Additions to real estate (125,000) (229,000) (157,000)
Restricted cash decrease (increase) 29,000 (11,000) 16,000
----------- ----------- -----------
Net cash (used in) provided by investing activities (96,000) 276,000 (141,000)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of mortgage subject to compromise -- -- (239,000)
Satisfaction of notes payable (50,000) -- --
Satisfaction of mortgage payable -- (3,142,000) --
Proceeds from refinancing of mortgage -- 3,595,000 --
Mortgage principal repayments (312,000) (2,001,000) (329,000)
Payment of deferred interest payable (456,000) -- --
----------- ----------- -----------
Net cash (used in) financing activities (818,000) (1,548,000) (568,000)
----------- ----------- -----------
Net Increase in Cash and Cash Equivalents 655,000 230,000 432,000
Cash and Cash Equivalents at Beginning of Year 1,622,000 1,392,000 960,000
----------- ----------- -----------
Cash and Cash Equivalents at End of Year $ 2,277,000 $ 1,622,000 $ 1,392,000
=========== =========== ===========
Supplemental Disclosure of Cash Flow Information:
Interest paid in cash $ 1,910,000 $ 1,579,000 $ 1,885,000
=========== =========== ===========
Supplemental Disclosure of Non-Cash Investing and
Financing Activities:
Increase in mortgages payable due to debt modification $ -- $ -- $ 128,000
Sale of property in 1994 - See Note 8 =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
F - 6
<PAGE>
NATIONAL PROPERTY INVESTORS 7
(a limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION
National Property Investors 7, (the "Partnership"), a limited
partnership, was organized under the Uniform Limited Partnership Laws of
California as of October 11, 1983 for the purpose of acquiring and
operating income-producing residential real estate. The Partnership owns
garden apartments in Pensacola (Florida) and Roanoke (Virginia). The
Partnership also owns a 99.99% interest in partnerships, which own garden
apartments in Lexington (Kentucky), Baton Rouge (Louisiana) and Durham
(North Carolina). The Partnership will terminate on December 31, 2008, or
sooner, in accordance with the terms of the Agreement of Limited
Partnership. Limited partners' units are at a stated value of $500. A
total of 60,517 units of the limited partnership were issued, for
aggregate capital contributions of $30,258,500. In addition, the general
partners contributed a total of $1,000 to the Partnership.
2. SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The consolidated financial statements include the Partnership and other
partnerships in which the Partnership has controlling interests. All
significant intercompany transactions and balances have been eliminated.
For a property which was held in joint ownership with an affiliated
partnership, revenues, and expenses were allocated on a pro-rata basis to
each partnership in accordance with their percentage of ownership (see
Note 9).
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
Fair Value of Financial Instruments
In 1995, the Partnership implemented Statement of Financial Accounting
Standards ("SFAS") No. 107, "Disclosures about Fair Value of Financial
Instruments," as amended by SFAS No. 119, "Disclosures about Derivative
Financial Instruments and Fair Value of Financial Instruments," which
requires disclosure of fair value information about financial
instruments, whether or not recognized in the balance sheet, for which it
is practicable to estimate fair value. Fair value is defined in the SFAS
as the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes that the carrying amount of
its financial instruments (except for long term debt) approximates fair
value due to the short term maturity of these instruments. The fair value
of the Partnership's long term debt, after discounting the scheduled loan
payments to maturity, approximates its carrying balance.
F - 7
<PAGE>
NATIONAL PROPERTY INVESTORS 7
(a limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Real Estate
Real estate is stated at cost. Acquisition fees are capitalized as a cost
of real estate. In 1995, the Partnership adopted SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of", which requires impairment losses to be
recognized for long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows are not sufficient
to recover the asset's carrying amount. The impairment loss is measured
by comparing the fair value of the asset to its carrying amount. The
adoption of the SFAS had no effect on the Partnership's financial
statements.
Cash and Cash Equivalents
The Partnership considers all highly liquid investments with an original
maturity of three months or less at the time of purchase to be cash
equivalents.
Concentration of Credit Risk
The Partnership maintains cash balances at institutions insured up to
$100,000 by the Federal Deposit Insurance Corporation ("FDIC"). Balances
in excess of $100,000 are usually invested in money market accounts and
repurchase agreements, which are collateralized by United States Treasury
obligations. Cash balances exceeded these insured levels during the year.
At December 31, 1995, the Partnership had approximately $700,000,
invested in overnight repurchase agreements, secured by United States
Treasury obligations, which are included in cash and cash equivalents.
Depreciation
Depreciation is computed by the straight-line method over estimated
useful lives ranging from 10 to 27.50 years for buildings and
improvements and seven years for furnishings.
Leases
Leases for rental units are accounted for as operating leases as tenants
are subject to leases which generally do not exceed one year. Rental
income is recorded when due under leasing arrangements and expenses are
charged to operations when incurred.
F - 8
<PAGE>
NATIONAL PROPERTY INVESTORS 7
(a limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Deferred Financing Costs
Financing costs are deferred and amortized as interest expense over the
term of the related loan. As of December 31, 1995 and 1994, net deferred
financing costs of $112,000 and $117,000, respectively, are included in
other assets. The accumulated amortization at December 31, 1995 and 1994
was $65,000 and $16,000, respectively.
Net income (Loss) Per Limited Partnership Unit
Net income (loss) per limited partnership unit is calculated by dividing
the net income (loss) allocated to the limited partners by the number of
units outstanding.
Income Taxes
Taxable income or loss of the Partnership is reported in the income tax
returns of its partners. Accordingly, no provision for income taxes is
made in the financial statements of the Partnership.
Reclassification
Certain amounts from 1994 and 1993 have been reclassified to conform to
the 1995 presentation.
3. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
NPI Equity Investments, Inc. ("NPI Equity" or the "Managing General
Partner"), is the general partner of the Partnership. NPI Equity is a
wholly-owned subsidiary of National Property Investors, Inc. ("NPI,
Inc."). On January 19, 1996, the stockholders of NPI, Inc. sold all of
the issued and outstanding stock of NPI, Inc. to an affiliate of Insignia
Financial Group, Inc. ("Insignia").
In October 1994 DeForest Ventures II L.P. ("DeForest II") made a tender
offer for limited partnership interests in the partnership, as well as
six affiliated limited partnerships. DeForest Ventures I, L.P. ("DeForest
I") made tender offers for limited partnership interests in twelve
affiliated limited partnerships. Shareholders who controlled DeForest
Capital II Corporation, the sole general partner of DeForest II, also
controlled NPI, Inc. As of December 31, 1995 DeForest II had acquired
approximately 41% of the total limited partnership units of the
Partnership. An affiliate of Insignia acquired the limited partnership
interests of the Partnership held by DeForest II and certain of its
affiliates (see Note 11).
F - 9
<PAGE>
NATIONAL PROPERTY INVESTORS 7
(a limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
3. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (Continued)
As compensation for providing property management, an affiliate of NPI
Equity is entitled to receive 5% of the gross annual receipts from all
Partnership properties it manages. For the years ended December 31, 1995,
1994 and 1993, an affiliate of NPI Equity earned $345,000, $330,000 and
$342,000, respectively. Property management fees are included in
operating expenses.
For services relating to the administration of the Partnership and
operation of Partnership properties, NPI Equity is entitled to receive
payment for non-accountable expenses up to a maximum of $150,000 per
year, based upon the number of Partnership units sold, subject to certain
limitations. NPI Equity was not entitled to any reimbursement for the
years ended December 31, 1995, 1994 and 1993.
For managing the affairs of the Partnership, NPI Equity is entitled to
receive a partnership management fee. The fee is to be equal to 4% of the
Partnership's adjusted cash from operations, 50% of which is subordinated
to the limited partners receipt of an 8% return on contributed capital
and 50% of which is subordinated to the limited partners receipt of a 5%
return on contributed capital. NPI Equity was not entitled to receive a
fee for the years ended December 31, 1995, 1994 and 1993.
NPI Equity received reimbursement of accountable administrative expenses
of $179,000, $190,000, and $150,000 for the years ended December 31,
1995, 1994 and 1993, respectively. These reimbursements are included in
general and administrative expenses. NPI Equity received reimbursement of
accountable property administrative expenses of $48,000, $40,000 and
$45,000 for the years ended December 31, 1995, 1994 and 1993,
respectively. These reimbursements are included in operating expenses.
NPI Equity is entitled to receive 1% of adjusted cash from operations and
an allocation of 1% of the net income or loss of the Partnership. There
were no distributions for the years ended December 31, 1995, 1994 and
1993.
Certain amendments to the Partnership Agreement ("Amendments"), as
described in the "Statement Furnished in Connection with the Solicitation
of Consents," provided to each limited partner on September 1, 1992, and
approved by a majority of the limited partners on October 16, 1992 (the
"Approval Date") retroactive to January 1, 1992, are summarized as
follows:
- Upon sale of the Partnership's properties, NPI Equity will be entitled
to an Incentive Compensation Fee equal to a declining percentage of
the difference between the total amount distributed to limited
partners and the appraised value of their investment at February 1,
1992. The percentage amount to be realized by NPI Equity, if any,
will be dependent upon the year in which the property is sold.
Payment of the Incentive Compensation Fee is subordinated to the
receipt by the limited partners, of: (a) distributions from capital
transaction proceeds of an amount equal to their appraised investment
in the Partnership at February 1, 1992; and (b) distributions from all
sources (capital transactions as well as cash flow) of an amount equal
to six percent (6%) per annum cumulative, non-compounded, on their
present appraised investment in the Partnership at February 1, 1992.
F - 10
<PAGE>
NATIONAL PROPERTY INVESTORS 7
(a limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
3. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (Continued)
- In addition, the Amendments authorize payment of a Refinancing Fee to
NPI Equity or an affiliate, if earned; permit NPI Equity or any of its
affiliates to provide construction services or construction
supervisory services to the Partnership, and permit affiliates of NPI
Equity to be paid an insurance brokerage commission in connection with
the sale of insurance to the properties under a master policy covering
numerous properties owned or managed by NPI Equity and its affiliates.
Included in operating expenses for the period ended December 31, 1995,
1994 and 1993 is approximately $187,000, $178,000 and $167,000
respectively, of insurance premiums, which were paid to NPI Equity
under a master insurance policy arranged for by NPI Equity.
- NPI Equity was paid a fee of $6,000 relating to a successful real
estate tax appeal on the Partnership's Lexington, Kentucky property
during the year ended December 31, 1993. The tax appeal fee is
included in operating expenses. NPI Equity was not paid any other fees
in connection with the disposition or provision of services to the
Partnership's properties during the years ended December 31, 1995,
1994 and 1993.
NPI Equity has established a revolving credit facility (the "Partnership
Revolver") to be used to fund deferred maintenance and working capital
needs of the National Property Investors Partnership Series (NPI
Partnerships). The maximum draw available to the Partnership under the
Partnership Revolver is $500,000. Loans under the Partnership Revolver
will have a term of 365 days, be unsecured and bear interest at the rate
of 2% per annum in excess of the prime rate announced from time to time
by Chemical Bank, N.A. The maturity date of such borrowing will be
accelerated in the event of: (i) the removal of the managing general
partner (whether or not For Cause); (ii) the sale or refinancing of a
property by the Partnership; or (iii) the liquidation of the Partnership.
The Partnership has not borrowed under the Partnership Revolver, to date.
4. RESTRICTED CASH
Restricted cash at December 31, 1995 and 1994,is to be retained by the
individual HUD mortgaged properties to meet their operating requirements
pursuant to a calculation required by the U.S. Department of Housing and
Urban Development ("HUD") Regulatory Agreement. These funds are not
available to pay expenses of the Partnership or expenses applicable to
other properties.
F - 11
<PAGE>
NATIONAL PROPERTY INVESTORS 7
(a limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
5. REAL ESTATE
Real estate is summarized as follows:
<TABLE>
<CAPTION>
December 31,
-----------------------------------
1995 1994
------------ ------------
<S> <C> <C>
Land $ 3,738,000 $ 3,738,000
Buildings and improvements 40,909,000 40,784,000
------------ ------------
44,647,000 44,522,000
Less: Accumulated depreciation 20,701,000 18,988,000
------------ ------------
$23,946,000 $ 25,534,000
=========== ============
</TABLE>
The real estate is pledged to collateralize the non-recourse mortgages
set forth in Note 6.
6. MORTGAGES PAYABLE
a. Mortgages payable, which are non-recourse to the Partnership,
are as follows:
<TABLE>
<CAPTION>
Annual
Type of Interest Monthly
Property Mortgage Rate Payments Maturity 1995 1994
------------------ -------- -------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Fairway View II First (1) 7.5% $ 43,000 7/20 $5,731,000 $5,810,000
(Baton Rouge,
Louisiana)
The Pines First 8.56% 28,000 2/01 3,549,000 3,578,000
(Roanoke,
Virginia)
Northwoods First (2) 9.4% 21,000 5/96 1,961,000 2,036,000
(Pensacola,
Florida)
Patchen Place First (1) 7% 23,000 11/13 2,871,000 2,949,000
(Lexington,
Kentucky)
</TABLE>
F - 12
<PAGE>
NATIONAL PROPERTY INVESTORS 7
(a limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
6. MORTGAGES PAYABLE (Continued)
<TABLE>
<CAPTION>
Annual
Type of Interest Monthly
Property Mortgage Rate Payments Maturity 1995 1994
------------------ -------- -------- -------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
South Point First (1) 7.5% 31,000 9/21 $ 4,212,000 $ 4,263,000
(Durham,
North Carolina) ----------- -----------
$18,324,000 $18,636,000
=========== ===========
</TABLE>
(1) The mortgage is insured under Section 221(d)(4) of the
National Housing Act, which requires payments of mortgage
insurance premiums in an annualized amount equal to 1/2% of
the average outstanding principal balance.
(2) The first mortgage encumbering the Partnership's Pensacola,
Florida property matured in February 1995. On April 28,
1995, the lender approved an extension of this obligation
until May 1, 1996, at which time a balloon payment of
approximately $1,936,000 will be due. The extension
required a principal payment of approximately $9,000 to
reduce the outstanding principal balance to $2,000,000. The
extension requires monthly payments of approximately $21,000
at 9.4% interest and is being amortized over a fifteen year
period. The Partnership incurred closing costs and fees of
approximately $44,000. The general partner anticipates
refinancing the mortgage prior to its maturity date.
On April 29, 1994, the Partnership prepaid the entire
principal amount of $1,710,000 on the second mortgage
encumbering the Partnership's Pensacola, Florida property.
The loan had been accruing interest at 11% per annum.
Deferred interest of approximately $456,000 was paid on
January 30, 1995.
b. The final payments due on mortgage payable for mortgages
which are not self-liquidating:
<TABLE>
<CAPTION>
Final Date of
Property Mortgage Payment Maturity
--------------- ---------- ------------ ----------
<S> <C> <C> <C>
The Pines First $ 3,357,000 2/01
Northwoods First 1,936,000 5/96
</TABLE>
F - 13
<PAGE>
NATIONAL PROPERTY INVESTORS 7
(a limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
6. MORTGAGES PAYABLE (Continued)
c. The following is a summary of the anticipated future principal
payments:
Year ending
December 31, Amount
------------ ----------
1996 $2,216,000
1997 275,000
1998 296,000
1999 319,000
2000 344,000
Thereafter 14,874,000
-----------
Total $18,324,000
===========
7. NOTE PAYABLE
The unsecured note payable of $50,000 on the Partnership's Lexington
Kentucky property matured in July 1995 and was satisfied in full.
8. GAIN ON SALE OF PROPERTY, EXTRAORDINARY GAIN AND PROVISION FOR LOSS
On August 6, 1992, the Partnership, in an effort to avoid a foreclosure
on its Antioch, California property ("Oakwood"), transferred its interest
in this property, along with all related assets and liabilities, to
Oaklift, L.P. which subsequently filed a voluntary petition (the
"Petition") for reorganization under Chapter 11 of the United States
Bankruptcy Code in the United States Bankruptcy Court (the "Court") for
the Eastern District of New York.
Oaklift L.P., a New York Limited Partnership, is owned 32.67% by the
Partnership and 66.33% by National Property Investors 8 ("NPI 8"), as
limited partners. The general partner, owning 1% is Oakny, Inc., a New
York corporation. Oakny, Inc. is owned 33% by the Partnership and 67% by
NPI 8. Both before and after the transaction, the Partnership and NPI 8,
combined, owned 100% of the Oakwood property. The Partnership continued
to consolidate its 33% share of the operations of the Oakwood property
until its sale in January 1994. All intercompany balances have been
eliminated in consolidation.
F - 14
<PAGE>
NATIONAL PROPERTY INVESTORS 7
(a limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
8. GAIN ON SALE OF PROPERTY, EXTRAORDINARY GAIN AND PROVISION FOR LOSS
(Continued)
Under Chapter 11, certain claims against Oaklift L.P. in existence prior
to the filing of the Petition are stayed while Oaklift L.P. continues
operations as a debtor-in-possession. On February 17, 1993, Oaklift L.P.
filed a Plan of Reorganization. On September 7, 1993, the Partnership
together with National Property Investors 8, purchased the secured and
unsecured claims (approximately $3,900,000 and $8,600, respectively) of
SB Partners, the third mortgage holder, against the debtor, Oaklift L.P.,
for an aggregate $725,000 (Registrant's share was 33% or $239,000). The
net carrying amount of the secured claim on Oaklift L.P.'s books was
$2,228,000. As a result, the Partnership realized a $499,000
extraordinary gain on the extinguishment of debt in 1993. In connection
with the assignment, SB Partners withdrew its motion to dismiss the
bankruptcy proceeding. Registrant was then entitled to vote in favor of
the debtor's plan of reorganization at the confirmation hearing. As a
result of the foregoing, a Second Amended Disclosure Statement and Plan
of Reorganization was filed by the debtor on September 23, 1993. The
Disclosure Statement was approved by the Court on October 27, 1993. On
December 7, 1993 the Court approved a Third Amended and Restated Plan of
Reorganization. The approved plan: (a) allowed in full the claims of the
first and second mortgagees (including recasting the principal balances
of the notes to include accrued interest); (b) modified the terms of both
mortgages; and (c) provided for payment in full of the debtor's other
creditors, including unpaid real estate taxes.
On January 28, 1994, the Partnership's California property, which had
been previously transferred to Oaklift, L.P., was sold to an unaffiliated
third party, subject to the first and second mortgages. The Partnership's
share of the sales proceeds, after closing expenses was $2,866,000. The
sale resulted in a gain of approximately $105,000. The Partnership had
recorded a $525,000 provision for loss on disposition of this property
during 1992. Net cash proceeds to the Partnership, after closing expenses
and the $239,000 to purchase the third mortgage, at a discount during
1993, were approximately $277,000.
9. JOINT VENTURE
The Partnership had a joint venture interest in an operating property
which was accounted for using the proportionate consolidation method. The
consolidated financial statements reflect the Partnership's proportionate
share of historical cost in this project. The property was sold in
January 1994 (see Note 8).
F - 15
<PAGE>
NATIONAL PROPERTY INVESTORS 7
(a limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
9. JOINT VENTURE (Continued)
The condensed combined statements of operations of the joint venture and
the Partnership's proportionate share of revenues and expenses for 1994
and 1993 are summarized as follows:
<TABLE>
<CAPTION>
COMBINED PROPORTIONATE SHARE
----------------------------- -------------------------
1994 1993 1994 1993
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Operating revenues $153,000 $1,798,000 $ 51,000 $593,000
Gain on sale of property 334,000 - 105,000 -
-------- ---------- -------- --------
Total revenues 487,000 1,798,000 156,000 593,000
-------- ---------- ------- --------
Operating and other expenses 171,000 1,095,000 56,000 361,000
Depreciation - 568,000 - 187,000
Mortgage interest 45,000 741,000 15,000 244,000
-------- ---------- -------- --------
Total Expenses 216,000 2,404,000 71,000 792,000
-------- ---------- -------- --------
Net income (loss) before
extraordinary item 271,000 (606,000) 85,000 (199,000)
Extraordinary item:
Gain on extinguishment of
debt - 1,512,000 - 499,000
-------- ---------- -------- --------
Net income $271,000 $ 906,000 $85,000 $300,000
======== ========== ======== ========
</TABLE>
F - 16
<PAGE>
NATIONAL PROPERTY INVESTORS 7
(a limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
10. RECONCILIATION OF NET LOSS PER FINANCIAL STATEMENTS TO TAX REPORTING
The Partnership files its tax return on an accrual basis and has computed
depreciation for tax purposes using accelerated methods, which are not in
accordance with generally accepted accounting principles. In addition,
the Partnership has elected to amortize for tax purposes a portion of
certain acquisition fees paid during 1984, 1985 and 1986. A
reconciliation of the net income (loss) per the financial statements to
the net taxable income (loss) to partners is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Net income (loss) per financial statements $ 198,000 $ (189,000) $ (417,000)
Difference in gain on disposition of
investment in a partnership
between financial statement and
tax reporting - 438,000 -
Tax depreciation in excess of
financial statement depreciation (26,000) (26,000) (57,000)
Other differences in income and
expenses between financial
statement and tax reporting (19,000) 15,000 (132,000)
Difference in gain on extinguishment
of debt between financial statement
and tax reporting - - (137,000)
---------- ---------- ----------
Net taxable income (loss) to partners $ 153,000 $ 238,000 $ (743,000)
========== ========== ==========
</TABLE>
11. SUBSEQUENT EVENT
On January 19, 1996, the stockholders of NPI, Inc. sold all of the issued
and outstanding stock of NPI, Inc. to an affiliate of Insignia. In
addition, an affiliate of Insignia acquired the limited partnership
interests of the Partnership held by DeForest II and certain of its
affiliates (see Note 3). As a result of the transaction, the Managing
General Partner of the Partnership is controlled by Insignia. Insignia
affiliates now provide property and asset management services to the
Partnership, maintain its books and records and oversee its operations.
F - 17
<PAGE>
NATIONAL PROPERTY INVESTORS 7
(a limited partnership)
December 31, 1995
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
-------------------------------------------------------
<TABLE>
<Capion>
Column A Column B Column C Column D
- -------- -------- -------- --------
Cost capitalized
Initial cost subsequent to
to company acquisition
----------------------- -------------------------
Buildings and Carrying
Description Encumbrances Land Improvements Improvements Costs
- ----------- ------------ ---- ------------ ------------ -----
<S> <C> <C> <C> <C> <C>
Residential
Properties
- ----------
Fairway View II Apartments
Baton Rouge, Louisiana $5,731,000 $1,086,000 $ 8,788,000 $ 340,000 $ 79,000
The Pines Apartments
Roanoke, Virginia 3,549,000 579,000 6,521,000 518,000 58,000
Northwoods Apartments
Pensacola, Florida 1,961,000 478,000 7,919,000 856,000 81,000
Patchen Place Apartments
Lexington, Kentucky 2,871,000 706,000 6,409,000 1,103,000 77,000
Southpoint Apartments
Durham, NC 4,212,000 859,000 7,686,000 449,000 55,000
------------ ----------- ------------- ----------- ----------
Totals $ 18,324,000 $ 3,708,000 $ 37,323,000 $3,266,000 $ 350,000
============ =========== ============ ========== =========
<CAPTION>
SCHEDULE III
Column A Column E Column F Column G Column H Column I
- -------- -------- -------- -------- -------- --------
Life
Gross amount on which
carried at depreciation
close of period is computed
------------------------------- in latest
Buildings and Accumulated Date of Date income
Description Land Improvements Total Depreciation Construction Acquired statement
- ----------- ---- ------------ ----- ------------ ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Residential
Properties
- ----------
Fairway View II Apartments
Baton Rouge, Louisiana $ 1,094,000 $ 9,199,000 $10,293,000 $ 4,297,000 1981 11/84 7-27 yrs.
The Pines Apartments
Roanoke, Virginia 584,000 7,092,000 7,676,000 3,843,000 1978 4/85 7-27 yrs.
Northwoods Apartments
Pensacola, Florida 483,000 8,851,000 9,334,000 4,274,000 1981 7/85 7-27 yrs.
Patchen Place Apartments
Lexington, Kentucky 714,000 7,581,000 8,295,000 4,416,000 1971 7/85 7-27 yrs.
Southpoint Apartments
Durham, NC 863,000 8,186,000 9,049,000 3,871,000 1980 3/86 7-27 yrs.
----------- ----------- ----------- -----------
Totals $ 3,738,000 $40,909,000 $44,647,000 $20,701,000
=========== =========== =========== ===========
</TABLE>
See notes on following page.
F - 18
<PAGE>
SCHEDULE III
NATIONAL PROPERTY INVESTORS 7
(a limited partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------
1995 1994 1993
------------------ ------------------- --------------------
<S> <C> <C> <C>
Reconciliation of real estate
Note 1. Balance at beginning of period $ 44,522,000 $ 48,834,000 $ 48,677,000
Additions during period:
Improvements 125,000 229,000 157,000
Revaluation allowance of rental property sold - 330,000 -
Subtractions during period:
Cost of rental property sold - (4,871,000) -
------------------ ------------------- --------------------
Balance at end of period $ 44,647,000 $ 44,522,000 $ 48,834,000
================== =================== ====================
Reconciliation of accumulated depreciation
Note 2. Balance at beginning of period $ 18,988,000 $ 18,962,000 $ 16,979,000
Additions during period:
Depreciation expense 1,713,000 1,773,000 1,983,000
Subtractions during period:
Accumulated depreciation
of rental property sold - (1,747,000) -
------------------ ------------------- --------------------
Balance at end of period $ 20,701,000 $ 18,988,000 $ 18,962,000
================== =================== ====================
</TABLE>
Note 3. The aggregate cost for federal income tax purposes at December
31, 1995 is $43,111,000.
F - 19
<PAGE>
NATIONAL PROPERTY INVESTORS 8
(A California Limited Partnership)
CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995
I N D E X
Page
----
PART I. FINANCIAL INFORMATION:
Independent Auditors' report........................... F - 2
Consolidated financial statements - years ended
December 31, 1995, 1994 and 1993:
Balance sheets....................................... F - 3
Statements of operations............................. F - 4
Statements of partners' equity....................... F - 5
Statements of cash flows............................. F - 6
Notes to consolidated financial statements............ F - 7
Financial Statement Schedule:
Schedule III - Real Estate and Accumulated
Depreciation at December 31, 1995................. F - 17
Financial statements and financial statement schedules not included have been
omitted because of the absence of conditions under which they are required or
because the information is included elsewhere in the financial statements.
F - 1
<PAGE>
To the Partners
National Property Investors 8
Greenville, South Carolina
Independent Auditors' Report
We have audited the accompanying consolidated balance sheets of National
Property Investors 8, (a California Limited Partnership) (the "Partnership") and
its subsidiaries, as of December 31, 1995 and 1994, and the related consolidated
statements of operations, partners' equity and cash flows for each of the three
years in the period ended December 31, 1995. Our audits also included additional
information supplied pursuant to Item 14(a)(2). These consolidated financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
National Property Investors 8, a California Limited Partnership and its
subsidiaries as of December 31, 1995 and 1994, and the results of its operations
and its cash flows for the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles. Also in our opinion,
the related financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly, in
all material respects, the information set forth therein.
Certified Public Accountants
New York, N.Y.
January 22, 1996
F - 2
<PAGE>
NATIONAL PROPERTY INVESTORS 8
(A California Limited Partnership)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
-------------------
1995 1994
---- ----
ASSETS
Real estate, net of accumulated depreciation $ 15,713,000 $ 16,808,000
Cash and cash equivalents 2,383,000 1,631,000
Restricted cash 57,000 90,000
Other assets 549,000 478,000
------------ ------------
Total assets $ 18,702,000 $ 19,007,000
============ ============
LIABILITIES AND PARTNERS' EQUITY
Mortgages payable $ 10,371,000 $ 10,545,000
Accounts payable and accrued expenses 479,000 462,000
Tenants' security deposits payable 96,000 101,000
------------ ------------
Total liabilities 10,946,000 11,108,000
------------ ------------
Partners' Equity:
Limited partners' equity (44,882 units
outstanding at December 31, 1995 and 1994) 7,902,000 8,044,000
General partner's deficit (146,000) (145,000)
------------ ------------
Total partners' equity 7,756,000 7,899,000
------------ ------------
Total liabilities and partners' equity $ 18,702,000 $ 19,007,000
============ ============
See notes to consolidated financial statements.
F - 3
<PAGE>
NATIONAL PROPERTY INVESTORS 8
(A California Limited Partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31,
-----------------------------
1995 1994 1993
---- ---- ----
Revenues:
Rental income $ 4,140,000 $ 4,095,000 $ 4,948,000
Other income 207,000 191,000 217,000
Interest income 98,000 49,000 36,000
Gain on sale of property -- 229,000 --
----------- ----------- -----------
Total revenues 4,445,000 4,564,000 5,201,000
----------- ----------- -----------
Expenses (including $564,000, $550,000
and $569,000 paid to the general partner
and affiliates in 1995, 1994, and 1993)
Operating expenses 2,216,000 2,475,000 3,044,000
Depreciation 1,248,000 1,361,000 1,752,000
Interest expense 866,000 915,000 1,474,000
General and administrative 258,000 268,000 215,000
----------- ----------- -----------
Total expenses 4,588,000 5,019,000 6,485,000
----------- ----------- -----------
Net loss from operations before
extraordinary item (143,000) (455,000) (1,284,000)
Extraordinary Item:
Gain on extinguishment of debt -- 169,000 1,013,000
----------- ---------- -----------
Net loss $ (143,000) $ (286,000) $ (271,000)
=========== ========== ===========
Net loss per limited partnership unit:
Net loss before extraordinary item $ (3.15) $ (10.03) $ (28.31)
Extraordinary gain -- 3.72 22.34
----------- ---------- -----------
Net loss $ (3.15) $ (6.31) $ (5.97)
=========== =========== ===========
See notes to consolidated financial statements.
F - 4
<PAGE>
NATIONAL PROPERTY INVESTORS 8
(A California Limited Partnership)
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
General Limited Total
partner's partners' partners'
(deficit) equity equity
--------- --------- ---------
Balance - January 1, 1993 $ (139,000) $ 8,595,000 $ 8,456,000
Net loss (3,000) (268,000) (271,000)
---------- ----------- -----------
Balance - December 31, 1993 (142,000) 8,327,000 8,185,000
Net loss (3,000) (283,000) (286,000)
---------- ----------- -----------
Balance - December 31, 1994 (145,000) 8,044,000 7,899,000
Net loss (1,000) (142,000) (143,000)
----------- ----------- -----------
Balance - December 31, 1995 $ (146,000) $ 7,902,000 $ 7,756,000
========== =========== ===========
See notes to consolidated financial statements.
F - 5
<PAGE>
NATIONAL PROPERTY INVESTORS 8
(A California Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (143,000) $ (286,000) $ (271,000)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Amortization of mortgage costs 7,000 7,000 7,000
Gain on sale of property -- (229,000) --
Gain on extinguishment of debt -- (169,000) (1,013,000)
Depreciation 1,248,000 1,361,000 1,752,000
Deferred interest income -- (1,000) (17,000)
Deferred interest expense -- 1,000 14,000
Decrease (increase) in certain assets: --
Other assets (78,000) 145,000 (29,000)
(Decrease) increase in certain liabilities:
Accounts payable and accrued expenses 17,000 (190,000) 70,000
Tenants' security deposits payable (5,000) (55,000) (3,000)
----------- ---------- -----------
Net cash provided by operating activities 1,046,000 584,000 510,000
----------- ----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property -- 1,049,000 --
Restricted cash decrease 33,000 4,000 7,000
Additions to real estate (153,000) (78,000) (97,000)
----------- ----------- ----------
Net cash (used in) provided by investing activities (120,000) 975,000 (90,000)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of mortgage subject to compromise -- -- (486,000)
Mortgage principal repayments (174,000) (183,000) (159,000)
Repayment of notes payable -- (815,000) --
----------- ----------- -----------
Cash (used in) financing activities (174,000) (998,000) (645,000)
----------- ----------- -----------
Net Increase (Decrease) in Cash and Cash Equivalents 752,000 561,000 (225,000)
Cash and Cash Equivalents at Beginning of Year 1,631,000 1,070,000 1,295,000
----------- ----------- -----------
Cash and Cash Equivalents at End of Year $ 2,383,000 $ 1,631,000 $ 1,070,000
=========== =========== ===========
Supplemental Disclosure of Cash Flow Information:
Interest paid in cash $ 817,000 $ 1,147,000 $ 1,390,000
=========== =========== ===========
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Increase in mortgages payable due to debt modification $ -- $ -- $ 260,000
=========== =========== ===========
Mortgage assumed on sale of property in 1994
See Note 9
</TABLE>
See notes to consolidated financial statements.
F - 6
<PAGE>
NATIONAL PROPERTY INVESTORS 8
(A California Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION
National Property Investors 8, a California Limited Partnership (the
"Partnership"), a limited partnership, was organized under the Uniform
Limited Partnership Laws of California as of June 26, 1984, for the
purpose of acquiring and operating income-producing residential real
estate. Registrant currently owns two properties located in Indianapolis
(Indiana) and one located in Morrisville (North Carolina). The
Partnership will terminate on December 31, 2008, in accordance with the
terms of the Agreement of Limited Partnership. Limited partners' units
are at a stated value of $500. A total of 44,882 units of the limited
partnership were issued, for aggregate capital contributions of
$22,441,000. In addition, the general partners contributed a total of
$1,000 to the Partnership.
2. SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The consolidated financial statements include the statements of the
Partnership, and other partnerships in which the Partnership has
controlling interest. All significant intercompany transactions and
balances have been eliminated.
For a property which was held in joint ownership with an affiliated
partnership, the revenues, costs and expenses are allocated on a pro-rata
basis to each partnership in accordance with their percentage of
ownership (see Note 10).
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
Fair Value of Financial Instruments
In 1995, the Partnership implemented Statement of Financial Accounting
Standards ("SFAS") No. 107, "Disclosures about Fair Value of Financial
Instruments," as amended by SFAS No. 119, "Disclosures about Derivative
Financial Instruments and Fair Value of Financial Instruments," which
requires disclosure of fair value information about financial
instruments, whether or not recognized in the balance sheet, for which it
is practicable to estimate fair value. Fair value is defined in the SFAS
as the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes the carrying amount of its
financial instruments (except for long-term debt) approximates fair value
due to the short term maturity of these instruments. The fair value of
the Partnership's long-term debt, after discounting the scheduled loan
payments to maturity, approximates its carrying balance.
F - 7
<PAGE>
NATIONAL PROPERTY INVESTORS 8
(A California Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Real Estate
Real estate is stated at cost. Acquisition fees are capitalized as a cost
of real estate. In 1995, the Partnership adopted SFAS No. 121,
"Accounting For the Impairment of Long-Lived Assets and For Long-Lived
Assets to be Disposed Of ", which requires impairment losses to be
recognized for long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows are not sufficient
to recover the assets' carrying amount. The impairment loss is measured
by comparing the fair value of the asset to its carrying amount. The
adoption of the SFAS had no effect on the Partnership's financial
statements.
Cash Equivalents
The Partnership considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
Concentration of Credit Risk
The Partnership maintains cash balances at institutions insured up to
$100,000 by the Federal Deposit Insurance Corporation. Balances in excess
of $100,000 are usually invested in money market accounts and repurchase
agreements which are collateralized by United States Treasury
obligations. Cash balances exceeded these insured levels during the year.
At December 31, 1995, the Partnership had approximately $1,640,000
invested in overnight repurchase agreements, secured by United States
Treasury obligations, which are included in cash and cash equivalents.
Depreciation
Depreciation is computed by the straight-line method over estimated
useful lives ranging from 10 to 29 years for buildings and improvements
and five to seven years for furnishings.
Leases
Leases for rental units are accounted for as operating leases as tenants
are subject to leases which generally do not exceed one year. Rental
income is recorded when due under leasing arrangements and expenses are
charged to operations when incurred.
F - 8
<PAGE>
NATIONAL PROPERTY INVESTORS 8
(A California Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Deferred Financing Costs
Financing costs are deferred and amortized as interest expense over the
term of the related loan or expensed if financing is not obtained. As of
December 31, 1995 and December 31, 1994, the net deferred financing costs
of $45,000 and $52,000, respectively are included in other assets. The
accumulated amortization as of December 31, 1995 and 1994, was $30,000
and $23,000, respectively.
Net Loss Per Limited Partnership Unit
Net loss per limited partnership unit is calculated by dividing the net
loss allocated to the limited partners by the number of its units
outstanding.
Income Taxes
Taxable income or loss of the Partnership is reported in the income tax
returns of its partners. Accordingly, no provision for income taxes is
made in the financial statements of the Partnership.
Reclassification
Certain amounts from 1994 and 1993, have been reclassified to conform to
the 1995 presentation.
3. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
NPI Equity Investments, Inc. ("NPI Equity" or the "Managing General
Partner"), is the general partner of the Partnership. NPI Equity is a
wholly-owned subsidiary of National Property Investors, Inc. ("NPI,
Inc."). On January 19, 1996, the stockholders of NPI, Inc. sold all of
the issued and outstanding stock of NPI, Inc. to an affiliate of
Insignia Financial Group, Inc. ("Insignia").
In October 1994 DeForest Ventures II L.P. ("DeForest II") made a tender
offer for limited partnership interests in the Partnership, as well as
six affiliated limited partnerships. DeForest Ventures I, L.P. made
tender offers for limited partnership interests in twelve affiliated
limited partnerships. Shareholders who controlled DeForest Capital II
Corporation, the sole general partner of DeForest II, also controlled
NPI, Inc. As of December 31, 1995 DeForest II and affiliates of DeForest
II owned approximately 37% of the total limited partnership units of the
Partnership. An affiliate of Insignia also acquired the limited
partnership interests of the Partnership held by DeForest II and certain
of its affiliates (see Note 11).
F - 9
<PAGE>
NATIONAL PROPERTY INVESTORS 8
(A California Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
3. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (Continued)
As compensation for providing property management services, an affiliate
of NPI Equity is entitled to receive 5% of the annual gross receipts from
all Partnership properties it manages. For the years ended December 31,
1995, 1994 and 1993, received $222,000, $213,000 and $262,000,
respectively. Property management fees are included in operating
expenses.
For services relating to the administration of the Partnership and
operation of its properties, NPI Equity is entitled to receive payment
for non-accountable expenses up to a maximum of $150,000 per year, based
upon the number of Partnership units sold, subject to certain
limitations. NPI Equity was not entitled to receive any non-accountable
expense reimbursements for the years ended December 31, 1995, 1994 and
1993.
For managing the affairs of the Partnership,NPI Equity is entitled to
receive a partnership management fee. The fee is to be equal to 4% of the
Partnership's adjusted cash from operations, of which 50% is subordinated
to the limited partners receipt of a 5% return on adjusted invested
capital and 50% of which is subordinated to the limited partners' receipt
of an 8% return on adjusted invested capital. NPI Equity was not entitled
to a fee for the years ended December 31, 1995, 1994 and 1993.
NPI Equity is entitled to receive 1% of adjusted cash from operations and
an allocation of 1% of the net income or loss of the Partnership. There
were no distributions of adjusted cash from operations for the years
ended December 31, 1995, 1994 and 1993. Upon sale of all properties and
termination of the Partnership, the general partners may be required to
contribute certain funds to the Partnership in accordance with the
partnership agreement.
NPI Equity received reimbursement of accountable administrative expenses
amounting to $193,000, $201,000 and $148,000 for the years ended December
31, 1995, 1994 and 1993, respectively. These reimbursements are included
in general and administrative expenses. NPI Equity received
reimbursements of accountable property administrative expenses of $38,000
and $31,000 and $29,000 for the years ended December 31, 1995, 1994 and
1993, respectively. These reimbursements are included in operating
expenses. In addition, NPI Equity was paid a fee of approximately $1,000
relating to a successful real estate tax appeal on the Partnership's
Morrisville, North Carolina property during the year ended December 31,
1993. This fee is included in operating expenses.
Certain amendments to the Partnership Agreement ("Amendments"), as
described in the "Statement Furnished in Connection with the Solicitation
of Consents," provided to each limited partner on September 1, 1992, and
approved by a majority of the limited partners on October 16, 1992 (the
"Approval Date") retroactive to January 1, 1992, are summarized as
follows:
F - 10
<PAGE>
NATIONAL PROPERTY INVESTORS 8
(A California Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
3. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (Continued)
- Upon sale of Partnership properties,NPI Equity will be entitled to
an Incentive Compensation Fee equal to a declining percentage of
the difference between the total amount distributed to limited
partners and the appraised value of their investment at February 1,
1992. The percentage amount to be realized by NPI Equity, if any,
will be dependent upon the year in which the property is sold.
Payment of the Incentive Compensation Fee is subordinated to the
receipt by the limited partners, of: (a) distributions from capital
transaction proceeds of an amount equal to their present appraised
investment in the Partnership at February 1, 1992; and (b)
distributions from all sources (capital transactions as well as cash
flow) of an amount equal to six percent (6%) per annum cumulative,
non-compounded, on their present appraised investment in the
Partnership at February 1, 1992.
- In addition, the Amendments authorize payment of a Refinancing Fee
to NPI Equity or an affiliate, if earned; permit NPI Equity or any
of its affiliates to provide construction services or construction
supervisory services to the Partnership, and permit affiliates of NPI
Equity to be paid insurance brokerage commissions in connection with
the sale of insurance to the properties under a master policy
covering numerous properties owned or managed by NPI Equity and its
affiliates. Included in operating expenses for the years ended
December 31, 1995, 1994 and 1993 are approximately $111,000 $105,000
and $129,000, respectively, of insurance premiums, which were paid
to NPI Equity under a master insurance policy arranged for by NPI
Equity.
NPI Equity has established a revolving credit facility (the "Partnership
Revolver") to be used to fund deferred maintenance and working capital
needs of the National Property Investors Partnership Series (NPI
Partnerships). The maximum draw available to the Partnership under the
Partnership Revolver is $500,000. Loans under the Partnership Revolver
will have a term of 365 days, be unsecured and bear interest at the rate
of 2% per annum in excess of the prime rate announced from time to time
by Chemical Bank, N.A. The maturity date of such borrowing will be
accelerated in the event of: (i) the removal of the managing general
partner (whether or not For Cause); (ii) the sale or refinancing of a
property by the Partnership (whether or not a borrowing under the
Partnership Revolver was made with respect to such property); or (iii)
the liquidation of the Partnership. The Partnership has not borrowed
under the Partnership Revolver, to date.
4. RESTRICTED CASH
Restricted cash at December 31, 1995 and 1994, is to be retained by
the individual HUD mortgaged properties to meet their operating
requirements pursuant to a calculation required by the U.S.
Department of Housing and Urban Development ("HUD") Regulatory
Agreement. These funds are not available to pay expenses of the
Partnership or expenses applicable to other properties.
F - 11
<PAGE>
NATIONAL PROPERTY INVESTORS 8
(A California Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
5. REAL ESTATE
Real estate, at depreciable cost, is summarized as follows:
December 31,
----------------------
1995 1994
---- ----
Land $ 1,970,000 $ 1,970,000
Buildings and improvements 26,490,000 26,337,000
------------ ------------
28,460,000 28,307,000
Less: Accumulated depreciation 12,747,000 11,499,000
------------ ------------
$ 15,713,000 $ 16,808,000
============ ============
The real estate is pledged to collateralize non-recourse mortgages as set
forth in Note 6.
6. MORTGAGES PAYABLE
a. The mortgages payable, which are non-recourse to the Partnership,
are as follows:
<TABLE>
<CAPTION>
Annual
Type of Interest Monthly
Property Mortgage Rate Payments Maturity 1995 1994
-------- -------- --------- -------- -------- ----- ------
<C> <C> <C> <C> <C> <C>
Williamsburg
One First 7%(1) 31,000 6/16 $ 4,092,000 $ 4,173,000
(Indianapolis,
Indiana)
Williamsburg
Two First 7.75%(1) 21,000 10/16 2,642,000 2,687,000
(Indianapolis,
Indiana)
Huntington First 9.85%(2) 34,000 2/02 3,637,000 3,685,000
(Morrisville,
North Carolina) ------------- -------------
$ 10,371,000 $ 10,545,000
============= =============
</TABLE>
F - 12
<PAGE>
NATIONAL PROPERTY INVESTORS 8
(A California Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
6. MORTGAGES PAYABLE (Continued)
(1) These mortgages are insured under Section 221(d)(4) of The
National Housing Act, which requires payments of mortgage
insurance premiums in an annualized amount equal to 1/2% of the
average outstanding balance.
(2) There is a potential prepayment premium if this mortgage is
satisfied prior to its maturity date of February 1, 2002.
b. Final payment due on the mortgage payable which is not
self-liquidating:
Date of
Property Mortgage Final Payment Maturity
-------- -------- ------------- --------
Huntington First $3,203,000 2/02
c. The following is a summary of the anticipated future principal
payments.
Year ending
December 31, Amount
------------ ------
1996 $ 201,000
1997 218,000
1998 236,000
1999 255,000
2000 277,000
Thereafter 9,184,000
------------
Total $ 10,371,000
============
7. NOTES PAYABLE AND EXTRAORDINARY GAIN
On February 1, 1994, the Partnership paid $579,000 in full satisfaction,
at a discount, the purchase money note, related to the Partnership's
Indianapolis, Indiana property (Williamsburg One), that was due in March
1996. This payment resulted in an extraordinary gain on extinguishment of
debt of $115,000, representing the retirement of the purchase money note
of $690,000 and $141,000 of deferred and accrued interest. This gain was
offset by $137,000 of a deferred receivable from the note holder.
On February 1, 1994, the Partnership paid $236,000 in full satisfaction,
at a discount, the purchase money note, related to the Partnership's
Indianapolis, Indiana property (Williamsburg Two), that was due in March
1996. This payment resulted in an extraordinary gain on the
extinguishment of debt of $54,000, representing the retirement of the
purchase money note of $310,000 and $64,000 of deferred and accrued
interest. This gain was offset by $84,000 of a deferred receivable from
the note holder.
F - 13
<PAGE>
NATIONAL PROPERTY INVESTORS 8
(A California Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
8. RECONCILIATION OF NET LOSS PER CONSOLIDATED FINANCIAL STATEMENTS TO TAX
REPORTING
The Partnership files its tax return on an accrual basis, and has
computed depreciation for tax purposes using the Accelerated Cost
Recovery System, which is not in accordance with generally accepted
accounting principles. A reconciliation of the net loss per the
consolidated financial statements to the net taxable income (loss) to
partners is as follows:
YEARS ENDED DECEMBER 31,
---------------------------
1995 1994 1993
---- ---- ----
Net loss per financial statements $ (143,000) $ (286,000) $ (271,000)
Tax depreciation less than financial
statement depreciation 223,000 254,000 181,000
Difference in gain on disposition of
investment in a partnership between
financial statement and tax reporting -- 890,000 --
Difference in gain on extinguishment
of debt between financial statement
and tax reporting -- (205,000) (278,000)
Difference in income and expenses
between financial statement and tax
reporting (2,000) 10,000 (238,000)
---------- ----------- -----------
Net taxable income (loss) to partners $ 78,000 $ 663,000 $ (606,000)
========== ========== ===========
F - 14
<PAGE>
NATIONAL PROPERTY INVESTORS 8
(A California Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
9. EXTRAORDINARY GAIN AND PROVISION FOR LOSS
On August 6, 1992, the Partnership, in an effort to avoid a foreclosure
on its Antioch, California property ("Oakwood"), transferred its interest
in this property, along with all related assets and liabilities, to
Oaklift, L.P. which subsequently filed a voluntary petition (the
"Petition") for reorganization under Chapter 11 of the United States
Bankruptcy Code in the United States Bankruptcy Court (the "Court") for
the Eastern District of New York.
Oaklift L.P., a New York Limited Partnership, was owned 66.33% by the
Partnership and 32.67% by National Property Investors 7 ("NPI 7"), as
limited partners. The general partner, owning 1% is Oakny, Inc., a New
York corporation. Oakny, Inc. was owned 67% by the Partnership and 33% by
NPI 7. Both before and after the transaction, the Partnership and NPI 7,
combined, owned 100% of the Oakwood property. The Partnership continued
to consolidate its 67% share of the operations of the Oakwood property
until its sale in January 1994. All intercompany balances have been
eliminated in consolidation.
Under Chapter 11, certain claims against Oaklift L.P. in existence prior
to the filing of the Petition were stayed while Oaklift L.P. continued
operations as a debtor-in-possession. On February 17, 1993, Oaklift L.P.
filed a Plan of Reorganization. On September 7, 1993, the Partnership
together with NPI 7, purchased the secured and unsecured claims
(approximately $3.9 million and $9,000, respectively) of SB Partners, the
third mortgage holder, against the debtor, Oaklift L.P., for an aggregate
$725,000 (the Partnership's share was 67% or $486,000). The net carrying
amount of the secured claim on Oaklift L.P.'s books was $2,228,000. As a
result, the Partnership realized a $1,013,000 extraordinary gain on the
extinguishment of debt in 1993. In connection with the assignment, SB
Partners withdrew its motion to dismiss the bankruptcy proceeding. The
Partnership was then entitled to vote in favor of the debtor's plan of
reorganization at the confirmation hearing. As a result of the foregoing,
a Second Amended Disclosure Statement and Plan of Reorganization was
filed by the debtor on September 23, 1993. The Disclosure Statement was
approved by the Court on October 27, 1993. On December 7, 1993, the Court
approved a Third Amended and Restated Plan of Reorganization. The
approved plan: (a) allowed in full the claims of the first and second
mortgagees (including recasting the principal balances of the notes to
include accrued interest); (b) modified the terms of both mortgages; and
(c) provided for payment in full of the debtor's other creditors,
including unpaid real estate taxes.
On January 28, 1994, the Partnership's Antioch, California property,
which had been previously transferred to Oaklift, L.P., was sold to an
unaffiliated third party, subject to the first and second mortgages. The
Partnership's share of the sales proceeds, after closing expenses was
$5,819,000. The sale resulted in a gain of approximately $229,000. The
Partnership had recorded a $1,063,000 provision for loss on disposition
of the property during 1992. Net cash proceeds to the Partnership, after
deducting closing expenses and the $486,000 to purchase the third
mortgage at a discount, were approximately $563,000.
F - 15
<PAGE>
NATIONAL PROPERTY INVESTORS 8
(A California Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
10. JOINT VENTURE
The Partnership had a joint venture interest in an operating property
which was accounted for using the proportionate consolidation method. The
consolidated financial statements reflect the Partnership's proportionate
share of historical cost in this project. The property was sold in
January 1994 (see Note 9).
The condensed, combined statements of operations of the joint venture and
the Partnership's proportionate share of revenues and expenses for 1994
and 1993 are summarized as follows:
<TABLE>
<CAPTION>
COMBINED PROPORTIONATE SHARE
---------------------- ------------------------
1994 1993 1994 1993
---- ----- ---- ----
<S> <C> <C> <C> <C>
Operating revenues $ 153,000 $ 1,798,000 $ 102,000 $ 1,205,000
Gain on sale of property 334,000 -- 229,000 --
--------- ----------- --------- -----------
Total revenues 487,000 1,798,000 331,000 1,205,000
-------- ----------- --------- -----------
Operating and other expenses 171,000 1,095,000 115,000 734,000
Depreciation -- 568,000 -- 381,000
Mortgage interest 45,000 741,000 30,000 497,000
-------- ---------- -------- ----------
Total expenses 216,000 2,404,000 145,000 1,612,000
-------- ---------- -------- ----------
Net income (loss) before
extraordinary item: 271,000 (606,000) 186,000 (407,000)
Extraordinary item:
Gain on extinguishment of debt -- 1,512,000 -- 1,013,000
----------- ---------- --------- ----------
Net income $ 271,000 $ 906,000 $ 186,000 $ 606,000
========== ========== ========= ==========
</TABLE>
11. SUBSEQUENT EVENT
On January 19, 1996, the stockholders of NPI, Inc. sold all of the issued
and outstanding stock of NPI, Inc. to an affiliate of Insignia. In
addition, an affiliate of Insignia acquired the limited partnership
interests of the Partnership held by DeForest II and certain of its
affiliates (see Note 3). As a result of the transaction, the general
partner of the Partnership is controlled by Insignia. Insignia affiliates
now provide property and asset management services to the Partnership,
maintain its books and records and oversee its operations.
F - 16
<PAGE>
NATIONAL PROPERTY INVESTORS 8
(A California Limited Partnership)
December 31, 1995
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION SCHEDULE III
<TABLE>
<CAPTION>
Column A Column B Column C Column D
- -------- -------- -------- --------
Cost capitalized
Initial cost subsequent to
to Partnership acquisition
----------------------- -------------------------
Buildings and Carrying
Description Encumbrances Land Improvements Improvements Costs
- ----------- ------------ ---- ------------ ------------ -----
<S> <C> <C> <C> <C> <C>
Residential
Properties
- -----------
Williamsburg One
Indianapolis, Indiana $ 4,092,000 $ 367,000 $ 9,215,000 $ 1,082,000 $ 52,000
Williamsburg Two
Indianapolis, Indiana 2,642,000 223,000 5,607,000 653,000 32,000
Huntington Apartments -
Morrisville,
North Carolina 3,637,000 1,368,000 9,233,000 568,000 60,000
------------ ---------- ---------- -------- -------
Totals $10,371,000 $ 1,958,000 $24,055,000 $2,303,000 $144,000
=========== =========== =========== ========== ========
<CAPTION>
Column A Column E Column F Column G Column H Column I
- -------- -------- -------- -------- -------- --------
Life
Gross amount on which
carried at depreciation
close of period is computer
------------------------------ in latest
Buildings and Accumulated Date of Date statement of
Description Land Improvements Total Depreciation Construction Acquired operations
- ----------- ---- ------------ ----- ------------ ------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Residential
Properties
- ------------
Williamsburg One
Indianapolis, Indiana $ 369,000 $ 10,347,000 $10,716,000 $ 5,818,000 1974 3/86 5-27 yrs.
Williamsburg Two
Indianapolis, Indiana 225,000 6,290,000 6,515,000 3,547,000 1976 3/86 5-27 yrs.
Huntington Apartments -
Morrisville,
North Carolina 1,376,000 9,853,000 11,229,000 3,382,000 1986 3/88 5-29 yrs.
--------- ----------- ----------- -----------
Totals $ 1,970,000 $26,490,000 $28,460,000 $12,747,000
=========== =========== =========== ===========
</TABLE>
See notes on following page.
F - 17
<PAGE>
SCHEDULE III
NATIONAL PROPERTY INVESTORS 8
(A California Limited Partnership)
NOTES TO SCHEDULE III -
REAL ESTATE AND ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------
1995 1994 1993
------------------ -------------------- -------------------
<S> <C> <C> <C>
Note 1. Reconciliation of real estate:
Balance at beginning of period $ 28,307,000 $ 37,432,000 $ 37,335,000
Additions during period:
Improvements 153,000 78,000 97,000
Revaluation allowance on rental property sold - 667,000 -
Subtractions during the period:
Cost of rental property sold - (9,870,000) -
------------- ------------ -------------
Balance at end of period $ 28,460,000 $ 28,307,000 $ 37,432,000
============= ============ =============
Note 2. Reconciliation of accumulated depreciation
Balance at beginning of period $ 11,499,000 $ 13,684,000 $ 11,932,000
Additions during period:
Depreciation expense 1,248,000 1,361,000 1,752,000
Subtractions during the period:
Accumulated depreciation of rental
property sold - (3,546,000) -
------------- ------------ -------------
Balance at end of period $ 12,747,000 $ 11,499,000 $ 13,684,000
============= ============ =============
</TABLE>
Note 3. The aggregate cost for federal income tax purposes at December 31,
1995 is $27,166,000.
F - 18
<PAGE>
CENTURY PROPERTIES FUND XIV
(A Limited Partnership)
CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995
INDEX
<TABLE>
<CAPTION>
Page
-----
<S> <C>
Independent Auditors' Reports............................................................................................ F - 2
Consolidated Financial Statements:
Balance Sheets at December 31, 1995 and 1994........................................................................ F - 4
Statements of Operations for the Years Ended December 31, 1995, 1994 and 1993....................................... F - 5
Statements of Partners' Equity for the Years Ended
December 31, 1995, 1994 and 1993................................................................................. F - 6
Statements of Cash Flows for the Years Ended December 31, 1995, 1994 and 1993....................................... F - 7
Notes to Consolidated Financial Statements.......................................................................... F - 8
Financial Statement Schedule:
Schedule III - Real Estate and Accumulated Depreciation at December 31, 1995................................. F - 21
</TABLE>
Financial statements and financial statement schedules not included have been
omitted because of the absence of conditions under which they are required or
because the information is included elsewhere in the consolidated financial
statements.
To the Partners
Century Properties Fund XIV
Greenville, South Carolina
Independent Auditors' Report
We have audited the accompanying consolidated balance sheets of Century
Properties Fund XIV (a limited partnership) (the "Partnership") and its
subsidiaries as of December 31, 1995 and 1994, and the related consolidated
statements of operations, partners' equity and cash flows for the years then
ended. Our audits also included the additional information supplied pursuant to
Item 14(a)(2). These consolidated financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Century Properties
Fund XIV and its subsidiaries 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, the related
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
Imowitz Koenig & Co., LLP
Certified Public Accountants
New York, N.Y.
February 12, 1996, except for Notes 10 and 11, which are dated March 7, 1996
INDEPENDENT AUDITORS' REPORT
Century Properties Fund XIV:
We have audited the accompanying statements of operations, partners' equity and
cash flows of Century Properties Fund XIV (a limited partnership) (the
"Partnership") for the year ended December 31, 1993. These financial statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the results of operations and cash flows of the Partnership for the
year ended December 31, 1993 in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
San Francisco, California
March 18, 1994
CENTURY PROPERTIES FUND XIV
(A Limited Partnership)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1995 1994
------------- -------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 2,576,000 $ 714,000
Other assets 905,000 1,136,000
Real Estate:
Real estate 43,879,000 53,142,000
Accumulated depreciation (19,115,000) (21,751,000)
Allowance for impairment of value (2,304,000) (4,205,000)
------------- -------------
Real estate, net 22,460,000 27,186,000
Deferred costs, net 544,000 639,000
------------- -------------
Total assets $ 26,485,000 $ 29,675,000
============= =============
LIABILITIES AND PARTNERS' EQUITY
Notes payable $ 21,254,000 $ 21,480,000
Deferred interest, accrued expenses and other liabilities 1,178,000 1,286,000
------------- -------------
Total liabilities 22,432,000 22,766,000
------------- -------------
Contingencies
Partners' Equity:
General partners 26,000 25,000
Limited partners (64,806 units outstanding at
December 31, 1995 and 1994) 4,027,000 6,884,000
------------- -------------
Total partners' equity 4,053,000 6,909,000
------------- -------------
Total liabilities and partners' equity $ 26,485,000 $ 29,675,000
============= =============
</TABLE>
See notes to consolidated financial statements.
CENTURY PROPERTIES FUND XIV
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------
1995 1994 1993
------------ ------------ -------------
<S> <C> <C> <C>
Revenues:
Rental $ 8,434,000 $ 8,073,000 $ 8,643,000
Interest and other income 568,000 146,000 162,000
Gain on sale of properties 239,000 - 2,725,000
------------ ------------ ------------
Total revenues 9,241,000 8,219,000 11,530,000
------------ ------------ ------------
Expenses (including $637,000 and $373,000 paid to
the general partners and affiliates in 1995 and 1994):
Operating 4,359,000 4,651,000 4,162,000
Interest 2,230,000 2,504,000 2,973,000
Depreciation 1,546,000 1,571,000 1,625,000
General and administrative 308,000 462,000 673,000
Loss on sale of properties 592,000 - 43,000
------------ ------------ ------------
Total expenses 9,035,000 9,188,000 9,476,000
------------ ------------ ------------
Net income (loss) $ 206,000 $ (969,000) $ 2,054,000
============ ============ ============
Net income (loss) per limited partnership unit $ 2.22 $ (14.66) $ 29.04
============ ============ ============
Distributions per limited partnership unit $ 46.31 $ - $ -
============ ============ ============
</TABLE>
See notes to consolidated financial statements.
CENTURY PROPERTIES FUND XIV
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
General
partners' Limited Total
(deficit) partners' partners'
equity equity equity
----------- ----------- -----------
Balance - January 1, 1993 $ (128,000) $ 5,952,000 $ 5,824,000
Net income 172,000 1,882,000 2,054,000
----------- ----------- -----------
Balance - December 31, 1993 44,000 7,834,000 7,878,000
Net loss (19,000) (950,000) (969,000)
----------- ----------- -----------
Balance - December 31, 1994 25,000 6,884,000 6,909,000
Net income 62,000 144,000 206,000
Cash distributions (61,000) (3,001,000) (3,062,000)
----------- ----------- -----------
Balance - December 31, 1995 $ 26,000 $ 4,027,000 $ 4,053,000
=========== =========== ===========
See notes to consolidated financial statements.
CENTURY PROPERTIES FUND XIV
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 206,000 $ (969,000) $ 2,054,000
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,744,000 1,871,000 1,850,000
Gain on sale of properties (239,000) - (2,725,000)
Loss on sale of properties 592,000 - 43,000
Provision for doubtful receivables 10,000 - 107,000
Deferred costs paid (150,000) (547,000) (177,000)
Changes in operating assets and liabilities:
Other assets 221,000 (564,000) 6,000
Deferred interest, accrued expenses and other liabilities (108,000) 19,000 (63,000)
----------- ----------- -----------
Net cash provided by (used in) operating activities 2,276,000 (190,000) 1,095,000
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net proceeds from sale of properties 4,024,000 - 6,419,000
Additions to real estate (1,117,000) (795,000) (411,000)
Proceeds from note receivable - 50,000 -
----------- ----------- -----------
Net cash provided by (used in) investing activities 2,907,000 (745,000) 6,008,000
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distribution to partners (3,062,000) - -
Satisfaction of notes payable - (20,211,000) (3,330,000)
Notes payable proceeds - 16,418,000 -
Notes payable principal payments (259,000) (275,000) (408,000)
----------- ----------- -----------
Net cash (used in) financing activities (3,321,000) (4,068,000) (3,738,000)
----------- ----------- -----------
Increase (Decrease) in Cash and Cash Equivalents 1,862,000 (5,003,000) 3,365,000
Cash and Cash Equivalents at Beginning of Year 714,000 5,717,000 2,352,000
----------- ----------- -----------
Cash and Cash Equivalents at End of Year $ 2,576,000 $ 714,000 $ 5,717,000
=========== =========== ===========
Supplemental Disclosure of Cash Flow Information:
Interest paid in cash during the year $ 2,073,000 $ 2,200,000 $ 2,790,000
=========== =========== ===========
Supplemental Disclosure of Non-cash Investing
and Financing Activities:
Disposition of rental properties in 1995 and 1993, See Note 6.
</TABLE>
See notes to consolidated financial statements.
CENTURY PROPERTIES FUND XIV
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Century Properties Fund XIV (the "Partnership") is a limited
partnership organized under the laws of the State of California to
acquire, hold for investment and ultimately sell income-producing real
estate. The Partnership currently owns two commercial properties
located in Texas and California and three residential apartment
complexes located in Nevada and Arizona. The general partners are Fox
Realty Investors ("FRI"), a California general partnership, and Fox
Capital Management Corporation ("FCMC"), a California Corporation. The
original capital contributions of $64,806,000 ($1,000 per unit) were
made by the limited partners, including 100 limited partnership units
purchased by FCMC.
On December 6, 1993, the shareholders of FCMC entered into a Voting
Trust Agreement with NPI Equity Investments II, Inc. ("NPI Equity" or
the "Managing General Partner") pursuant to which NPI Equity was
granted the right to vote 100 percent of the outstanding stock of FCMC
and NPI Equity became the managing general partner of FRI. As a result,
NPI Equity became responsible for the operation and management of the
business and affairs of the Partnership and the other investment
partnerships originally sponsored by FCMC and/or FRI. NPI Equity is a
wholly-owned subsidiary of National Property Investors, Inc. ("NPI,
Inc."). The shareholders of FCMC and the partners in FRI retain
indirect economic interests in the Partnership and such other
investment limited partnerships, but have ceased to be responsible for
the operation and management of the Partnership and such other
partnerships.
In October 1994 DeForest Ventures I L.P. ("DeForest I") made a tender
offer for limited partnership interests in the partnership, as well as
eleven affiliated limited partnerships. DeForest Ventures II, L.P.
("DeForest II") made tender offers for limited partnership interests in
seven affiliated limited partnerships. Shareholders who controlled
DeForest Capital I Corporation, the sole general partner of DeForest I,
also controlled NPI, Inc. As of December 31, 1995, DeForest I had
acquired approximately 41% of total limited partnership units of the
Partnership (see Note 10).
On January 19, 1996, the stockholders of NPI, Inc. sold all of
the issued and outstanding stock of NPI, Inc. to an affiliate of
Insignia Financial Group, Inc. ("Insignia"). In addition, an
affiliate of Insignia acquired the limited partnership interests of
the Partnership held by DeForest I and certain of its affiliates (see
Note 10).
Consolidation
The consolidated financial statements include the statements of the
Partnership and its wholly-owned subsidiaries formed in 1994 (see Note
4). All significant intercompany transactions and balances have been
eliminated.
CENTURY PROPERTIES FUND XIV
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND 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 amounts reported in the financial
statements and accompanying notes. Actual results could differ from
those estimates.
Distributions
On October 17, 1995, the Partnership distributed $3,001,000 ($46.31 per
unit) to the limited partners and $61,000 to the general partners from
the proceeds of the sale of the Partnership's Greenbriar Plaza Shopping
Center and Duck Creek Shopping Center properties (see Note 6). On
January 11, 1996, the Partnership distributed $980,000 ($15.12 per
unit) to the limited partners and $20,000 to the general partners from
the proceeds received from the sale of the Partnership's Wingren Plaza
property.
Fair Value of Financial Instruments
In 1995, the Partnership implemented Statement of Financial Accounting
Standards ("SFAS") No. 107, "Disclosures about Fair Value of Financial
Instruments," as amended by SFAS No. 119, "Disclosures about Derivative
Financial Instruments and Fair Value of Financial Instruments," which
requires disclosure of fair value information about financial
instruments, whether or not recognized in the balance sheet, for which
it is practicable to estimate fair value. Fair value is defined in the
SFAS as the amount at which the instrument could be exchanged in a
current transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes that the carrying amount of
its financial instruments (except for long term debt) approximates fair
value due to the short term maturity of these instruments. The fair
value of the Partnership's long term debt, after discounting the
scheduled loan payments to maturity, approximates its carrying balance.
Cash and Cash Equivalents
The Partnership considers all highly liquid investments with an
original maturity of three months or less at the time of purchase to be
cash equivalents.
Concentration of Credit Risk
The Partnership maintains cash balances at institutions insured up to
$100,000 by the Federal Deposit Insurance Corporation. Balances in
excess of $100,000 are usually invested in repurchase agreements, which
are collateralized by United States Treasury obligations. Cash balances
exceeded these insured levels during the year. At December 31, 1995,
the Partnership had approximately $2,200,000 invested in overnight
repurchase agreements, secured by United States Treasury obligations,
which are included in cash and cash equivalents.
CENTURY PROPERTIES FUND XIV
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Real Estate
Real estate is stated at cost. Acquisition fees are capitalized as a
cost of real estate. In 1995, the Partnership adopted SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of ", which requires impairment losses to be
recognized for long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows are not
sufficient to recover the asset's carrying amount. The impairment loss
is measured by comparing the fair value of the asset to its carrying
amount. The adoption of the SFAS had no effect on the Partnership's
financial statements.
Depreciation
Depreciation is computed by the straight-line method over estimated
useful lives ranging from 27.5 to 39 years for buildings and
improvements and six to seven years for furnishings.
Deferred Costs
Deferred costs represent deferred financing costs and deferred leasing
commissions. Deferred financing costs are amortized as interest expense
over the lives of the related loans, or expensed, if financing is not
obtained. Deferred leasing commissions are amortized over the life of
the applicable lease. Such amortization is charged to operating
expenses. At December 31, 1995 and 1994, accumulated amortization of
deferred costs totaled $245,000 and $336,000, respectively.
Net Income (Loss) Per Limited Partnership Unit
The net income (loss) per limited partnership unit is computed by
dividing net income (loss) allocated to the limited partners by 64,806
units outstanding.
Income Taxes
Taxable income or loss of the Partnership is reported in the income tax
returns of its partners. Accordingly, no provision for income taxes is
made in the financial statements of the Partnership.
2. TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES
In accordance with the Partnership Agreement, the Partnership may be
charged by the general partners and affiliates for services provided to
the Partnership. From March 1988 to December 1992 such amounts were
assigned pursuant to a services agreement by the general partners and
affiliates to Metric Realty Services, L.P. ("MRS"), which performed
partnership management and other services for the Partnership.
CENTURY PROPERTIES FUND XIV
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES (Continued)
On January 1, 1993, Metric Management, Inc., ("MMI"), successor to MRS,
a company which is not affiliated with the general partners, commenced
providing certain property and portfolio management services to the
Partnership under a new services agreement. As provided in the new
services agreement, effective January 1, 1993, no reimbursements were
made to the general partners and affiliates after December 31, 1992.
Subsequent to December 31, 1992, reimbursements were made to MMI. On
December 16, 1993, the services agreement with MMI was modified and, as
a result thereof, NPI Equity began directly providing cash management
and other Partnership services on various dates commencing December 23,
1993. On March 1, 1994, an affiliate of NPI Equity commenced providing
certain property management services (see Notes 1 and 10). Related
party expenses for the years ended December 31, 1995, 1994 and 1993
were as follows:
1995 1994 1993
--------- --------- -------
Property management fees $ 262,000 $ 204,000 $ -
Real estate tax reduction fees 5,000 4,000 -
Reimbursement of expenses:
Partnership accounting and
investor services 186,000 153,000 -
Professional services - 12,000 -
--------- --------- -------
Total $ 453,000 $ 373,000 $ -
========= ========= =======
Property management fees and real estate tax reduction fees are
included in operating expenses. Reimbursed expenses are primarily
included in general and administrative expenses. In addition,
approximately $184,000 of insurance premiums which were paid to an
affiliate of NPI Inc., under a master insurance policy arranged by such
affiliate, are included in operating expenses for the year ended
December 31, 1995.
In accordance with the partnership agreement, the general partners were
allocated their two percent continuing interest in the Partnership's
net income (loss) and taxable income (loss). Gains from dispositions of
Partnership properties were allocated first to the general partners to
the extent of the deficit in their capital accounts at the time of the
dispositions, then two percent of the remainder.
On January 11, 1996, the general partners received a distribution of
$20,000, representing the general partners two percent interest in cash
available for distribution, which was primarily from the proceeds
received on the sale of the Partnership's Wingren Plaza property (see
Note 6). On October 17, 1995, the general partners received a
distribution of $61,000, representing the general partners two percent
interest in cash available for distribution which was primarily from
the proceeds received on the sale of the Partnership's Greenbriar Plaza
Shopping Center and Duck Creek Shopping Center properties. There were
no cash distributions to the general partners for the years ended
December 31, 1994 and 1993.
CENTURY PROPERTIES FUND XIV
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
3. REAL ESTATE
Real estate, at December 31, 1995 and 1994, is summarized as follows:
<TABLE>
<CAPTION>
Residential Commercial
Properties Properties Total
----------- ---------- -----
<S> <C> <C> <C>
1995:
Land $ 2,288,000 $ 3,436,000 $ 5,724,000
Buildings and improvements 20,258,000 14,589,000 34,847,000
Furnishings 3,180,000 128,000 3,308,000
------------ ------------ ------------
Total 25,726,000 18,153,000 43,879,000
Accumulated depreciation (12,334,000) (6,781,000) (19,115,000)
Allowance for impairment of value - (2,304,000) (2,304,000)
------------ ------------ ------------
Real estate, net $ 13,392,000 $ 9,068,000 $ 22,460,000
============ ============ ============
1994:
Land $ 2,288,000 $ 4,893,000 $ 7,181,000
Buildings and improvements 19,403,000 23,201,000 42,604,000
Furnishings 3,130,000 227,000 3,357,000
------------ ------------ ------------
Total 24,821,000 28,321,000 53,142,000
Accumulated depreciation (11,505,000) (10,246,000) (21,751,000)
Allowance for impairment of value - (4,205,000) (4,205,000)
------------ ------------ ------------
Real estate, net $ 13,316,000 $ 13,870,000 $ 27,186,000
============ ============ ============
</TABLE>
Subsequent to the balance sheet date, the Partnership sold its
University Square Shopping Center and Broadway Trade Center properties
(see Note 10).
CENTURY PROPERTIES FUND XIV
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
4. NOTES PAYABLE
Individual rental properties are pledged as collateral for the related
notes payable. The notes are payable monthly and mature between 1996
and 2008. Interest rates on the notes ranged from 9.25 percent to 10.50
percent during the year ended December 31, 1995. Certain notes relating
to Broadway Trade Center had been discounted to yield interest at an
annual rate of 15 percent. Amortization of the discounted amounts
totaled $33,000,$32,000 and $40,000 for 1995, 1994 and 1993,
respectively. Principal payments at December 31, 1995 are required as
follows:
1996 $ 3,617,000
1997 175,000
1998 191,000
1999 211,000
2000 230,000
Thereafter 16,830,000
-----------
Total $21,254,000
===========
For Broadway Trade Center, which was sold in the first quarter of 1996,
the principal payments are reflected in 1996 regardless of their
original due date.
On July 5, 1994, the Partnership paid down $6,000 of the existing
mortgage encumbering the St. Charleston Village Apartments property and
replaced the remaining $6,300,000 balance with a new first mortgage.
The loan requires monthly payments of $55,000 at 9.88% interest and is
being amortized over 30 years. The loan matures on July 1, 2001 with a
balloon payment of $5,967,000. As specified in the loan agreement, the
Partnership was required to establish with the lender an escrow account
for taxes and insurance and a replacement reserve account for future
capital improvements. A premium is to be calculated under the terms of
the mortgage if the loan is prepaid. The Partnership incurred closing
costs and fees of $169,000 in connection with this refinancing. As part
of the agreement, the Partnership was required to transfer the assets
and liabilities of St. Charleston Village Apartments to a newly formed,
wholly-owned subsidiary, Century St. Charleston Limited Partnership.
On July 5, 1994, the Partnership paid down $1,914,000 of the existing
mortgage encumbering the Sun River Apartments property and replaced the
remaining $6,368,000 balance with a new first mortgage. The loan
requires monthly payments of $55,000 at 9.88% interest and is being
amortized over 30 years. The loan matures on July 1, 2001 with a
balloon payment of $6,032,000. As specified in the loan agreement, the
Partnership was required to establish with the lender an escrow account
for taxes and insurance and a replacement reserve account for future
capital improvements. A premium is to be calculated under the terms of
the mortgage if the loan is prepaid. The partnership incurred closing
costs and fees of $161,000 in connection with this refinancing. As part
of the agreement, the Partnership was required to transfer the assets
and liabilities of Sun River Apartments to a newly formed, wholly-owned
subsidiary, Century Sun River Limited Partnership.
CENTURY PROPERTIES FUND XIV
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
4. NOTES PAYABLE (Continued)
On July 5, 1994, the Partnership paid down $189,000 of the existing
mortgage encumbering the Torrey Pines Village Apartments property and
replaced the remaining $3,750,000 balance with a new first mortgage.
The loan requires monthly payments of $33,000 at 9.88% interest and is
being amortized over 30 years. The loan matures on July 1, 2001 with a
balloon payment of $3,545,000. As specified in the loan agreement, the
Partnership was required to establish with the lender an escrow account
for taxes and insurance and a replacement reserve account for future
capital improvements. A premium is to be calculated under the terms of
the mortgage if the loan is prepaid. The Partnership incurred closing
costs and fees of $111,000 in connection with this refinancing. As part
of the agreement, the Partnership was required to transfer the assets
and liabilities of Torrey Pines Village Apartments to a newly formed,
wholly-owned subsidiary, Century Torrey Pines Limited Partnership.
On September 15, 1994, the Partnership satisfied the $1,684,000
outstanding mortgage encumbering the Duck Creek Shopping Center.
In September 1993, the Partnership paid off the $200,000 second note on
The Oaks Shopping Center upon its maturity.
Amortization of deferred financing costs totaled $68,000, $164,000 and
$87,000 for 1995, 1994 and 1993, respectively.
5.MINIMUM FUTURE RENTAL REVENUES
Minimum future rental revenues from operating leases having
non-cancelable lease terms in excess of one year are as follows:
1996 $ 540,000
1997 366,000
1998 241,000
1999 163,000
2000 164,000
Thereafter 1,162,000
-------------
Total $ 2,636,000
=============
Subsequent to the balance sheet date, the Partnership sold its
University Square Shopping Center and Broadway Trade Center (see Note
10). The minimum future rental revenues from University Square Shopping
Center and Broadway Trade Center have been excluded.
Rental revenues include contingent rent of $38,000, $6,000 and $40,000
in 1995, 1994 and 1993, respectively.
Amortization of deferred leasing commissions totaled $97,000, $104,000
and $97,000 for 1995, 1994 and 1993, respectively.
CENTURY PROPERTIES FUND XIV
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
6. DISPOSITION OF RENTAL PROPERTIES
On November 9, 1995, the Partnership sold its Wingren Plaza property,
located in Dallas, Texas for $1,000,000. After closing expenses of
$68,000, the net proceeds received by the Partnership were $932,000.
The carrying value of the property at the time of sale was $693,000.
For financial statement purposes, the sale resulted in a gain of
$239,000. The Partnership had previously recorded a $1,901,000
provision for impairment of value in 1991 (see Note 8).
On October 6, 1995, the Partnership sold its Duck Creek Shopping Center
property, located in Garland, Texas for $2,250,000. After closing
expenses of $138,000, the net proceeds received by the Partnership were
$2,112,000. The carrying value of the property at the time of sale was
$2,148,000. For financial statement purposes, the sale resulted in a
loss of $36,000.
On September 12, 1995, the Partnership sold its Greenbriar Plaza
Shopping Center property, located in Duncanville, Texas for $1,050,000.
After closing expenses of $70,000, the net proceeds received by the
Partnership were $980,000. The carrying value of the property at the
time of sale was $1,536,000. For financial statement purposes, the sale
resulted in a loss of $556,000.
In December 1993, The Village Square Shopping Center was disposed of
through foreclosure for $2,645,000 to the holder of the first deed of
trust on the property. The disposition value is comprised of the first,
second and third note balances totaling $2,316,000, and net liabilities
released upon disposition of $329,000. Total disposition costs were
$6,000. At the date of disposition of The Village Square Shopping
Center, the carrying amount of land and improvements and unamortized
leasing commissions, after the $352,000 provision for impairment of
value recognized in 1992, was $2,642,000. The loss on disposition was
$3,000.
In December 1993, The Market Place Shopping Center was disposed of
through foreclosure for $1,615,000 to the holder of the first deed of
trust on the property. The disposition value is comprised of the first,
second and third note balances totaling $1,506,000, and net liabilities
released upon foreclosure of $109,000. Total disposition costs were
$6,000. At the date of disposition on The Market Place Shopping Center,
the carrying amount of land and improvements and unamortized leasing
commissions and financing costs, after the $534,000 provision for
impairment of value recognized in 1992, was $1,649,000. The loss on
disposition was $40,000.
In May 1993, the Partnership sold Cedarwood Apartments, located in
Lakewood, Colorado for $6,600,000. After payment of the existing first
and second loan balances of approximately $2,547,000 and $583,000,
respectively, and expenses of the sale of $169,000, the net cash
proceeds to the Partnership was $3,301,000. The carrying value of the
property at the time of sale was $3,706,000. The gain on sale was
$2,725,000.
CENTURY PROPERTIES FUND XIV
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
7. NOTE RECEIVABLE FROM PROPERTY SALE
The Partnership has a purchase money note receivable in the amount of
$1,500,000 due in 1997. This note is not reported in the accompanying
financial statements due to uncertainty regarding collectability.
8. ALLOWANCE FOR IMPAIRMENT OF VALUE
At December 31, 1994, the Partnership's allowance for impairment of
value was $4,205,000 consisting of $883,000 on the Oaks Shopping
Center, $1,421,000 on Broadway Trade Center (see Note 10) and
$1,901,000 on Wingren Plaza. The allowance for impairment of value is
$2,304,000 at December 31, 1995 since the Partnership sold its Wingren
Plaza property on November 9, 1995 (see Note 6). Due to the current
real estate market it is reasonably possible that the Partnership's
estimate of fair value will change within the next year.
CENTURY PROPERTIES FUND XIV
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
9. RECONCILIATION TO INCOME TAX METHOD OF ACCOUNTING
The differences between the accrual method of accounting for income tax
reporting and the accrual method of accounting used in the consolidated
financial statements are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Net income (loss) - financial statements $ 206,000 $ (969,000) $ 2,054,000
Differences resulted from:
Notes payable discount amortization 33,000 32,000 40,000
Interest income on notes receivable 97,000 89,000 83,000
Depreciation (510,000) (604,000) (934,000)
Unearned revenue (1,000) 4,000 (3,000)
Property dispositions - net 442,000 - 1,162,000
Other income - foreclosures - - 302,000
Other 75,000 57,000 (1,000)
----------- ----------- -----------
Net income (loss) - income tax method $ 342,000 $(1,391,000) $ 2,703,000
=========== =========== ===========
Taxable income (loss) per limited partnership
unit after giving effect to the allocation
to the general partners $ 5 $ (21) $ 40
=========== =========== ===========
Partners equity - financial statements $ 4,053,000 $ 6,909,000 $ 7,878,000
Differences resulted from:
Provision for impairment of value 2,304,000 4,205,000 4,205,000
Deferred gain on property sales 706,000 706,000 706,000
Sales commissions and organization costs 6,749,000 6,749,000 6,749,000
Notes payable discount amortization 790,000 757,000 725,000
Interest income on notes receivable 625,000 528,000 439,000
Construction interest and financing costs (770,000) (855,000) (904,000)
Reduction of rental properties due to
lease payments 1,239,000 1,472,000 1,472,000
Depreciation (11,228,000) (13,294,000) (12,690,000)
Unearned revenue 4,000 5,000 1,000
Other 13,000 23,000 15,000
----------- ----------- -----------
Partners' equity - income tax method $ 4,485,000 $ 7,205,000 $ 8,596,000
=========== =========== ===========
</TABLE>
CENTURY PROPERTIES FUND XIV
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
10. SUBSEQUENT EVENTS
On January 19, 1996, the stockholders of NPI, Inc. sold all of the
issued and outstanding stock of NPI, Inc. to an affiliate of Insignia.
In addition, an affiliate of Insignia acquired the limited partnership
interests of the Partnership held by DeForest I and certain of its
affiliates (see Note 1). As a result of the transaction, the Managing
General Partner of the Partnership is controlled by Insignia. Insignia
affiliates now provide property and asset management services to the
Partnership, maintain its books and records and oversee its operations.
On February 12, 1996, the Partnership sold its University Square
Shopping Center Property, located in Bozeman, Montana for $4,850,000.
After closing expenses of approximately $75,000, the net proceeds
received by the Partnership were approximately $4,775,000. The
Partnership will recognize a gain of approximately $1,500,000 during
the first quarter of 1996.
On March 7, 1996, the Partnership sold its Broadway Trade Center
Property, located in San Antonio, Texas for $3,825,000. After repayment
of the first, second and third mortgages totaling approximately
$1,640,000 (including unamortized discount) and closing expenses of
$215,000, the net proceeds received by the Partnership were
approximately $1,970,000. The Partnership will recognize a gain of
approximately $1,250,000 during the first quarter of 1996.
11. PROFORMA FINANCIAL INFORMATION
The following pro forma consolidated balance sheet as of December 31,
1995, and the pro forma consolidated statement of operations for the
year then ended give effect to the sales of the Partnership's
University Square Shopping Center and Broadway Trade Center properties.
The adjustments related to the pro forma consolidated balance sheet
assume the transactions were consummated at December 31, 1995, while
the adjustments to the pro forma consolidated income statement assume
the transactions were consummated at the beginning of the year
presented. The sales occurred on February 12, 1996 and March 7, 1996,
respectively.
The pro forma adjustments required are to eliminate the assets,
liabilities and operating activity of University Square Shopping Center
and Broadway Trade Center and to reflect consideration received for the
properties.
These pro forma adjustments are not necessarily reflective of the
results that actually would have occurred if the sales had been in
effect as of and for the period presented or what may be achieved in
the future.
CENTURY PROPERTIES FUND XIV
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
11. PRO FORMA FINANCIAL INFORMATION (CONTINUED)
PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1995
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
------------- ------------- -------------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 2,576,000 $ - $ 2,576,000
Receivables and other assets 905,000 6,745,000 7,650,000
Real Estate:
Real estate 43,879,000 (10,861,000) 33,018,000
Accumulated depreciation (19,115,000) 4,233,000 (14,882,000)
Allowance for impairment of value (2,304,000) 1,421,000 (883,000)
------------- ------------- -------------
Real estate, net 22,460,000 (5,207,000) 17,253,000
Deferred costs, net 544,000 (93,000) 451,000
------------- ------------- -------------
Total assets $ 26,485,000 $ 1,445,000 $ 27,930,000
============= ============= =============
LIABILITIES AND PARTNERS' EQUITY
Notes payable $ 21,254,000 $ (1,283,000) $ 19,971,000
Deferred interest, accrued expenses and other liabilities 1,178,000 (112,000) 1,066,000
------------- ------------- -------------
Total liabilities 22,432,000 (1,395,000) 21,037,000
------------- ------------- -------------
Partners' Equity:
General partners 26,000 57,000 83,000
Limited partners 4,027,000 2,783,000 6,810,000
------------- ------------- -------------
Total partners' equity 4,053,000 2,840,000 6,893,000
------------- ------------- -------------
Total liabilities and partners' equity $ 26,485,000 $ 1,445,000 $ 27,930,000
============= ============= =============
</TABLE>
CENTURY PROPERTIES FUND XIV
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
11. PRO FORMA FINANCIAL INFORMATION (CONTINUED)
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the year ended December 31, 1995
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
------------ ------------- -------------
<S> <C> <C> <C>
Revenues:
Rental $ 8,434,000 $ (1,543,000) $ 6,891,000
Interest and other income 568,000 (150,000) 418,000
Gain on sale of properties 239,000 - 239,000
------------ ------------- -------------
Total revenues 9,241,000 (1,693,000) 7,548,000
------------ ------------- -------------
Expenses:
Operating 4,359,000 (515,000) 3,844,000
Interest 2,230,000 (195,000) 2,035,000
Depreciation 1,546,000 (324,000) 1,222,000
General and administrative 308,000 - 308,000
Loss on sale of properties 592,000 - 592,000
------------ ------------- -------------
Total expenses 9,035,000 (1,034,000) 8,001,000
------------ ------------- -------------
Net income (loss) $ 206,000 $ (659,000) $ (453,000)
============ ============= =============
Net income (loss) per limited partnership unit $ 2.22 $ (9.96) $ (7.74)
============ ============= =============
Distributions per limited partnership unit $ 46.31 $ - $ 46.31
============ ============= =============
</TABLE>
CENTURY PROPERTIES FUND XIV
(A Limited Partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
COLUMN COLUMN COLUMN COLUMN COLUMN COLUMN COLUMN COLUMN COLUMN
A B C D E F G H I
Cost Capitalized Gross Amount
Initial Cost Subsequent at Which Carried at
to Partnership to Acquisition Close of Period(1)
-------------- -------------- -----------------
Accum- Life
lated on which
Deprecia- Deprecia-
tion and Year tion is
Build- Build- Impair- of Date computed
ings and ings and ment of Con- of in latest
Encum- Improve- Improve- Carrying Improve- Total value struc- Acqui- statement of
Description brances Land ments ments Costs Land ments (2) (3) tion sition operations
- ----------- ------- ---- ------- ------ ------- ---- ------- ----- ------- ----- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(Amounts in thousands)
PARTNERSHIP:
University Square
Shopping Center
Bozeman, Montana $ - $1,034 $ 4,565 $ 325 $ (511) $ 945 $ 4,468 $ 5,413 $ 2,219 12/80 12/79 6 - 39 Yrs
Gateway Park
Dublin, California 1,505 484 1,135 174 - 487 1,306 1,793 635 10/77 10/80 6 - 39 Yrs
The Oaks Shopping Center
Beaumont, Texas 2,175 1,146 3,599 1,147 (393) 1,278 4,221 5,499 2,797 4/81 9/80 6 - 39 Yrs
Broadway Trade Center
San Antonio, Texas 1,283 768 3,358 1,415 (93) 726 4,722 5,448 3,434 1978/ 1/81 6 - 39 Yrs
1979
SUBSIDIARIES:
Torrey Pines Village
Apartments
Las Vegas, Nevada 3,721 460 4,595 955 (52) 455 5,503 5,958 2,896 6/80 9/79 6 - 30 Yrs
St. Charleston Village
Apartments
Las Vegas, Nevada 6,251 751 7,322 1,344 (90) 743 8,584 9,327 4,608 7/80 9/79 6 - 30 Yrs
Sun River Apartments
Tempe, Arizona 6,319 1,102 8,770 669 (100) 1,090 9,351 10,441 4,830 9/81 11/80 6 - 30 Yrs
------- ------ ------- ------ ------- ------ ------- ------- -------
TOTAL $21,254 $5,745 $33,344 $6,029 $(1,239) $5,724 $38,155 $43,879 $21,419
======= ====== ======= ====== ======= ====== ======= ======= =======
</TABLE>
See accompanying notes.
SCHEDULE III
CENTURY PROPERTIES FUND XIV
(A Limited Partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
<S> <C>
NOTES:
(1) The aggregate cost for Federal income tax purposes is $44,921,000.
(2) Balance, January 1, 1993 $ 65,785,000
Improvements capitalized subsequent to acquisition 411,000
Cost of rental properties sold or disposed of (13,849,000)
------------
Balance, December 31, 1993 52,347,000
Improvements capitalized subsequent to acquisition 795,000
------------
Balance, December 31, 1994 53,142,000
Improvements capitalized subsequent to acquisition 1,117,000
Cost of rental properties sold or disposed of (10,380,000)
------------
Balance, December 31, 1995 $ 43,879,000
============
(3) Balance, January 1, 1993 $ 28,870,000
Additions charged to expense 1,625,000
Accumulated depreciation of rental properties sold or disposed of (5,224,000)
Allowance for impairment of value of rental properties disposed of (886,000)
------------
Balance, December 31, 1993 24,385,000
Additions charged to expense 1,571,000
------------
Balance, December 31, 1994 25,956,000
Additions charged to expense 1,546,000
Accumulated depreciation of rental properties sold or disposed of (4,182,000)
Allowance for impairment of value of rental properties sold (1,901,000)
------------
Balance, December 31, 1995 $ 21,419,000
============
(4) Encumbrances shown are net of discounts totaling $322,000.
</TABLE>
<PAGE>
CENTURY PROPERTIES FUND XV
(A Limited Partnership)
CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995
INDEX
Page
Independent Auditors' Reports. . . . . . . . . . . . . . . . . . . . . F - 2
Consolidated Financial Statements:
Balance Sheets at December 31, 1995 and 1994 . . . . . . . . . . . . F - 4
Statements of Operations for the Years Ended December 31, 1995,
1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . F - 5
Statements of Partners' Equity for the Years Ended
December 31, 1995, 1994 and 1993. . . . . . . . . . . . . . . . . F - 6
Statements of Cash Flows for the Years Ended December 31, 1995,
1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . F - 7
Notes to Consolidated Financial Statements . . . . . . . . . . . . . F - 8
Financial Statement Schedule:
Schedule III - Real Estate and Accumulated Depreciation at
December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . F - 18
Financial statements and financial statement schedules not included have been
omitted because of the absence of conditions under which they are required or
because the information is included elsewhere in the consolidated financial
statements.
To the Partners
Century Properties Fund XV
Greenville, South Carolina
Independent Auditors' Report
We have audited the accompanying consolidated balance sheets of Century
Properties Fund XV (a limited partnership) (the "Partnership") and
subsidiaries as of December 31, 1995 and 1994, and the related consolidated
statements of operations, partners' equity and cash flows for the years
then ended. Our audits also included the additional information supplied
pursuant to Item 14(a)(2). These consolidated financial statements are the
responsibility of the Partnership's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Century Properties Fund XV and subsidiaries 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, the related financial statement schedule,
when considered in relation to the basic consolidated financial statements
taken as a whole, presents fairly, in all material respects, the
information set forth therein.
Imowitz Koenig & Co., LLP
Certified Public Accountants
New York, N.Y.
February 4, 1996
INDEPENDENT AUDITORS' REPORT
Century Properties Fund XV:
We have audited the accompanying consolidated statements of operations,
partners' equity and cash flows of Century Properties Fund XV (a limited
partnership) (the "Partnership") and its joint venture for the year ended
December 31, 1993. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the results of operations and cash flows of the Partnership
and its joint venture for the year ended December 31, 1993 in conformity with
generally accepted accounting principles.
The accompanying 1993 consolidated financial statements have been prepared
assuming that the Partnership will continue as a going concern. As discussed in
the first paragraph of Note 9 to the financial statements, the Partnership has
balloon payments totaling $17,000,000 due in May 1994, which raises substantial
doubt about the Partnership's ability to continue as a going concern.
Management's plans in regard to this matter are also described in Note 9. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
DELOITTE & TOUCHE LLP
San Francisco, California
March 18, 1994
CENTURY PROPERTIES FUND XV
(A Limited Partnership)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
-------------------------
ASSETS 1995 1994
- ------ ----------- -----------
Cash and cash equivalents $ 5,008,000 $ 1,606,000
Other assets 1,757,000 1,378,000
Real Estate:
Real estate 59,945,000 74,737,000
Accumulated depreciation (24,490,000) (29,112,000)
----------- -----------
Real estate, net 35,455,000 45,625,000
Deferred costs, net 617,000 682,000
----------- -----------
Total assets $42,837,000 $49,291,000
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
- --------------------------------
Notes payable $25,831,000 $34,229,000
Accrued expenses and other liabilities 1,298,000 1,347,000
----------- -----------
Total liabilities 27,129,000 35,576,000
----------- -----------
Minority interest in joint venture -- 772,000
----------- -----------
Partners' Equity (Deficit):
General partners (1,015,000) (1,275,000)
Limited partners (89,980 units outstanding
at December 31, 1995 and 1994) 16,723,000 14,218,000
----------- -----------
Total partners' equity 15,708,000 12,943,000
----------- -----------
Total liabilities and partners' equity $42,837,000 $49,291,000
=========== ===========
See notes to consolidated financial statements.
CENTURY PROPERTIES FUND XV
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31,
--------------------------------------
1995 1994 1993
----------- ----------- -----------
Revenues:
Rental $11,249,000 $12,517,000 $11,666,000
Interest income 130,000 79,000 89,000
Gain on sale of properties 11,484,000 -- --
----------- ----------- -----------
Total revenues 22,863,000 12,596,000 11,755,000
----------- ----------- -----------
Expenses (including $897,000,
$610,000 and $95,000 paid to the
joint venture partner, general
partners and affiliates in 1995,
1994 and 1993, respectively):
Operating 6,019,000 6,542,000 5,836,000
Interest 3,603,000 4,073,000 4,417,000
Depreciation 2,250,000 2,371,000 2,324,000
General and administrative 211,000 368,000 441,000
----------- ----------- -----------
Total expenses 12,083,000 13,354,000 13,018,000
----------- ----------- -----------
Income (loss) before minority
interest in joint venture's
operations and extraordinary
item 10,780,000 (758,000) (1,263,000)
Minority interest in joint
venture's operations (868,000) (145,000) (132,000)
----------- ----------- -----------
Income (loss) before
extraordinary item 9,912,000 (903,000) (1,395,000)
Extraordinary item:
Loss on extinguishment of debt (720,000) -- --
----------- ----------- -----------
Net income (loss) $ 9,192,000 $ (903,000) $(1,395,000)
=========== =========== ===========
Net income (loss) per limited
partnership unit:
Income (loss) before
extraordinary item $ 105.69 $ (9.84) $ (15.19)
Extraordinary item (7.85) -- --
----------- ----------- -----------
Net income (loss) $ 97.84 $ (9.84) $ (15.19)
=========== =========== ===========
Distributions per limited
partnership unit $ 70.00 $ -- $ --
=========== =========== ===========
See notes to consolidated financial statements.
CENTURY PROPERTIES FUND XV
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
General Limited Total
partners' partners' partners'
(deficit) equity equity
----------- ----------- -----------
Balance -- January 1, 1993 $(1,229,000) $16,470,000 $15,241,000
Net loss (28,000) (1,367,000) (1,395,000)
----------- ----------- -----------
Balance -- December 31, 1993 (1,257,000) 15,103,000 13,846,000
Net loss (18,000) (885,000) (903,000)
----------- ----------- -----------
Balance -- December 31, 1994 (1,275,000) 14,218,000 12,943,000
Net income 388,000 8,804,000 9,192,000
Distributions (128,000) (6,299,000) (6,427,000)
----------- ----------- -----------
Balance -- December 31, 1995 $(1,015,000) $16,723,000 $15,708,000
=========== =========== ===========
See notes to consolidated financial statements.
CENTURY PROPERTIES FUND XV
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
--------------------------------------
1995 1994 1993
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
- -------------------------------------
Net income (loss) $ 9,192,000 $ (903,000) $(1,395,000)
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Depreciation and amortization 2,781,000 2,912,000 3,174,000
Provision for doubtful
receivables -- -- 32,000
Gain on sale of properties (11,484,000) -- --
Extraordinary item 720,000 -- --
Deferred costs paid (122,000) (23,000) (250,000)
Minority interest in joint
venture's operations 868,000 145,000 132,000
Changes in operating assets
and liabilities:
Other assets (379,000) (621,000) (259,000)
Accrued expenses and other
liabilities (140,000) 114,000 (109,000)
----------- ----------- -----------
Net cash provided by operating
activities 1,436,000 1,624,000 1,325,000
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
- -------------------------------------
Note receivable repayments from
property sale -- -- 22,000
Additions to real estate (1,457,000) (905,000) (1,658,000)
Proceeds from cash investments -- -- 496,000
Purchase of cash investments -- -- (496,000)
Net proceeds from sale of rental
properties 20,875,000 -- --
Property sales expenses paid -- -- (2,000)
----------- ----------- -----------
Net cash provided by (used in)
investing activities 19,418,000 (905,000) (1,638,000)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------
Notes payable proceeds 2,443,000 14,868,000 3,300,000
Financing costs paid (99,000) (436,000) --
Satisfaction of notes payable (11,121,000) (14,200,000) (3,309,000)
Notes payable principal payments (608,000) (569,000) (457,000)
Joint venture partner
distributions (1,640,000) (143,000) (120,000)
Cash distributions to partners (6,427,000) -- --
----------- ----------- -----------
Net cash used in financing
activities (17,452,000) (480,000) (586,000)
----------- ----------- -----------
Increase (Decrease) in Cash
and Cash Equivalents 3,402,000 239,000 (899,000)
Cash and Cash Equivalents at
Beginning of Year 1,606,000 1,367,000 2,266,000
----------- ----------- -----------
Cash and Cash Equivalents at
End of Year $ 5,008,000 $ 1,606,000 $ 1,367,000
=========== =========== ===========
Supplemental Disclosure of
Cash Flow Information:
Interest paid in cash during
the year $ 3,600,000 $ 3,482,000 $ 3,645,000
=========== =========== ===========
Supplemental Disclosure of
Non-cash Investing and
Financing Activities:
Property sale expenses accrued $ 91,000 $ -- $ --
=========== =========== ===========
Disposition of rental
properties in 1995 -- see Note 6
See notes to consolidated financial statements.
CENTURY PROPERTIES FUND XV
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Century Properties Fund XV (the "Partnership") is a limited
partnership organized under the laws of the State of California to
acquire, hold for investment and ultimately sell income-producing real
estate. The Partnership currently owns three apartment complexes in
Texas and a commercial building located in Georgia. The general
partners of the Partnership are Fox Realty Investors ("FRI"), a
California general partnership, and Fox Capital Management Corporation
("FCMC"), a California Corporation. The original capital contributions
of $89,980,000 ($1,000 per unit) were made by the limited partners,
including 100 limited partnership units purchased by FCMC.
On December 6, 1993, the shareholders of FCMC entered into a Voting
Trust Agreement with NPI Equity Investments II, Inc. ("NPI Equity" or
the "Managing General Partner") pursuant to which NPI Equity was
granted the right to vote 100 percent of the outstanding stock of FCMC
and NPI Equity became the managing general partner of FRI. As a
result, NPI Equity became responsible for the operation and management
of the business and affairs of the Partnership and the other
investment partnerships originally sponsored by FCMC and/or FRI. NPI
Equity is a wholly-owned subsidiary of National Property Investors,
Inc. ("NPI, Inc."). The shareholders of FCMC and the partners in FRI
retain indirect economic interests in the Partnership and such other
investment limited partnerships, but have ceased to be responsible for
the operation and management of the Partnership and such other
partnerships.
In October 1994, DeForest Ventures I L.P. ("DeForest I") made a tender
offer for limited partnership interests in the partnership, as well as
eleven affiliated limited partnerships. DeForest Ventures II, L.P.
("DeForest II") made tender offers for limited partnership interests in
seven affiliated limited partnerships. Shareholders who controlled
DeForest Capital I Corporation, the sole general partner of DeForest
I, also controlled NPI, Inc. As of December 31, 1995, DeForest I had
acquired approximately 39% of total limited partnership units of the
Partnership (see Note 10).
On January 19, 1996, the stockholders of NPI, Inc. sold all of the
issued and outstanding stock of NPI, Inc. to an affiliate of Insignia
Financial Group, Inc. ("Insignia"). In addition, an affiliate of
Insignia acquired the limited partnership interests of the Partnership
held by DeForest I and certain of its affiliates (see Note 10).
CENTURY PROPERTIES FUND XV
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Distributions
On July 26, 1995, the Partnership distributed $6,299,000 ($70 per
unit) to the limited partners and $128,000 to the general partners
from the proceeds of the sale of the Partnership's joint venture
property, Plumtree Apartments.
On January 11, 1996, the Partnership distributed $3,920,000 ($43.57
per unit) to the limited partners and $80,000 to the general partners
primarily from the proceeds from the sale of the Partnership's
Farmer's Lane Plaza property (see Note 6).
Consolidation
The consolidated financial statements include the statements of the
Partnership, its wholly owned subsidiaries and its joint venture,
Plumtree Apartments (80 percent owned) which was sold on April 12,
1995 (see Note 6). All significant intercompany transactions and
balances have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from
those estimates.
Fair Value of Financial Instruments
In 1995, the Partnership implemented Statement of Financial Accounting
Standards ("SFAS") No. 107, "Disclosures about Fair Value of Financial
Instruments," as amended by SFAS No. 119, "Disclosures about Derivative
Financial Instruments and Fair Value of Financial Instruments," which
requires disclosure of fair value information about financial
instruments, whether or not recognized in the balance sheet, for which
it is practicable to estimate fair value. Fair value is defined in
the SFAS as the amount at which the instrument could be exchanged in a
current transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes that the carrying amount
of its financial instruments (except for long term debt) approximates
fair value due to the short term maturity of these instruments. The
fair value of the Partnership's long term debt, after discounting the
scheduled loan payments to maturity, is approximately $29,336,000.
The carrying amount of long term debt includes notes whereby the
Partnership would be required to pay an amount significantly in excess
of their fair value in order to prepay such notes. Consequently, the
Partnership would be unable to refinance these properties to obtain
the aforementioned calculated debt amounts.
CENTURY PROPERTIES FUND XV
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Real Estate
Real estate is stated at cost. Acquisition fees are capitalized as a
cost of real estate. In 1995, the Partnership adopted SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of ", which requires impairment losses to be
recognized for long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows are not
sufficient to recover the asset's carrying amount. The impairment
loss is measured by comparing the fair value of the asset to its
carrying amount. The adoption of the SFAS had no effect on the
Partnership's financial statements.
Cash and Cash Equivalents
The Partnership considers all highly liquid investments with an
original maturity of three months or less at the time of purchase to
be cash equivalents.
Concentration of Credit Risk
The Partnership maintains cash balances at institutions insured up to
$100,000 by the Federal Deposit Insurance Corporation. Balances in
excess of $100,000 are usually invested in repurchase agreements,
which are collateralized by United States Treasury obligations. Cash
balances exceeded these insured levels during the year. At December
31, 1995, the Partnership had approximately $1,100,000 invested in
overnight repurchase agreements, secured by United States Treasury
obligations, which are included in cash and cash equivalents.
Depreciation
Depreciation is computed by the straight-line method over estimated
useful lives currently ranging from 27.5 to 39 years for buildings and
improvements and six to seven years for furnishings.
Deferred Costs
Deferred costs represent deferred financing costs, leasing commissions
and lease buyout fees. Deferred financing costs are amortized as
interest expense over the lives of the related loans or expensed, if
financing is not obtained. Deferred leasing commissions and deferred
lease buyout fees are amortized over the life of the applicable lease.
Such amortization is charged to operating expenses. At December 31,
1995 and 1994, accumulated amortization of deferred costs was $346,000
and $508,000, respectively.
CENTURY PROPERTIES FUND XV
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Net Income (Loss) Per Limited Partnership Unit
The net income (loss) per limited partnership unit is computed by
dividing net income (loss) allocated to the limited partners by 89,980
units outstanding.
Income Taxes
Taxable income or loss of the Partnership is reported in the income
tax returns of its partners. Accordingly, no provision for income
taxes is made in the financial statements of the Partnership.
Reclassification
Certain amounts from 1994 have been reclassified to conform to the
1995 presentation.
2. TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES
In accordance with the partnership agreement, the Partnership may be
charged by the general partners and affiliates for services provided
to the Partnership. From March 1988 to December 1992, such amounts
were assigned pursuant to a services agreement by the general partners
and affiliates to Metric Realty Services, L.P. ("MRS"), which
performed partnership management and other services for the
Partnership.
On January 1, 1993, Metric Management, Inc. ("MMI"), successor to MRS,
a company which is not affiliated with the general partners, commenced
providing certain property and portfolio management services to the
Partnership under a new services agreement. As provided in the new
services agreement effective January 1, 1993, no reimbursements were
made to the general partner and affiliates after December 31, 1992.
Subsequent to December 31, 1992, reimbursements were made to MMI. On
December 16, 1993, the services agreement with MMI was modified and,
as a result thereof, the Managing General Partner began directly
providing cash management and other Partnership services on various
dates commencing December 23, 1993. On March 1, 1994, an affiliate of
NPI Equity commenced providing certain property management services
(see Notes 1 and 10). Related party expenses for the years ended
December 31, 1995, 1994 and 1993 were as follows:
1995 1994 1993
-------- -------- --------
Property management fees $399,000 $319,000 $ --
Real estate tax reduction fees 57,000 -- --
Reimbursement of expenses:
Partnership accounting and investor
services 152,000 162,000 --
Professional services -- 25,000 --
-------- -------- ---------
Total $608,000 $506,000 $ --
======== ======== =========
CENTURY PROPERTIES FUND XV
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES (Continued)
Property management fees and real estate tax reduction fees are
included in operating expenses. Reimbursed expenses are primarily
included in general and administrative expenses. In addition,
approximately $259,000 of insurance premiums which were paid to an
affiliate of NPI Inc. under a master insurance policy arranged by such
affiliate, are included in operating expenses for the year ended
December 31, 1995.
In accordance with the partnership agreement, the general partners
were allocated their two percent continuing interest in the
Partnership's net income (loss) and taxable income (loss). Gains from
dispositions of the Partnership's properties were allocated first to
the general partners to the extent of distributions received or they
were entitled to receive, then two percent of the remainder.
3. RELATED PARTY TRANSACTIONS
Apart from the reimbursements paid to the general partners and
affiliates as set forth above, the Partnership also has an agreement
with its joint venture partner to provide for the management and
operation of the joint venture property. Fees paid pursuant to this
agreement, generally based upon a percentage of gross revenues from
the operation of the property, were $30,000, $104,000 and $95,000 in
1995, 1994 and 1993, respectively.
4. REAL ESTATE
Real estate, at December 31, 1995 and 1994, is summarized as follows:
Residential Commercial
Properties Properties Total
----------- ----------- -----------
1995:
Land $ 6,765,000 $ 1,607,000 $ 8,372,000
Buildings and improvements 36,020,000 11,824,000 47,844,000
Furnishings 3,609,000 120,000 3,729,000
----------- ----------- -----------
Total 46,394,000 13,551,000 59,945,000
Accumulated depreciation (19,394,000) (5,096,000) (24,490,000)
----------- ----------- -----------
Real estate, net $27,000,000 $ 8,455,000 $35,455,000
=========== =========== ===========
CENTURY PROPERTIES FUND XV
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
4. REAL ESTATE (Continued)
Residential Commercial
Properties Properties Total
----------- ----------- -----------
1994:
Land $ 7,416,000 $ 3,063,000 $10,479,000
Buildings and improvements 42,361,000 17,308,000 59,669,000
Furnishings 4,444,000 145,000 4,589,000
----------- ----------- -----------
Total 54,221,000 20,516,000 74,737,000
Accumulated depreciation (21,973,000) (7,139,000) (29,112,000)
----------- ----------- -----------
Real estate, net $32,248,000 $13,377,000 $45,625,000
=========== =========== ===========
Subsequent to the balance sheet date, the Partnership sold its
Northbank Complex (see Note 10).
5. NOTES PAYABLE
Individual rental properties are pledged as collateral for the related
notes payable. Interest rates on the notes payable ranged from 8.5 to
11 percent during the year ended December 31, 1995. Certain notes have
been discounted to yield interest from 14.5 percent to 16.5 percent
during the year ended December 31, 1995. Amortization of these
discounted amounts was $347,000, $393,000 and $670,000 for 1995, 1994
and 1993, respectively. The notes are payable monthly.
Principal payments at December 31, 1995 are required as follows:
1996 $ 2,905,000
1997 506,000
1998 555,000
1999 2,852,000
2000 536,000
Thereafter 19,371,000
Unamortized discount (894,000)
-----------
Total $25,831,000
===========
CENTURY PROPERTIES FUND XV
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
5. NOTES PAYABLE (Continued)
Principal payments for Northbank Complex, which was sold in the first
quarter of 1996, are reflected in 1996 regardless of their original due
date (see Note 10).
On June 15, 1994, the Partnership obtained a new first mortgage
encumbering the Lakeside Place Apartments in the amount of $14,868,000.
The loan requires monthly payments of $126,000 at 9.60% interest and is
being amortized over 30 years. The loan matures on July 1, 2001 with a
balloon payment of $14,043,000. As specified in the loan agreement,
the Partnership was required to establish a reserve account to be used
for the completion of certain renovations. The Partnership incurred
closing costs and fees of $393,000 in connection with this refinancing.
As part of the agreement, the Partnership was required to form a
wholly-owned subsidiary, Century Lakeside L.P., and transfer the assets
and liabilities of Lakeside Place Apartments to the subsidiary.
On September 10, 1994, the Partnership obtained a modification of the
existing mortgage encumbering the Phoenix Business Park property in the
amount of $2,778,000. The mortgage, as modified, requires monthly
payments of $27,000 at 8.625% interest and is being amortized over 16
years. As specified in the loan agreement, the Partnership was
required to establish a repair reserve account. The loan matures on
September 10, 1999 with a balloon payment of $2,284,000. The
Partnership incurred closing costs and fees of $43,000 in connection
with the modification.
On November 16, 1995, the Partnership obtained a new first mortgage
encumbering the Northbank Complex in the amount of $2,443,000. The
partnership incurred closing costs and fees of $99,000 in connection
with this refinancing. On January 30, 1996, the Partnership sold its
Northbank Complex (see Note 10).
Amortization of deferred financing costs totaled $100,000, $71,000 and
$104,000 for 1995, 1994 and 1993, respectively.
6. DISPOSITION OF RENTAL PROPERTIES
On April 12, 1995, an affiliate of the Partnership's joint venture
partner in Plumtree Apartments acquired, pursuant to a right of first
refusal, Plumtree Apartments for $12,500,000. After repayment of
existing loans of $4,595,000, a prepayment premium of $42,000 and
closing expenses of $113,000, net proceeds received by the joint
venture were $7,750,000. The Partnership retained $6,229,000 of the
$7,750,000 proceeds in accordance with the joint venture agreement.
For financial statement purposes, the sale resulted in a gain of
$7,866,000.
On December 29, 1995, the Partnership's Farmer's Lane Plaza property
was sold to an unaffiliated third party for $8,750,000. After
satisfaction of the existing first and second notes payable totaling
$4,444,000, a prepayment premium of $36,000 and closing expenses of
$275,000, the Partnership received approximately $3,995,000 of net
proceeds. For financial statement purposes, the sale resulted in a
gain of $3,618,000.
CENTURY PROPERTIES FUND XV
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
6. DISPOSITION OF RENTAL PROPERTIES (Continued)
In connection with the sale of properties and the repayment of the
related outstanding debt, the Partnership recognized an extraordinary
loss on extinguishment of debt of $720,000, consisting of th write-off
of unamortized discounts, deferred loan costs and prepayment premiums.
7. MINIMUM FUTURE RENTAL REVENUES
Minimum future rental revenues from operating leases having
non-cancelable lease terms in excess of one year are as follows:
1996 $ 683,000
1997 638,000
1998 466,000
1999 435,000
2000 330,000
Thereafter 1,345,000
----------
Total $3,897,000
==========
Subsequent to the balance sheet date, the Partnership sold its
Northbank Complex (see Note 10). The minimum future rental revenues
from Northbank Complex have been excluded.
Amortization of deferred leasing commissions and deferred lease buyout
fees totaled $84,000, $77,000 and $76,000 for 1995, 1994 and 1993,
respectively.
8. RECONCILIATION TO INCOME TAX METHOD OF ACCOUNTING
The differences between the accrual method of accounting for income tax
reporting and the accrual method of accounting used in the consolidated
financial statements are as follows:
1995 1994 1993
----------- ----------- -----------
Net income (loss) -- financial
statements $ 9,192,000 $ (903,000) $(1,395,000)
Differences resulted from:
Depreciation (935,000) (973,000) (900,000)
Gain on property dispositions
-- net 3,510,000 -- --
Unearned revenue (4,000) (16,000) (9,000)
Amortization of notes payable
discount 347,000 393,000 670,000
Minority interest (1,873,000) (18,000) (14,000)
Other (80,000) 82,000 64,000
----------- ----------- -----------
Net income (loss) -- income
tax method $10,157,000 $(1,435,000) $(1,584,000)
=========== =========== ===========
CENTURY PROPERTIES FUND XV
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
8. RECONCILIATION TO INCOME TAX METHOD OF ACCOUNTING (Continued)
Taxable income (loss) per limited
partnership unit after giving
effect to the allocation
to the general partners $ 118 $ (16) $ (17)
=========== =========== ===========
Partners' equity -- financial
statements $15,708,000 $12,943,000 $13,846,000
Differences resulted from:
Sales commissions and
organization expenses 10,322,000 10,322,000 10,322,000
Depreciation (16,714,000 (19,218,000) (18,245,000)
Payments credited to rental
properties 332,000 464,000 464,000
Unearned revenue (2,000) 2,000 18,000
Amortization of notes
payable discount 7,224,000 8,662,000 8,269,000
Minority interest -- (187,000) (169,000)
Other 43,000 195,000 113,000
----------- ----------- -----------
Partners' equity -- income
tax method $16,913,000 $13,183,000 $14,618,000
=========== =========== ===========
9. BASIS OF PRESENTATION AND OPERATING STRATEGY FOR THE YEAR ENDED
DECEMBER 31, 1993
The accompanying consolidated financial statements for the year ended
December 31, 1993 have been prepared on a going concern basis which
contemplates the realization of assets and satisfaction of liabilities
in the normal course of business. The Partnership holds investments in
and operates properties in real estate markets that are or were
experiencing unfavorable economic conditions. Each of the
Partnership's properties competes in an area which normally contains
numerous other real properties which may be considered competitive.
Markets in many areas remain depressed due in part to overbuilding,
which continues to depress commercial, office and residential rental
rates. In addition, the availability of favorable financing rates, as
well as affordable prices for the purchase of single family homes has
created increased competition for the declining tenant base and has
inhibited rate growth at certain of the apartment properties. The
level of sales of existing properties has been affected by the limited
availability of financing and buyers in real estate markets. Balloon
payments of $14,200,000 on Lakeside Place Apartments and $2,800,000 on
Phoenix Business Park were due in May 1994. The consolidated financial
statements do not include any adjustments that might have resulted from
the ultimate outcome of these uncertainties.
The Partnership refinanced the mortgage encumbering Lakeside Place
Apartments and obtained a modification of the Phoenix Business Park
debt during 1994 (see Note 5).
CENTURY PROPERTIES FUND XV
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
10. SUBSEQUENT EVENTS
On January 19, 1996, the stockholders of NPI, Inc. sold all of the issued
and outstanding stock of NPI, Inc. to an affiliate of Insignia. In
addition, an affiliate of Insignia acquired the limited partnership
interests of the Partnership held by DeForest I and certain of its
affiliates (see Note 1). As a result of the transaction, the Managing
General Partner of the Partnership is controlled by Insignia. Insignia
affiliates now provide property management services to the Partnership's
residential properties, asset management services to the Partnership,
maintain its books and records and oversee its operations.
On February 1, 1996, the Partnership's Northbank Complex property was
sold to an unaffiliated third party for $4,605,000. After satisfaction
of the notes payable and closing costs, the Partnership received net
proceeds of approximately $1,900,000. For financial reporting purposes,
the Partnership will record a gain on sale of approximately $850,000
during the first quarter of 1996.
CENTURY PROPERTIES FUND XV
(A Limited Partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION SCHEDULE III
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- -------- -------- -------- -------- --------
Cost capitalized Gross amount
Initial cost subsequent to carried at
to Partnership acquisition close of period (1)
-------------------------- ----------------------- ------------------------------------
Buildings and Carrying Buildings and
Description Encumbrances (4) Land Improvements Improvements Costs Land Improvements Total (2)
- ----------- ---------------- ---- ------------- ------------ -------- ---- ------------- ---------
(Amounts in thousands)
----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PARTNERSHIP:
Preston Creek
Apartments
Dallas, Texas $ 2,917 $ 2,118 $ 5,793 $1,166 $ (39) $2,107 $ 6,931 $ 9,038
Northbank Complex
Eugene, Oregon 2,443 897 4,605 440 (251) 861 4,830 5,691
Phoenix Business
Park
Atlanta, Georgia 2,672 746 5,176 1,938 -- 746 7,114 7,860
SUBSIDIARIES:
Lakeside Place
Apartments
Houston, Texas 14,738 3,659 21,481 4,369 -- 3,659 25,850 29,509
Summerhill
Apartments
Dallas, Texas 3,061 1,003 6,069 817 (42) 999 6,848 7,847
---------------- -------- ------------- ------------ -------- -------- ------------- ---------
TOTAL $25,831 $8,423 $43,124 $8,730 $(332) $8,372 $51,573 $59,945
================ ======== ============= ============ ======== ======== ============= =========
<CAPTION>
Column A Column F Column G Column H Column I
- -------- ------------ ------------ -------- -------------
Life
on which
depreciation
is computed
Accumulated in latest
Depreciation Date of Date statement of
Description (3) Construction Acquired operations
- ----------- ------------ ------------ -------- -------------
(Amounts in thousands)
----------------------
<S> <C> <C> <C> <C>
PARTNERSHIP:
Preston Creek
Apartments
Dallas, Texas $ 3,208 10/79 8/81 6-27.5 Yrs.
Northbank Complex
Eugene, Oregon 2,205 8/79 12/81 6-39 Yrs.
Phoenix Business
Park
Atlanta, Georgia 2,891 6/80 5/82 6-39 Yrs.
SUBSIDIARIES:
Lakeside Place
Apartments 10/76
Houston, Texas 12,835 10/78 (5) 12/80 6-27.5 Yrs.
Summerhill
Apartments
Dallas, Texas 3,351 9/79 8/81 6-27.5 Yrs.
------------
TOTAL $24,490
============
</TABLE>
See accompanying notes.
SCHEDULE III
CENTURY PROPERTIES FUND XV
(A Limited Partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
NOTES:
(1) The aggregate cost for Federal income tax purposes
is $68,411,000.
(2) Balance, January 1, 1993 $72,174,000
Improvements capitalized subsequent to acquisition 1,658,000
-----------
Balance, December 31, 1993 73,832,000
Improvements capitalized subsequent to acquisition 905,000
-----------
Balance, December 31, 1994 74,737,000
Improvements capitalized subsequent to acquisition 1,457,000
Cost of rental properties sold (16,249,000)
-----------
Balance December 31, 1995 $59,945,000
===========
(3) Balance, January 1, 1993 $24,417,000
Additions charged to expense 2,324,000
-----------
Balance, December 31, 1993 26,741,000
Additions charged to expense 2,371,000
-----------
Balance, December 31, 1994 29,112,000
Additions charged to expense 2,250,000
Accumulated depreciation of rental properties sold (6,872,000)
-----------
Balance, December 31, 1995 $24,490,000
===========
(4) Encumbrances shown are net of discounts totaling
$894,000.
(5) Construction completed in two phases.
<PAGE>
CENTURY PROPERTIES FUND XVI
(A Limited Partnership)
CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Reports............................................................................................ F - 2
Consolidated Financial Statements:
Balance Sheets at December 31, 1995 and 1994........................................................................ F - 4
Statements of Operations for the Years Ended December 31, 1995, 1994 and 1993....................................... F - 5
Statements of Partners' Equity for the Years Ended
December 31, 1995, 1994 and 1993................................................................................. F - 6
Statements of Cash Flows for the Years Ended December 31, 1995, 1994 and 1993....................................... F - 7
Notes to Consolidated Financial Statements.......................................................................... F - 8
Financial Statement Schedule:
Schedule III - Real Estate and Accumulated Depreciation at December 31, 1995................................. F - 14
Financial statements and financial statement schedules not included have been
omitted because of the absence of conditions under which they are required or
because the information is included elsewhere in this Report.
</TABLE>
To the Partners
Century Properties Fund XVI
Greenville, South Carolina
Independent Auditors' Report
We have audited the accompanying consolidated balance sheets of Century
Properties Fund XVI (a limited partnership) (the "Partnership") as of December
31, 1995 and 1994, and the related consolidated statements of operations,
partners' equity and cash flows for the years then ended. Our audits also
included the additional information supplied pursuant to Item 14(a)(2). These
consolidated financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Century
Properties Fund XVI as of December 31, 1995 and 1994, and the consolidated
results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles. Also in our opinion,
the related financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly, in
all material respects, the information set forth therein.
Imowitz Koenig & Co., LLP
Certified Public Accountants
New York, N.Y.
January 22, 1996
INDEPENDENT AUDITORS' REPORT
Century Properties Fund XVI:
We have audited the accompanying statements of operations, partners' equity and
cash flows of Century Properties Fund XVI (a limited partnership) (the
"Partnership") for the year ended December 31, 1993. These financial statements
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the results of operations and cash flows of the Partnership for the
year ended December 31, 1993 in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
San Francisco, California
March 18, 1994
CENTURY PROPERTIES FUND XVI
(A Limited Partnership)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1994
---- ----
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 846,000 $ 932,000
Other assets 227,000 189,000
Real Estate:
Real estate 14,497,000 14,439,000
Accumulated depreciation (6,414,000) (5,958,000)
------------ -------------
Real estate, net 8,083,000 8,481,000
Deferred financing costs, net 315,000 181,000
------------ -------------
Total assets $ 9,471,000 $ 9,783,000
============ =============
LIABILITIES AND PARTNERS' EQUITY
Notes payable $ 7,550,000 $ 7,000,000
Accrued expenses and other liabilities
(including $38,000 to a related party in 1995) 203,000 370,000
------------ -------------
Total liabilities 7,753,000 7,370,000
------------ -------------
Partners' Equity (Deficit):
General partners (3,786,000) (3,738,000)
Limited partners (130,000 units outstanding at
December 31, 1995 and 1994) 5,504,000 6,151,000
------------ -------------
Total partner's equity 1,718,000 2,413,000
------------ -------------
Total liabilities and partners' equity $ 9,471,000 $ 9,783,000
============ =============
</TABLE>
See notes to consolidated financial statements.
CENTURY PROPERTIES FUND XVI
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Revenues:
Rental $2,636,000 $ 2,511,000 $ 2,369,000
Interest and other income 42,000 36,000 67,000
---------- ------------- ------------
Total revenues 2,678,000 2,547,000 2,436,000
---------- ------------- ------------
Expenses (including $369,000
and $250,000 paid to the
general partners and
affiliates in 1995 and 1994):
Operating 1,646,000 1,808,000 1,466,000
Interest 795,000 734,000 730,000
Depreciation 456,000 459,000 459,000
General and administrative 256,000 301,000 206,000
---------- ------------- ------------
Total expenses 3,153,000 3,302,000 2,861,000
---------- ------------- ------------
Loss before extraordinary item (475,000) (755,000) (425,000)
Extraordinary item:
Loss on extinguishment of debt (220,000) - -
---------- ------------- ------------
Net loss $ (695,000) $ (755,000) $ (425,000)
========== ============= ============
Net loss per limited partnership
assignee unit:
Loss before extraordinary item $ (3.40) $ (5.41) $ (3.05)
Extraordinary item (1.58) - -
---------- ------------- ------------
Net loss $ (4.98) $ (5.41) $ (3.05)
========== ============= ============
</TABLE>
See notes to consolidated financial statements.
CENTURY PROPERTIES FUND XVI
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
General Limited Total
partners' partners' partners'
(deficit) equity equity
--------- ------ ------
<S> <C> <C> <C>
Balance - January 1, 1993 $ (3,657,000) $ 7,250,000 $ 3,593,000
Net loss (29,000) (396,000) (425,000)
------------ ------------ --------------
Balance - December 31, 1993 (3,686,000) 6,854,000 3,168,000
Net loss (52,000) (703,000) (755,000)
------------ ------------ --------------
Balance - December 31, 1994 (3,738,000) 6,151,000 2,413,000
Net loss (48,000) (647,000) (695,000)
------------ ------------ --------------
Balance - December 31, 1995 $ (3,786,000) $ 5,504,000 $ 1,718,000
============ ============ ==============
</TABLE>
See notes to consolidated financial statements.
CENTURY PROPERTIES FUND XVI
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $ (695,000) $ (755,000) $ (425,000)
Adjustments to reconcile net (loss)
to net cash (used in) provided by
operating activities:
Depreciation and amortization 529,000 531,000 531,000
Extraordinary item - extinguishment
of debt 220,000 - -
Changes in operating assets and liabilities:
Other assets (38,000) (166,000) 3,000
Accrued expenses and other liabilities (292,000) 32,000 (6,000)
----------- ----------- ------------
Net cash (used in) provided by operating activities (276,000) (358,000) 103,000
----------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from cash investments - 692,000 990,000
Purchase of cash investments - - (692,000)
Additions to real estate (58,000) (64,000) (245,000)
----------- ----------- ------------
Net cash (used in) provided by investing activities (58,000) 628,000 53,000
----------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Notes payable proceeds 7,550,000 - -
Satisfaction of notes payable (7,000,000) - -
Deferred financing costs paid (190,000) - -
Costs paid to extinguish debt (112,000) - -
----------- ----------- ------------
Net cash provided by financing activities 248,000 - -
----------- ----------- ------------
(Decrease) Increase in Cash and Cash Equivalents (86,000) 270,000 156,000
Cash and Cash Equivalents at Beginning of Year 932,000 662,000 506,000
----------- ----------- ------------
Cash and Cash Equivalents at End of Year $ 846,000 $ 932,000 $ 662,000
=========== =========== ============
Supplemental Disclosure of Cash Flow Information:
Interest paid in cash during the year $ 748,000 $ 634,000 $ 630,000
========= =========== ============
Refinancing of notes payable (see Note 4)
</TABLE>
See notes to consolidated financial statements.
CENTURY PROPERTIES FUND XVI
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Century Properties Fund XVI (the "Partnership") is a limited partnership
organized under the laws of the State of California to acquire, hold for
investment, and ultimately sell income-producing real estate. The
Partnership currently owns two residential apartment complexes located in
Texas and Florida. The general partners are Fox Realty Investors ("FRI"),
a California general partnership, and Fox Capital Management Corporation
("FCMC"), a California corporation. The capital contributions of
$65,000,000 ($500 per unit) were made by the limited partners, including
200 Limited Partnership Units purchased by FCMC.
On December 6, 1993, the shareholders of FCMC entered into a Voting Trust
Agreement with NPI Equity Investments II, Inc. ("NPI Equity" or the
"Managing General Partner") pursuant to which NPI Equity was granted the
right to vote 100 percent of the outstanding stock of FCMC and NPI Equity
became the managing general partner of FRI. As a result, NPI Equity
became responsible for the operation and management of the business and
affairs of the Partnership and the other investment partnerships
originally sponsored by FCMC and/or FRI. NPI Equity is a wholly-owned
subsidiary of National Property Investors, Inc. ("NPI, Inc."). The
shareholders of FCMC and the partners of FRI retain indirect economic
interests in the Partnership and such other investment limited
partnerships, but have ceased to be responsible for the operation and
management of the Partnership and such other partnerships.
In October 1994 DeForest Ventures I L.P. ("DeForest I") made a tender
offer for limited partnership interests in the partnership, as well as
eleven affiliated limited partnerships. DeForest Ventures II, L.P.
("DeForest II") made tender offers for limited partnership interests in
seven affiliated limited partnerships. Shareholders who controlled
DeForest Capital I Corporation, the sole general partner of DeForest I,
also controlled NPI, Inc. As of December 31, 1995, DeForest I had
acquired approximately 36% of the total limited partnership units of the
Partnership (see Note 6).
On January 19, 1996, the stockholders of NPI, Inc. sold all of the issued
and outstanding stock of NPI, Inc. to an affiliate of Insignia
Financial Group, Inc. ("Insignia"). In addition, an affiliate of
Insignia acquired the limited partnership interests of the Partnership
held by DeForest I and certain of its affiliates (see Note 6).
Consolidation
The 1995 consolidated financial statements include the accounts of the
Partnership and its wholly-owned subsidiaries formed in December 1995.
All significant intercompany transactions and balances have been
eliminated.
CENTURY PROPERTIES FUND XVI
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND 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 amounts reported in the financial
statements and accompanying notes. Actual results could differ from
those estimates.
Fair Value of Financial Instruments
In 1995, the Partnership implemented Statement of Financial Accounting
Standards ("SFAS") No. 107, "Disclosures about Fair Value of Financial
Instruments," as amended by SFAS No. 119, "Disclosures about Derivative
Financial Instruments and Fair Value of Financial Instruments," which
requires disclosure of fair value information about financial
instruments, whether or not recognized in the balance sheet, for which it
is practicable to estimate fair value. Fair value is defined in the SFAS
as the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes that the carrying amount of
its financial instruments (except for long term debt) approximates fair
value due to the short term maturity of these instruments. The fair value
of the Partnership's long term debt approximates its carrying balance,
since the debt was refinanced in 1995.
Real Estate
Real estate is stated at cost. Acquisition fees are capitalized as a cost
of real estate. In 1995, the Partnership adopted SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of ", which requires impairment losses to be
recognized for long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows are not sufficient
to recover the asset's carrying amount. The impairment loss is measured
by comparing the fair value of the asset to its carrying amount. The
adoption of the SFAS had no effect on the Partnership's financial
statements.
Cash and Cash Equivalents
The Partnership considers all highly liquid investments with an original
maturity of three months or less at the time of purchase to be cash
equivalents.
CENTURY PROPERTIES FUND XVI
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Concentration of Credit Risk
The Partnership maintains cash balances at institutions insured up to
$100,000 by the Federal Deposit Insurance Corporation. Balances in excess
of $100,000 are usually invested in money market accounts and repurchase
agreements, which are collateralized by United States Treasury
obligations. Cash balances exceeded these insured levels during the year.
Depreciation
Depreciation is computed by the straight-line method over estimated
useful lives ranging from 27.5 to 30 years for buildings and improvements
and from six to seven years for furnishings.
Deferred Financing Costs
Deferred financing costs are amortized as interest expense over the lives
of the related loans, or expensed, if financing is not obtained. At
December 31, 1994, accumulated amortization of deferred financing costs
totaled $180,000. There was no accumulated amortization at December 31,
1995.
Net (Loss) Per Limited Partnership Unit
The net (loss) per limited partnership unit is computed by dividing net
(loss) allocated to the limited partners by 130,000 units outstanding.
Income Taxes
Taxable income or loss of the Partnership is reported in the income tax
returns of its partners. Accordingly, no provision for income taxes is
made in the financial statements of the Partnership.
CENTURY PROPERTIES FUND XVI
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. TRANSACTIONS WITH THE GENERAL PARTNERS AND AFFILIATES
In accordance with the partnership agreement, the Partnership may be
charged by the general partners and affiliates for services provided to
the Partnership. From March 1988 to December 1992 such rights were
assigned pursuant to a services agreement by the general partners and
affiliates to Metric Realty Services, L.P., ("MRS") which performed
partnership management and other services for the Partnership.
On January 1, 1993, Metric Management, Inc., ("MMI"), successor to MRS, a
company which is not affiliated with the general partners, commenced
providing certain property and portfolio management services to the
Partnership under a new services agreement. As provided in the new
services agreement, effective January 1, 1993, no reimbursements were
made to the general partners and affiliates after December 31, 1992.
Subsequent to December 31, 1992, reimbursements were made to MMI.
On December 16, 1993, the services agreement with MMI was modified and,
as a result thereof, NPI Equity began directly providing cash
management and other Partnership services on various dates commencing
December 23, 1993. On March 1, 1994, an affiliate of NPI Equity
commenced providing certain property management services (See notes 1
and 6). Related party fees and expenses for the years ended
December 31, 1995, 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Financing fees $ 38,000 $ - $ -
Property management fees 132,000 103,000 -
Reimbursement of expenses:
Partnership accounting and investor services 144,000 129,000 -
Professional services - 18,000 -
--------- -------- ----------
Total $ 314,000 $250,000 $ -
========= ======== ==========
</TABLE>
Property management fees are included in operating expenses. Reimbursed
expenses are primarily included in general and administrative expenses.
Financing fees have been capitalized and are being amortized over the
life of the loans. Approximately $93,000 of insurance premiums, which
were paid to an affiliate of NPI Inc. under a master insurance policy
arranged by such affiliate, are included in operating expenses for the
year ended December 31, 1995.
In accordance with the partnership agreement, the general partners
received a partnership management incentive allocation equal to five
percent of net and taxable loss. The general partners were also allocated
their two percent continuing interest in the Partnership's net and
taxable loss after the preceding allocation. Upon sale of all properties
and termination of the Partnership, the general partners may be required
to contribute certain funds to the Partnership in accordance with the
partnership agreement.
CENTURY PROPERTIES FUND XVI
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
3. REAL ESTATE
Real estate, at December 31, 1995 and 1994, is summarized as follows:
1995 1994
---- ----
Land $ 1,409,000 $ 1,409,000
Buildings and improvements 11,798,000 11,759,000
Furnishings 1,290,000 1,271,000
------------- -------------
Total 14,497,000 14,439,000
Accumulated depreciation (6,414,000) (5,958,000)
-------------- -------------
Real estate, net $ 8,083,000 $ 8,481,000
============ ============
The real estate is pledged to collateralize the non-recourse mortgages
set forth in Note 4.
4. NOTES PAYABLE
On December 29, 1995, the Partnership refinanced its existing
indebtedness on its Woods of Inverness ("Woods") and The Landings
Apartments ("Landings") properties. The existing loans aggregating
$7,000,000, maturing in June 1997, were refinanced with two new loans
aggregating $7,550,000 with interest at 7.88 percent per annum, monthly
payments of approximately $55,000 and maturing in January 2006, with
balloon payments of approximately $6,737,000. The loans may not be
prepaid without penalty. In connection with the refinancings, the
Partnership was required to transfer the assets and liabilities of Woods
and Landings to Woods of Inverness CPF 16, L.P. and Landings CPF 16,
L.P., respectively, both newly formed, wholly-owned subsidiaries. In
connection with the refinancings, the Partnership incurred financings
costs and fees of $315,000, of which $190,000 was paid in 1995. The
Partnership recognized an extraordinary loss of $220,000 on the
refinancings which consists of prepayment premiums, loan termination fees
and the write-off of deferred financing costs.
Principal payments at December 31, 1995 are required as follows:
1996 $ 51,000
1997 60,000
1998 65,000
1999 71,000
2000 77,000
Thereafter 7,226,000
------------
$ 7,550,000
============
CENTURY PROPERTIES FUND XVI
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
5. RECONCILIATION TO INCOME TAX METHOD OF ACCOUNTING
The differences between the accrual method of accounting for income tax
reporting and the accrual method of accounting used in the financial
statements are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net (loss) - financial statements $ (695,000) $ (755,000) $ (425,000)
Differences resulted from:
Depreciation (32,000) (37,000) (38,000)
Interest expense - 1,000 8,000
----------- ------------ ------------
Net loss - income tax method $ (727,000) $ (791,000) $ (455,000)
============ ============= ============
Taxable loss per limited partnership unit
after giving effect to the allocation to the
general partners $ (5) $ (6) $ ( 3)
============ ============= ============
Partners' equity - financial statements $ 1,718,000 $ 2,413,000 $ 3,168,000
Differences resulted from:
Depreciation (6,194,000) (6,162,000) (6,125,000)
Sales commissions and organization expenses 8,275,000 8,275,000 8,275,000
Interest expense 1,183,000 1,183,000 1,182,000
Other (391,000) (391,000) (391,000)
------------ ------------ -----------
Partners' equity - income tax method $ 4,591,000 $ 5,318,000 $ 6,109,000
=========== ============ ===========
</TABLE>
6. SUBSEQUENT EVENT
On January 19, 1996, the stockholders of NPI, Inc. sold all of the issued
and outstanding stock of NPI, Inc. to an affiliate of Insignia. In
addition, an affiliate of Insignia acquired the limited partnership
interests of the Partnership held by DeForest I and certain of its
affiliates (see Note 1). As a result of the transaction, the Managing
General Partner of the Partnership is controlled by Insignia. Insignia
affiliates now provide property and asset management services to the
Partnership, maintain its books and records and oversee its operations.
SCHEDULE III
CENTURY PROPERTIES FUND XVI
(A Limited Partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
COLUMN COLUMN COLUMN COLUMN COLUMN COLUMN COLUMN COLUMN COLUMN
A B C D E F G H I
Cost Capitalized Gross Amount at
Initial Cost Subsequent Which Carried at Close
to Partnership to Acquisition of Period(1)
-------------- -------------- -----------------------------
Life
on which
Deprecia-
Accumu- Year tion is
Buildings Buildings lated of Date computed
and and Deprecia- Con- of in latest
Encum- Improve- Improve- Carrying Improve- Total tion struc- Acqui- statement of
Description brances Land ments ments Costs Land ments (2) (3) tion sition operations
- ----------- ------- ---- ----- ----- ----- ---- ----- --- --- ---- ------ ----------
(Amounts in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Landings
Apartments
Tampa, Florida $2,300 $ 504 $ 4,702 $ 472 $ - $ 504 $ 5,174 $ 5,678 $2,530 6/79 6/82 6 - 30 Yrs.
Woods of Inverness
Apartments
Houston, Texas 5,250 1,292 10,305 698 (3,476) 905 7,914 8,819 3,884 7/81 7/82 6 - 30 Yrs.
------ ------ ------- ------ ------- ------ ------- ------- ------
TOTAL $7,550 $1,796 $15,007 $1,170 $(3,476) $1,409 $13,088 $14,497 $6,414
====== ====== ======= ====== ======= ====== ======= ======= ======
</TABLE>
See accompanying notes.
SCHEDULE III
CENTURY PROPERTIES FUND XVI
(A Limited Partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
<TABLE>
<S> <C>
NOTES:
(1) The aggregate cost for Federal income tax purposes is $15,306,000.
(2) Balance, January 1, 1993 $ 14,130,000
Improvements capitalized subsequent to acquisition 245,000
------------
Balance, December 31, 1993 14,375,000
Improvements capitalized subsequent to acquisition 64,000
------------
Balance, December 31, 1994 14,439,000
Improvements capitalized subsequent to acquisition 58,000
------------
Balance, December 31, 1995 $ 14,497,000
============
(3) Balance, January 1, 1993 $ 5,040,000
Additions charged to expense 459,000
------------
Balance, December 31, 1993 5,499,000
Additions charged to expense 459,000
------------
Balance, December 31, 1994 5,958,000
Additions charged to expense 456,000
------------
Balance, December 31, 1995 $ 6,414,000
============
</TABLE>
<PAGE>
CENTURY PROPERTIES FUND XVII
(A Limited Partnership)
CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995
INDEX
Page
Independent Auditors' Reports............................................ F - 2
Consolidated Financial Statements:
Balance Sheets at December 31, 1995 and 1994........................ F - 4
Statements of Operations for the Years Ended December 31, 1995,
1994 and 1993..................................................... F - 5
Statements of Partners' Equity for the Years Ended
December 31, 1995, 1994 and 1993.................................. F - 6
Statements of Cash Flows for the Years Ended December 31, 1995,
1994 and 1993..................................................... F - 7
Notes to Consolidated Financial Statements.......................... F - 8
Financial Statement Schedule:
Schedule III - Real Estate and Accumulated Depreciation at
December 31, 1995................................................. F -16
Consolidated financial statements and financial statement schedules not included
have been omitted because of the absence of conditions under which they are
required or because the information is included elsewhere in the consolidated
financial statements.
To the Partners
Century Properties Fund XVII
Greenville, South Carolina
Independent Auditors' Report
We have audited the accompanying consolidated balance sheets of Century
Properties Fund XVII, (a limited partnership) (the "Partnership") and its wholly
owned subsidiaries as of December 31, 1995 and 1994 and the related consolidated
statements of operations, partners' equity and cash flows for the years then
ended. Our audits also included the additional information supplied pursuant to
Item 14(a)(2). These consolidated financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Century
Properties Fund XVII and its subsidiaries 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,
the related financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly, in
all material respects, the information set forth therein.
Imowitz Koenig & Co., LLP
Certified Public Accountants
New York, N.Y.
January 26, 1996
INDEPENDENT AUDITORS' REPORT
Century Properties Fund XVII:
We have audited the accompanying consolidated statements of operations,
partners' equity and cash flows of Century Properties Fund XVII (a limited
partnership) (the "Partnership") and its wholly-owned subsidiaries for the year
ended December 31, 1993. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the results of operations and cash flows of the Partnership
and its wholly-owned subsidiaries for the year ended December 31, 1993 in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
San Francisco, California
March 18, 1994
CENTURY PROPERTIES FUND XVII
(A Limited Partnership)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
------------------------------
1995 1994
------------ ------------
ASSETS
Cash and cash equivalents $ 2,623,000 $ 1,149,000
Reserve for capital improvements 836,000 1,596,000
Other assets 928,000 1,164,000
Real Estate:
Real Estate 65,648,000 64,917,000
Accumulated depreciation (26,013,000) (23,970,000)
Allowance for impairment of value (1,430,000) (1,430,000)
------------ ------------
Real estate, net 38,205,000 39,517,000
Deferred financing costs, net 483,000 615,000
------------ ------------
Total assets $ 43,075,000 $ 44,041,000
============ ============
LIABILITIES AND PARTNERS' EQUITY
Accrued expenses and other liabilities $ 678,000 $ 1,036,000
Notes payable 35,537,000 35,800,000
------------ ------------
Total liabilities 36,215,000 36,836,000
------------ ------------
Partners' Equity (Deficit):
General partners (6,922,000) (6,881,000)
Limited partners (75,000 units
outstanding at December 31,
1995 and 1994) 13,782,000 14,086,000
------------ ------------
Total partners' equity 6,860,000 7,205,000
------------ ------------
Total liabilities and partners'
equity $ 43,075,000 $ 44,041,000
============ ============
See notes to consolidated financial statements.
CENTURY PROPERTIES FUND XVII
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31,
---------------------------------------
1995 1994 1993
----------- ----------- -----------
Revenues:
Rental $11,874,000 $11,230,000 $12,651,000
Interest income 134,000 125,000 113,000
Gain on property disposition - - 145,000
----------- ----------- -----------
Total revenues 12,008,000 11,355,000 12,909,000
----------- ----------- -----------
Expenses (including $1,180,000 and
$655,000 paid to the general
partners and affiliates in
1995 and 1994):
Operating 6,672,000 6,150,000 6,691,000
Interest 3,524,000 3,283,000 4,778,000
Depreciation 2,043,000 1,972,000 1,977,000
General and administrative 243,000 387,000 478,000
Provision for impairment of value - - 1,430,000
----------- ----------- -----------
Total expenses 12,482,000 11,792,000 15,354,000
----------- ----------- -----------
Loss before extraordinary item (474,000) (437,000) (2,445,000)
Extraordinary item:
Gain on extinguishment of debt 129,000 - 3,813,000
----------- ----------- -----------
Net (loss) income $ (345,000) $ (437,000) $ 1,368,000
=========== =========== ===========
Net (loss) income per limited
partnership unit:
Loss before extraordinary item $ (5.57) $ (5.13) $ (28.76)
Extraordinary item 1.52 - 44.85
----------- ----------- -----------
Net (loss) income $ (4.05) $ (5.13) $ 16.09
=========== =========== ===========
See notes to consolidated financial statements.
CENTURY PROPERTIES FUND XVII
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
General Limited Total
partners' partners' partners'
(deficit) equity equity
----------- ----------- -----------
Balance - January 1, 1993 $(6,990,000 $13,264,000 $ 6,274,000
Loss before extraordinary item (288,000) (2,157,000) (2,445,000)
Extraordinary item - Gain on
extinguishment of debt 449,000 3,364,000 3,813,000
----------- ----------- -----------
Balance - December 31, 1993 (6,829,000) 14,471,000 7,642,000
Net loss (52,000) (385,000) (437,000)
----------- ----------- -----------
Balance - December 31, 1994 (6,881,000) 14,086,000 7,205,000
Loss before extraordinary item (56,000) (418,000) (474,000)
Extraordinary item - Gain on
extinguishment of debt 15,000 114,000 129,000
----------- ----------- -----------
Balance - December 31, 1995 $(6,922,000) $13,782,000 $ 6,860,000
=========== =========== ===========
See notes to consolidated financial statements.
CENTURY PROPERTIES FUND XVII
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
--------------------------------------
1995 1994 1993
----------- ----------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (345,000) $ (437,000) $ 1,368,000
Adjustments to reconcile net (loss)
income to net cash provided by
operating activities:
Depreciation and amortization 3,299,000 2,924,000 3,138,000
Provision for impairment of value - - 1,430,000
Gain on extinguishment of debt (129,000) - (3,813,000)
Gain on property disposition - - (145,000)
Financing costs paid - - (499,000)
Changes in operating assets and
liabilities:
Other assets 236,000 (328,000) (236,000)
Accrued expenses and other
liabilites (358,000) 1,000 254,000
----------- ----------- ------------
Net cash provided by operating
activities 2,703,000 2,160,000 1,497,000
----------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property sales expenses paid - - (225,000)
Proceeds from disposition of real estate - - 4,800,000
Additions to real estate (692,000) (2,238,000) (1,191,000)
Reserve for capital improvements 760,000 73,000 (1,669,000)
----------- ----------- ------------
Net cash provided by (used in) investing
activities 68,000 (2,165,000) 1,715,000
----------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Satisfaction of note payable (910,000) - -
Notes payable proceeds - - 11,615,000
Notes payable principal payments (387,000) (357,000) (14,421,000)
----------- ----------- ------------
Net cash (used in) financing activities (1,297,000) (357,000) (2,806,000)
----------- ----------- ------------
Increase (Decrease) in Cash and Cash
Equivalents 1,474,000 (362,000) 406,000
Cash and Cash Equivalents at Beginning
of Year 1,149,000 1,511,000 1,105,000
----------- ----------- ------------
Cash and Cash Equivalents at End of Year $ 2,623,000 $ 1,149,000 $ 1,511,000
=========== =========== ============
Supplemental Disclosure of Cash Flow
Information:
Interest paid in cash during the
year $ 2,268,000 $ 2,330,000 $ 3,161,000
=========== =========== ============
Supplemental Disclosure of Non-Cash
Investing and Financing Activities:
Additions to real estate funded by
notes payable $ 39,000 $ - $ -
=========== =========== ============
Gain on extinguishment of debt in 1995
and 1993 - See Notes 5 and 7.
Disposition of rental properties in
1993 - See Note 7.
Amortization of deferred debt discount -
See Note 5.
See notes to consolidated financial statements.
CENTURY PROPERTIES FUND XVII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Century Properties Fund XVII (the "Partnership") is a limited partnership
organized under the laws of the State of California to acquire, hold for
investment, and ultimately sell income-producing real estate. The
Partnership currently owns five residential apartment complexes of which
three are located in Colorado, and one each in Florida and Texas. The
general partner of the Partnership is Fox Partners, a California general
partnership. The general partners of Fox Partners are Fox Capital
Management Corporation ("FCMC"), a California corporation, Fox Realty
Investors ("FRI"), a California general partnership, and Fox Partners 82,
a California general partnership. The capital contributions of
$75,000,000 ($1,000 per unit) were made by the limited partners,
including 100 Limited Partnership Units purchased by FCMC.
On December 6, 1993, the shareholders of FCMC entered into a Voting Trust
Agreement with NPI Equity Investments II, Inc. ("NPI Equity" or the
"Managing General Partner") pursuant to which NPI Equity was granted the
right to vote 100 percent of the outstanding stock of FCMC and NPI Equity
became the Managing General Partner of FRI. As a result, NPI Equity
became responsible for the operation and management of the business and
affairs of the Partnership and the other investment partnerships
originally sponsored by FCMC and/or FRI. NPI Equity is a wholly-owned
subsidiary of National Property Investors, Inc. ("NPI, Inc."). The
shareholders of FCMC and the partners in FRI retain indirect economic
interests in the Partnership and such other investment limited
partnerships, but have ceased to be responsible for the operation and
management of the Partnership and such other partnerships.
In October 1994, DeForest Ventures I L.P. ("DeForest I") made a tender
offer for limited partnership interests in the partnership, as well as
eleven affiliated limited partnerships. DeForest Ventures II, L.P.
("DeForest II") made tender offers for limited partnership interests in
seven affiliated limited partnerships. Shareholders who controlled
DeForest Capital I Corporation, the sole general partner of DeForest I,
also controlled NPI, Inc. As of December 31, 1995, DeForest I had
acquired approximately 34% of total limited partnership units of the
Partnership (see Note 9).
On January 19, 1996, the stockholders of NPI, Inc. sold all of the issued
and outstanding stock of NPI, Inc. to an affiliate of Insignia
Financial Group, Inc. ("Insignia"). In addition, an affiliate of
Insignia acquired the limited partnership interests of the Partnership
held by DeForest I and certain of its affiliates (see Note 9).
CENTURY PROPERTIES FUND XVII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Consolidation
The consolidated financial statements include the statements of the
Partnership and its wholly-owned subsidiaries formed in 1991. All
significant intercompany transactions and balances have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from
those estimates.
Fair Value of Financial Instruments
In 1995, the Partnership implemented Statement of Financial Accounting
Standards ("SFAS") No. 107, "Disclosures about Fair Value of Financial
Instruments," as amended by SFAS No. 119, "Disclosures about Derivative
Financial Instruments and Fair Value of Financial Instruments," which
requires disclosure of fair value information about financial
instruments, whether or not recognized in the balance sheet, for which it
is practicable to estimate fair value. Fair value is defined in the SFAS
as the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes that the carrying amount of
its financial instruments (except for long term debt) approximates fair
value due to the short term maturity of these instruments. The fair value
of the Partnership's long term debt, after discounting the scheduled loan
payments to maturity, approximates its carrying balance.
Cash and Cash Equivalents
The Partnership considers all highly liquid investments with an original
maturity of three months or less at the time of purchase to be cash
equivalents.
CENTURY PROPERTIES FUND XVII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Concentration of Credit Risk
The Partnership maintains cash balances at institutions insured up to
$100,000 by the Federal Deposit Insurance Corporation. Balances in excess
of $100,000 are usually invested in repurchase agreements, which are
collateralized by United States Treasury obligations. Cash balances
exceeded these insured levels during the year. At December 31, 1995,
substantially all of the Partnership's cash was invested in overnight
repurchase agreements, secured by United States Treasury obligations,
which are included in cash and cash equivalents.
Real Estate
Real estate is stated at cost. Acquisition fees are capitalized as a cost
of real estate. In 1995, the Partnership adopted SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of ", which requires impairment losses to be
recognized for long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows are not sufficient
to recover the asset's carrying amount. The impairment loss is measured
by comparing the fair value of the asset to its carrying amount. The
adoption of the SFAS had no effect on the Partnership's financial
statements.
Depreciation
Depreciation is computed by the straight-line method over estimated
useful lives currently ranging from 27.5 to 30 years for buildings and
improvements and six to seven years for furnishings.
Deferred Financing Costs
Financing costs are deferred and amortized, as interest expense, over the
lives of the related loans which range from three to nine years, or
expensed, if financing is not obtained. As of December 31, 1995 and 1994,
accumulated amortization amounted to $620,000 and $488,000, respectively.
Net Income (Loss) Per Limited Partnership Unit
The net income (loss) per limited partnership unit is computed by
dividing net income (loss) allocated to the limited partners by 75,000
units outstanding.
CENTURY PROPERTIES FUND XVII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
Taxable income or loss of the Partnership is reported in the income tax
returns of its partners. Accordingly, no provision for income taxes is
made in the financial statements of the Partnership.
Reclassification
Certain amounts from 1994 and 1993 have been reclassified to conform to
the 1995 presentation.
2. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES
In accordance with the Partnership Agreement, the Partnership may be
charged by the general partner and affiliates for services provided to
the Partnership. From March 1988 to December 1992, such amounts were
assigned pursuant to a services agreement by the general partner and
affiliates to Metric Realty Services, L.P. ("MRS"), which performed
partnership management and other services for the Partnership.
On January 1, 1993, Metric Management, Inc. ("MMI"), successor to MRS, a
company which is not affiliated with the general partner, commenced
providing certain property and portfolio management services to the
Partnership under a new services agreement. As provided in the new
services agreement effective January 1, 1993, no reimbursements were made
to the general partner and affiliates after December 31, 1992. Subsequent
to December 31, 1992, reimbursements were made to MMI. On December 16,
1993, the services agreement with MMI was modified and, as a result
thereof, NPI Equity began directly providing cash management and other
Partnership services on various dates commencing December 23, 1993. On
March 1, 1994, an affiliate of NPI Equity commenced providing certain
property management services (see Notes 1 and 9). Related party expenses
for the years ended December 31, 1995, 1994 and 1993 were as follows:
1995 1994 1993
---- ---- ----
Property management fees $ 592,000 $ 466,000 $ -
Real estate tax reduction fees 27,000 - -
Reimbursement of administrative expenses:
Partnership accounting and investor services 162,000 189,000 -
--------- --------- ---------
Total $ 781,000 $ 655,000 $ -
========= ========= =========
Property management fees and real estate tax reduction fees are included
in operating expenses. Reimbursed expenses are primarily included in
general and administrative expenses. In addition, approximately $399,000
of insurance premiums, which were paid to an affiliate of NPI Inc. under
a master insurance policy arranged by such affiliate, are included in
operating expenses for the year ended December 31, 1995.
CENTURY PROPERTIES FUND XVII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES (Continued)
In accordance with the partnership agreement, the general partner
received a partnership management incentive allocation equal to ten
percent of net and taxable income (loss) before gains on property
dispositions. The general partner is also allocated its two percent
continuing interest in the Partnership's net and taxable income (loss)
after the preceding allocation. The general partner is also allocated
gain on property dispositions to the extent it is entitled to receive
distributions and then twelve percent of any remaining gain.
3. RESERVE FOR CAPITAL IMPROVEMENTS
As of December 31, 1995 and 1994, the reserve for capital improvements
represents amounts held by lenders on Creekside, The Lodge, Coopers Pond
and Cherry Creek Gardens to be used for capital improvements and repairs
to the properties (see Note 5). These funds will be released to the
Partnership as improvements and repairs are completed.
4. REAL ESTATE
Real estate, at December 31, 1995 and 1994, is summarized as follows:
1995 1994
---------- -------
Land $ 7,237,000 $ 7,237,000
Buildings and improvements 52,679,000 52,349,000
Furnishings 5,732,000 5,331,000
------------ ------------
Total 65,648,000 64,917,000
Accumulated depreciation (26,013,000) (23,970,000)
Allowance for impairment of value (1,430,000) (1,430,000)
------------ ------------
Real Estate, Net $ 38,205,000 $ 39,517,000
============ ============
5. NOTES PAYABLE
Individual rental properties are pledged as collateral for the related
notes payable. Interest rates on the notes currently range from 7.875
percent to 8.63 percent, not including one of the notes which has been
discounted to yield interest at an annual rate of 10.25 percent.
Amortization of discounted amounts was $1,124,000, $794,000 and
$1,009,000 for 1995, 1994 and 1993, respectively.
CENTURY PROPERTIES FUND XVII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
5. NOTES PAYABLE (Continued)
Principal payments at December 31, 1995, are required as follows:
1996 $ 391,000
1997 423,000
1998 458,000
1999 11,199,000
2000 24,780,000
Thereafter 4,134,000
Unamortized discount (5,848,000)
------------
Total $35,537,000
============
Amortization of deferred financing costs totaled $132,000, $158,000 and
$143,000 for 1995, 1994 and 1993, respectively.
On August 3, 1995, the Partnership paid $910,000 to satisfy in full the
$1,039,000 second mortgage encumbering The Village in the Woods
Apartments at a discount. The debt forgiveness of $129,000 was recognized
as an extraordinary item in 1995.
In connection with the October 1993, debt modification agreements with
the three lenders of the Cooper's Pond Apartments notes payable, the
Partnership negotiated a discounted payoff of $250,000 on the $526,000
second loan on Phase I which was due in July 1995. The debt forgiveness
of $276,000 was recognized as an extraordinary item in 1993.
6. ALLOWANCE FOR IMPAIRMENT OF VALUE
The Partnership determined that, based upon current economic conditions
and projected operational cash flows, the recovery of the carrying value
of Cooper's Pond Apartments, located in Tampa, Florida, was not likely.
Accordingly, an allowance for impairment of value of $1,430,000 was
recognized in 1993 to reduce the carrying value of the property to its
estimated fair value. Carrying value includes the cost of the property
less accumulated depreciation and deferred financing costs. Due to the
current real estate market it is reasonably possible that the
Partnership's estimate of fair value will change within the next year.
7. PROPERTY DISPOSITIONS
In June 1993, the Partnership sold The Lakes Apartments, located in
Tucson, Arizona for $2,500,000. After payment of the existing loans of
$2,291,000 and expenses of the sale of approximately $70,000, proceeds to
the Partnership were approximately $139,000. The proceeds which were held
back in escrow, were released and received by the Partnership in June
1994. The net loss on the sale was $404,000. An allowance for impairment
of $438,000 was recognized in 1992 and an adjustment to the allowance was
recognized as a gain on property disposition of $34,000 in 1993.
CENTURY PROPERTIES FUND XVII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
7. PROPERTY DISPOSITIONS (Continued)
In August 1993, the Partnership sold Treehouse Apartments, located in
Tampa, Florida for $2,400,000. As part of the sale, a portion of the
existing loan in the amount of $1,991,000 was repaid at the time of sale.
The lender forgave the remaining principal balance of $100,000. After
payment of the existing loan and expenses of sale of $142,000, proceeds
to the Partnership were approximately $267,000. At the date of sale, the
carrying amount of land and improvements, net of the $785,000 provision
for impairment of value recognized in 1992, was $2,147,000. The gain on
sale, excluding the debt forgiveness of $100,000, was $111,000 and was
recognized in 1993.
In December 1993, the Partnership allowed Inwood Grove Apartments,
located in Houston, Texas, to be acquired by the lender through
foreclosure. Accordingly, the Partnership was relieved of the first notes
payable totaling $8,235,000, $1,749,000 of accrued and unpaid interest
and $200,000 in property taxes. The gain of $3,437,000 from debt
extinguishment was recognized in 1993 as an extraordinary item.
8. RECONCILIATION TO INCOME TAX METHOD OF ACCOUNTING
The differences between the accrual method of accounting for income tax
reporting and the accrual method of accounting used in the consolidated
financial statements are as follows:
1995 1994 1993
---- ---- ----
Net (loss) income - financial statements $ (345,000) $ (437,000) $ 1,368,000
Differences resulted from:
Provision for impairment of value - - 1,430,000
Depreciation and amortization (994,000) (1,028,000) (1,557,000)
Amortization of discount on notes
payable 1,124,000 794,000 1,975,000
Gain on property disposition - - 2,622,000
Interest forgiven - - 1,678,000
Interest capitalized for income tax
reporting 12,000 175,000 -
Debt forgiven - - (276,000)
Other 2,000 21,000 (70,000)
---------- ---------- -----------
Net (loss) income - income tax method $ (201,000) $ (475,000) $ 7,170,000
========== ========== ===========
Taxable (loss) income per Limited
Partnership Unit after allocation
of taxable (loss) to the general
partner $ (2.36) $ (5.59) $ 84.32
========== ========== ===========
CENTURY PROPERTIES FUND XVII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
8. RECONCILIATION TO INCOME TAX METHOD OF ACCOUNTING (Continued)
1995 1994 1993
---------- --------- -------
Partners' equity-financial statements $ 6,860,000 $ 7,205,000 $ 7,642,000
Differences resulted from:
Sales commissions and organization
expenses 9,324,000 9,324,000 9,324,000
Depreciation (27,936,000) (26,942,000) (25,914,000)
Provision for impairment of value 1,430,000 1,430,000 1,430,000
Leaseback termination (1,365,000) (1,365,000) (1,365,000)
Lease payments credited to rental
properties 2,068,000 2,068,000 2,068,000
Amortization of discount on notes
payable 10,486,000 9,362,000 8,568,000
Construction period interest and
taxes (483,000) (483,000) (483,000)
Debt forgiven (276,000) (276,000) (276,000)
Interest capitalized for income tax
reporting 187,000 175,000 -
Other (92,000) (94,000) (115,000)
----------- ----------- -----------
Partners' equity - income tax method $ 203,000 $ 404,000 $ 879,000
=========== =========== ===========
9. SUBSEQUENT EVENT
On January 19, 1996, the stockholders of NPI, Inc. sold all of the issued
and outstanding stock of NPI, Inc. to an affiliate of Insignia. In
addition, an affiliate of Insignia acquired the limited partnership
interests of the Partnership held by DeForest I and certain of its
affiliates (see Note 1). As a result of the transaction, the Managing
General Partner of the Partnership is controlled by Insignia. Insignia
affiliates now provide property and asset management services to the
Partnership, maintain its books and records and oversee its operations.
CENTURY PROPERTIES FUND XVII
(A Limited Partnership)
December 31, 1995
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- -------- -------- -------- -------- --------
Cost capitalized Gross amount
Initial cost subsequent to carried at
to company acquisition close of period (1)
----------------------- ------------------------- ------------------------------
Buildings and Carrying Buildings and
Description Encumbrances Land Improvements Improvements Costs Land Improvements Total (2)
- ----------- ------------ ---- ------------ ------------ ----- ---- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Residential
Properties
- ----------
Cherry Creek Gardens
Apartments
Englewood, Colorado $ 7,882 $1,320 $11,879 $ 1,278 - $1,320 $13,157 $14,477
The Lodge Apartments
Denver, Colorado 5,864 1,575 8,580 1,526 - 1,575 10,106 11,681
Creekside Apartments
Denver, Colorado 5,339 1,366 7,307 1,273 - 1,366 8,580 9,946
Cooper's Pond
Apartments
Tampa, Florida 7,878 1,476 12,505 1,515 - 1,476 14,020 15,496
The Village in the
Woods
Apartments
Cypress, Texas 8,574 2,852 20,915 1,547 (11,266) 1,500 12,548 14,048
------ ------- ------- -------- -------- ------ ------- -------
TOTAL $35,537 $8,589 $61,186 $7,139 $(11,266) $7,237 $58,411 $65,648
======= ======= ======= ====== ======== ====== ======= =======
<CAPTION>
Column A Column F Column G Column H Column I
- -------- -------- -------- -------- --------
Life
Accumulated on which
depreciation depreciation
and provision is computed
for in latest
impairment Date of Date statement of
Description (3) Construction Acquired operations
- ----------- ---------- ------------ -------- ----------
<S> <C> <C> <C> <C>
Residential
Properties
Cherry Creek Gardens
Apartments
Englewood, Colorado $ 5,943 1979 9/82 6-30 Yrs.
The Lodge Apartments
Denver, Colorado 4,510 1974 10/82 6-30 Yrs.
Creekside Apartments
Denver, Colorado 3,832 1974 10/82 6-30 Yrs.
Cooper's Pond
Apartments 1979 &
Tampa, Florida 7,548 1981(4) 3/83 6-30 Yrs.
The Village in the
Woods
Apartments
Cypress, Texas 5,610 12/83 10/82 6-30 Yrs.
-------
TOTAL $27,443
=======
</TABLE>
See accompanying notes.
SCHEDULE III
CENTURY PROPERTIES FUND XVII
(A Limited Partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
NOTES:
(1) The aggregate cost for Federal income tax purposes is
$71,953,000.
(2) Balance, January 1, 1993 $ 80,296,000
Improvements capitalized subsequent to acquisition 1,191,000
Cost of rental properties sold and foreclosed on (18,808,000)
------------
Balance, December 31, 1993 62,679,000
Improvements capitalized subsequent to acquisition 2,238,000
------------
Balance, December 31, 1994 64,917,000
Improvements capitalized subsequent to acquisition 731,000
------------
Balance, December 31, 1995 $ 65,648,000
============
(3) Balance, January 1, 1993 $ 27,619,000
Additions charged to expense 1,977,000
Accumulated depreciation of rental properties sold
and foreclosed on (6,375,000)
Provision for impairment of value 1,430,000
Allowance for impairment of value on property sold (1,223,000)
------------
Balance, December 31, 1993 23,428,000
Additions charged to expense 1,972,000
------------
Balance, December 31, 1994 25,400,000
Additions charged to expense 2,043,000
------------
Balance, December 31, 1995 $ 27,443,000
============
(4) Construction completed in two phases.
<PAGE>
CENTURY PROPERTIES FUND XVIII
(A Limited Partnership)
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Reports............................................................................................F - 2
Financial Statements:
Balance Sheets at December 31, 1995 and 1994........................................................................F - 4
Statements of Operations for the Years Ended December 31, 1995, 1994 and 1993.......................................F - 5
Statements of Partners' Equity (Deficit) for the Years Ended
December 31, 1995, 1994 and 1993.................................................................................F - 6
Statements of Cash Flows for the Years Ended December 31, 1995, 1994 and 1993.......................................F - 7
Notes to Financial Statements.......................................................................................F - 8
Financial Statement Schedule:
Schedule III - Real Estate and Accumulated Depreciation at December 31, 1995........................................F - 16
Financial statement schedules not included have been omitted because of the
absence of conditions under which they are required or because the information
is included elsewhere in the financial statements.
</TABLE>
To the Partners
Century Properties Fund XVIII
Atlanta, Georgia
Independent Auditors' Report
We have audited the accompanying balance sheets of Century Properties Fund XVIII
(a limited partnership) (the "Partnership") as of December 31, 1995 and 1994,
and the related statements of operations, partners' equity and cash flows for
the years then ended. Our audits also included the additional information
supplied pursuant to Item 14(a)(2). These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Century Properties Fund XVIII
as of December 31, 1995 and 1994, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles. Also in our opinion, the related 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.
Imowitz Koenig & Co., LLP
Certified Public Accountants
New York, N.Y.
January 22, 1996
INDEPENDENT AUDITORS' REPORT
Century Properties Fund XVIII:
We have audited the accompanying consolidated statements of operations,
partners' equity and cash flows of Century Properties Fund XVIII (a limited
partnership) (the "Partnership") and its wholly-owned subsidiaries for the year
ended December 31, 1993. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the results of operations and cash flows of the Partnership
and its wholly-owned subsidiaries for the year ended December 31, 1993 in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
San Francisco, California
March 18, 1994
CENTURY PROPERTIES FUND XVIII
(A Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------
1995 1994
------------------- ---------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 938,000 $ 972,000
Other assets 627,000 415,000
Real Estate:
Real estate 26,477,000 26,159,000
Accumulated depreciation (8,412,000) (7,760,000)
------------------- ---------------------
Real Estate, net 18,065,000 18,399,000
Deferred financing costs, net 210,000 267,000
------------------- ---------------------
Total assets $ 19,840,000 $ 20,053,000
------------------- ---------------------
------------------- ---------------------
LIABILITIES AND PARTNERS' EQUITY
Notes payable $ 19,127,000 $ 19,303,000
Accrued expenses and other liabilities 420,000 453,000
------------------- ---------------------
Total liabilities 19,547,000 19,756,000
------------------- ---------------------
Partners' Equity (Deficit):
General partner (6,425,000) (6,425,000)
Limited partners (75,000 units outstanding at
December 31, 1995 and 1994) 6,718,000 6,722,000
------------------- ---------------------
Total partners' equity 293,000 297,000
------------------- ---------------------
Total liabilities and partners' equity $ 19,840,000 $ 20,053,000
------------------- ---------------------
------------------- ---------------------
</TABLE>
See notes to financial statements.
CENTURY PROPERTIES FUND XVIII
(A Limited Partnership)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------
1995 1994 1993
------------- ------------------ ---------------------
<S> <C> <C> <C>
Revenues:
Rental $ 4,457,000 $ 4,437,000 $ 8,877,000
Interest and other income 54,000 46,000 46,000
Gain on property disposition - 1,246,000 1,778,000
------------- ------------------ ---------------------
Total revenues 4,511,000 5,729,000 10,701,000
------------- ------------------ ---------------------
Expenses (including $481,000, $364,000 and
$109,000 paid to the general partner
and affiliates in 1995, 1994 and 1993):
Operating 2,133,000 2,457,000 4,367,000
Interest 1,469,000 1,588,000 6,632,000
Depreciation 652,000 646,000 1,611,000
General and administrative 261,000 306,000 380,000
Loss on disposition of properties - - 2,649,000
------------- ------------------ ---------------------
Total expenses 4,515,000 4,997,000 15,639,000
------------- ------------------ ---------------------
(Loss) income before extraordinary item (4,000) 732,000 (4,938,000)
Extraordinary item:
Gain on debt forgiveness - - 6,501,000
------------- ------------------ ---------------------
Net (loss) income $ (4,000) $ 732,000 $ 1,563,000
------------- ------------------ ---------------------
------------- ------------------ ---------------------
Net (loss) income per limited partnership unit:
(Loss) income before extraordinary item $ (0.05) $ 8.77 $ (59.63)
Extraordinary item - Gain on debt forgiveness - - 78.09
------------- ------------------ ---------------------
Net (loss) income $ (0.05) $ 8.77 $ 18.46
------------- ------------------ ---------------------
------------- ------------------ ---------------------
</TABLE>
See notes to financial statements.
CENTURY PROPERTIES FUND XVIII
(A Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
General Limited Total
partner partners' partners'
(deficit) equity equity
------------- ----------------- ---------------------
<S> <C> <C> <C>
Balance - January 1, 1993 $ (6,677,000 $ 4,679,000 $ (1,998,000)
Loss before extraordinary item (466,000) (4,472,000) (4,938,000)
Extraordinary item 644,000 5,857,000 6,501,000
------------- ----------------- ---------------------
Balance - December 31, 1993 (6,499,000) 6,064,000 (435,000)
Net income 74,000 658,000 732,000
------------- ----------------- ---------------------
Balance - December 31, 1994 (6,425,000) 6,722,000 297,000
Net loss - (4,000) (4,000)
------------- ----------------- ---------------------
Balance, December 31, 1995 $ (6,425,000) $ 6,718,000 $ 293,000
------------- ----------------- ---------------------
------------- ----------------- ---------------------
</TABLE>
See notes to financial statements.
CENTURY PROPERTIES FUND XVIII
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------
1995 1994 1993
------------ ----------------- -------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (4,000) $ 732,000 $ 1,563,000
Adjustments to reconcile net (loss) income to net cash
provided by (used in) operating activities:
Depreciation and amortization 709,000 724,000 2,420,000
Gain on property disposition - (1,246,000) (1,778,000)
Loss on disposition of properties - - 2,649,000
Extraordinary item - gain on debt forgiveness - - (6,501,000)
Deferred financing costs paid - - (510,000)
Deferred financing cost refunded - - 85,000
Costs expensed on attempted property refinancing - - 22,000
Deferred interest added to note principal 81,000 - -
Changes in operating assets and liabilities:
Other assets (212,000) 220,000 (137,000)
Accrued expenses and other liabilities (33,000) (460,000) 146,000
------------ ----------------- -------------------
Net cash provided by (used in) operating activities 541,000 (30,000) (2,041,000)
------------ ----------------- -------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate (318,000) (262,000) (643,000)
Net proceeds from sales of rental properties - 1,700,000 26,124,000
Property sales expenses - (210,000) (687,000)
Restricted cash decrease (increase) - 273,000 (103,000)
------------ ----------------- -------------------
Net cash (used in) provided by investing activities (318,000) 1,501,000 24,691,000
------------ ----------------- -------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of note payable to an affiliate of
the general partner (608,000) (2,148,000)
Notes payable principal payments (257,000) (254,000) (27,733,000)
Notes payable proceeds - - 7,200,000
------------ ----------------- -------------------
Net cash used in financing activities (257,000) (862,000) (22,681,000)
------------ ----------------- -------------------
(Decrease) Increase in Cash and Cash Equivalents (34,000) 609,000 (31,000)
Cash and Cash Equivalents at Beginning of Year 972,000 363,000 394,000
------------ ----------------- -------------------
Cash and Cash Equivalents at End of Year $ 938,000 $ 972,000 $ 363,000
------------ ----------------- -------------------
------------ ----------------- -------------------
Supplemental Disclosure of Cash Flow Information:
Interest paid in cash during the year $1,331,000 $ 1,877,000 $ 5,572,000
------------ ----------------- -------------------
------------ ----------------- -------------------
Supplemental Disclosure of Non-cash Investing and
Financing Activities:
Mortgage assumed on property sale and disposition of rental properties in 1994. See note 6.
Accrued interest added to note payable balance in 1994. See note 4.
</TABLE>
See notes to financial statements.
CENTURY PROPERTIES FUND XVIII
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Century Properties Fund XVIII (the "Partnership") is a limited
partnership organized under the laws of the State of California to
acquire, hold for investment, and ultimately sell income-producing real
property. The Partnership currently owns two residential complexes
located in Utah and Texas. The general partner of the Partnership is Fox
Partners, a California general partnership, whose general partners are
Fox Capital Management Corporation ("FCMC"), a California corporation,
Fox Realty Investors ("FRI"), a California general partnership and Fox
Partners 82, a California general partnership. The original capital
contributions of $75,000,000 ($1,000 per unit) were made by the limited
partners, including 100 limited partnership units purchased by FCMC.
On December 6, 1993, the shareholders of FCMC entered into a Voting Trust
Agreement with NPI Equity Investments II, Inc. ("NPI Equity" or the
"Managing General Partner") pursuant to which NPI Equity was granted the
right to vote 100 percent of the outstanding stock of FCMC and NPI Equity
became the managing general partner of FRI. As a result, NPI Equity
became responsible for the operation and management of the business and
affairs of the Partnership and the other investment partnerships
originally sponsored by FCMC and/or FRI. NPI Equity is a wholly-owned
subsidiary of National Property Investors, Inc. ("NPI, Inc."). The
shareholders of FCMC and the partners in FRI retain indirect economic
interests in the Partnership and such other investment limited
partnerships, but have ceased to be responsible for the operation and
management of the Partnership and such other partnerships.
In October 1994 DeForest Ventures I L.P. ("DeForest I") made a tender
offer for limited partnership interests in the partnership, as well as
eleven affiliated limited partnerships. DeForest Ventures II, L.P.
("DeForest II") made tender offers for limited partnership interests in
seven affiliated limited partnerships. Shareholders who controlled
DeForest Capital I Corporation, the sole general partner of DeForest I,
also controlled NPI, Inc. As of December 31, 1995, DeForest I had
acquired approximately 29% of total limited partnership units of the
Partnership (see Note 8).
On January 19, 1996, the stockholders of NPI, Inc. sold all of the issued
and outstanding stock of NPI, Inc. to an affiliate of Insignia
Financial Group, Inc. ("Insignia"). In addition, an affiliate of
Insignia acquired the limited partnership interests of the Partnership
held by DeForest I and certain of its affiliates (see Note 8).
CENTURY PROPERTIES FUND XVIII
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND 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 amounts reported in the financial
statements and accompanying notes. Actual results could differ from
those estimates.
Fair Value of Financial Instruments
In 1995, the Partnership implemented Statement of Financial Accounting
Standards ("SFAS") No. 107, "Disclosures about Fair Value of Financial
Instruments," as amended by SFAS No. 119, "Disclosures about Derivative
Financial Instruments and Fair Value of Financial Instruments," which
requires disclosure of fair value information about financial
instruments, whether or not recognized in the balance sheet, for which it
is practicable to estimate fair value. Fair value is defined in the SFAS
as the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes that the carrying amount of
its financial instruments (except for long term debt) approximates fair
value due to the short term maturity of these instruments. The fair value
of the Partnership's long term debt, after discounting the scheduled loan
payments to maturity, approximates its carrying balance.
Real Estate
Real estate is stated at cost. Acquisition fees are capitalized as a cost
of real estate. In 1995, the Partnership adopted SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of ", which requires impairment losses to be
recognized for long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows are not sufficient
to recover the asset's carrying amount. The impairment loss is measured
by comparing the fair value of the asset to its carrying amount. The
adoption of the SFAS had no effect on the Partnership's financial
statements.
Cash and Cash Equivalents
The Partnership considers all highly liquid investments with an original
maturity of three months or less at the time of purchase to be cash
equivalents.
Concentration of Credit Risk
The Partnership maintains cash balances at institutions insured up to
$100,000 by the Federal Deposit Insurance Corporation. Balances in excess
of $100,000 are usually invested in United States Treasury repurchase
agreements, which are collateralized by United States Treasury
obligations. Cash balances exceeded these insured levels during the year.
CENTURY PROPERTIES FUND XVIII
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Depreciation
Depreciation is computed by the straight-line method over estimated
useful lives currently ranging from 27.5 to 30 years for buildings and
improvements and six to seven years for furnishings.
Deferred Financing Costs
Deferred financing costs are amortized over the lives of the related
loans, or expensed, if financing is not obtained. At December 31, 1995
and 1994, accumulated amortization of deferred financing costs totaled
$262,000 and $205,000, respectively.
Net Income (Loss) Per Limited Partnership Unit
The net income (loss) per limited partnership unit is computed by
dividing net income (loss) allocated to the limited partners by 75,000
units outstanding.
Income Taxes
Taxable income or loss of the Partnership is reported in the income tax
returns of its partners. Accordingly, no provision for income taxes is
made in the financial statements of the Partnership.
Reclassification
Certain amounts from 1994 and 1993 have been reclassified to conform to
the 1995 presentation.
2. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES
In accordance with the Partnership Agreement, the Partnership may be
charged by the general partner and affiliates for services provided to
the Partnership. From March 1988 to December 1992 such amounts were
assigned pursuant to a services agreement by the general partner and
affiliates to Metric Realty Services, L.P. ("MRS"), which performed
partnership management and other services for the Partnership.
On January 1, 1993, Metric Management, Inc., ("MMI"), successor to
MRS, a company which is not affiliated with the general partners,
commenced providing certain property and portfolio management
services to the Partnership under a new services agreement. As
provided in the new services agreement, effective January 1,
1993, no reimbursements were made to the general partners
and affiliates after December 31, 1992. Subsequent to
December 31, 1992, reimbursements were made to MMI.
On December 16, 1993, the services agreement with MMI was modified
and, as a result thereof, NPI Equity began directly providing cash
management and other Partnership services on various dates
commencing December 23, 1993. On March 1, 1994, an affiliate of
NPI Equity commenced providing certain property management services.
CENTURY PROPERTIES FUND XVIII
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES (Continued)
Related party expenses for the years ended December 31, 1995, 1994 and 1993
were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- -------
<S> <C> <C> <C>
Property management fees $ 212,000 $ 177,000 $ -
Reimbursement of operational expenses:
Partnership accounting and investor services 162,000 173,000 -
Professional services - 9,000 -
-------------- ---------- ------------
Total $ 374,000 $ 359,000 $ -
========= ========= ============
Interest expense $ - $ 5,000 $109,000
============= ========== ========
</TABLE>
Property management fees are included in operating expenses. Reimbursed
expenses are primarily included in general and administrative expenses.
In addition, approximately $107,000 of insurance premiums which were paid
to an affiliate of NPI Inc. under a master insurance policy arranged by
such affiliate are included in operating expenses for the year ended
December 31, 1995.
In accordance with the partnership agreement, the general partners
received (1) a partnership management incentive equal to an allocation of
nine percent of net and taxable income (loss) before gain on property
dispositions and (2) a one percent continuing interest of net and taxable
income (loss) before gain on property dispositions after the above
allocation of the partnership management incentive. The general partners
were also allocated ten percent of gain on property dispositions to the
extent of its deficit capital account and cash available for
distribution. Upon sale of all properties and termination of the
Partnership, the general partners may be required to contribute certain
funds to the Partnership in accordance with the partnership agreement.
3. REAL ESTATE
Real estate, at December 31, 1995 and 1994, is summarized as follows:
<TABLE>
<CAPTION>
1995 1994
----------------- ----------------
<S> <C> <C>
Land $ 7,296,000 $ 7,296,000
Buildings and improvements 16,836,000 16,570,000
Furnishings 2,345,000 2,293,000
------------- --------------
Total 26,477,000 26,159,000
Accumulated depreciation (8,412,000) (7,760,000)
------------- -------------
Real estate, net $ 18,065,000 $ 18,399,000
============ ==============
</TABLE>
CENTURY PROPERTIES FUND XVIII
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
4. NOTES PAYABLE
Individual rental properties are pledged as collateral for the related
notes payable. Interest rates on the notes payable ranged from 8.25 to
9.00 percent during the year ended December 31, 1995. Principal payments
at December 31, 1995 are required as follows:
1996 $ 264,000
1997 271,000
1998 278,000
1999 8,064,000
2000 6,909,000
Thereafter 3,341,000
------------
Total $ 19,127,000
============
The Partnership modified its note payable on Overlook Point Apartments in
February 1994. Principal of $7,166,000 plus contingent interest of
$1,213,000 was outstanding on the original loan which was due August
1995. The Partnership paid down $129,000 of the accrued interest from its
escrow accounts with the lender and secured a new loan for the balance of
$8,250,000. The new loan requires monthly payments of $62,000 at 8.25%
interest and is being amortized over 30 years. The loan matures in 1999
with a balloon payment of approximately $7,869,000.
In October 1993, the Partnership obtained replacement financing on the
Oak Run Apartments' $4,358,000 wrap note equity portion which was due in
October 1993, as well as on the two underlying first loans in the amount
of $2,147,000 and $2,950,000 which were scheduled to mature in October
2009 and September 1994, respectively. The new loan, in the amount of
$7,200,000 was used to pay off the two first loans, including prepayment
premiums of $51,000 and refinancing costs of $333,000 (including a
$70,000 interest rate cap cost). The new loan has a variable interest
rate of 4.25 percent over 30-day LIBOR not to exceed 11 percent for the
first four years of the new loan and is scheduled to mature in September
2000. The pay rate is nine percent for the first two years, 9.5 percent
for years three through five and ten percent for years six and seven. Any
difference between the contract interest rate and the pay rate will be
applied to the outstanding principal balance. The remaining proceeds of
approximately $1,719,000 were used to pay down a portion of the wrap note
equity portion. The remaining balance of the wrap note equity portion of
$4,127,000 will only be paid to the lender as a participation in future
cash flow and sales proceeds from the property. The Partnership paid the
participant approximately $116,000 and $75,000 during 1995 and 1994,
respectively, which was treated as a reduction in principal.
Amortization of deferred financing costs totaled $57,000, $78,000 and
$121,000 for 1995, 1994 and 1993, respectively.
CENTURY PROPERTIES FUND XVIII
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
5. NOTE PAYABLE TO AFFILIATES OF THE GENERAL PARTNER
In February 1994, the Partnership paid $608,000 of principal and $230,000
of accrued interest to an affiliate of the general partner. Interest
charged on the note was $5,000 and $109,000 for the years ended December
31, 1994 and 1993, respectively.
6. DISPOSITION OF RENTAL PROPERTIES
In February 1994, the Partnership sold Plantation Ridge Apartments,
located in Marietta, Georgia for $15,353,000. The existing loans of
$13,653,000 were assumed by the buyer at the time of sale. After
assumption of the existing loans and costs of the sale of $210,000,
proceeds to the Partnership were $1,490,000. At the date of sale, the
carrying amount of real estate was $13,897,000. For financial statement
purposes, the Partnership recorded a $1,246,000 gain on sale of property
for the year ended December 31, 1994.
In March 1993, the Partnership sold Dover Village Apartments, located in
Orlando, Florida for $9,300,000. After payment of the first and second
loan balances of $5,674,000 and $2,490,000, respectively, and costs of
sale of $358,000 (including $186,000 real estate commissions paid to an
outside broker), the net proceeds to the Partnership were $778,000. In
addition, accrued but unpaid interest of $707,000 on the second loan was
forgiven by the lender and was recognized in 1993 as an extraordinary
item-gain on debt forgiveness. At the date of sale, the carrying amount
of land and improvements, net of the $961,000 provision for impairment of
value recognized in 1992, was $9,302,000. The loss on sale of $360,000
was recognized at the time of sale.
In May 1993, the Partnership sold Reflections Apartments, located in
Aurora, Colorado, for $7,924,000. After payment of the existing loan
balance of $5,111,000 and costs of sale of $285,000 (including $238,000
of real estate commissions paid to outside brokers), net proceeds to the
Partnership were $2,528,000. At the date of sale, the carrying amount of
land and improvements, net of the $551,000 provision for impairment of
value recognized in 1991, was $5,861,000. The gain on sale of $1,778,000
was recognized at the time of sale.
In August 1993, the Partnership sold Northgreen Apartments, located in
Oklahoma City, Oklahoma, for $8,763,000. In addition, the Partnership
received a $137,000 property tax reimbursement from the buyer. After
payment of a portion of the existing loan of $8,750,000 and costs of sale
of $51,000, the net proceeds to the Partnership were $99,000. Principal
and accrued interest outstanding on the existing loan at the time of sale
was $14,545,000, of which $5,794,000 was forgiven by the lender at the
time of sale. At the date of sale, the carrying amount of land and
improvements was $11,138,000. The loss on sale was $2,289,000 and
$5,794,000 (consisting of $3,350,000 in principal and $2,444,000 in
accrued interest) was recognized as an extraordinary item-gain on debt
forgiveness in 1993.
CENTURY PROPERTIES FUND XVIII
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
7. RECONCILIATION TO INCOME TAX METHOD OF ACCOUNTING
The differences between the accrual method of accounting for income tax
reporting and the accrual method of accounting used in the financial
statements are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ --------------
<S> <C> <C> <C>
Net income (loss) - financial statements $ (4,000) $ 732,000 $ 1,563,000
Differences resulted from:
Depreciation 142,000 2,000 (933,000)
Loss on disposition of properties - - 871,000
Gain on property dispositions - net - 5,178,000 11,558,000
Amortization of notes payable discount - - 688,000
Amortization of construction period interest - - (107,000)
Amortization of deferred loan fees - (65,000) 13,000
Amortization of original issue discount (81,000) (128,000) (3,000)
Interest expense 9,000 (1,209,000) 1,178,000
Interest expense - short term borrowings - (224,000) (395,000)
Other - - (13,000)
-------------- --------------- ------------
Net income - income tax method $ 66,000 $ 4,286,000 $14,420,000
=========== =========== ===========
Taxable income per limited partnership unit after
giving effect to the allocation to the general
partner $ 1 $ 51 $ 173
============= ============= ==============
Partners' equity (deficit) - financial statements $ 293,000 $ 297,000 $ (435,000)
Differences resulted from:
Depreciation (9,932,000) (10,074,000) (15,177,000)
Deferred sales commissions and organization
expenses 9,592,000 9,592,000 9,592,000
Amortization of notes payable discount 2,755,000 2,755,000 2,755,000
Construction period interest - - (318,000)
Payments credited to rental properties 302,000 302,000 302,000
Amortization of deferred loan fees (3,000) (3,000) 339,000
Accumulated amortization of original issue discount (757,000) (676,000) (548,000)
Interest expense - short term borrowings - - 224,000
Interest expense 6,000 (3,000) 1,213,000
Other (168,000) (168,000) (210,000)
------------ ------------- -------------
Partners' equity (deficit) - income tax method $ 2,088,000 $ 2,022,000 $ (2,263,000)
=========== =========== ============
</TABLE>
CENTURY PROPERTIES FUND XVIII
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
8. SUBSEQUENT EVENT
On January 19, 1996, the stockholders of NPI, Inc. sold all of the issued
and outstanding stock of NPI, Inc. to an affiliate of Insignia. In
addition, an affiliate of Insignia acquired the limited partnership
interests of the Partnership held by DeForest I and certain of its
affiliates (see Note 1). As a result of the transaction, the Managing
General Partner of the Partnership is controlled by Insignia. Insignia
affiliates now provide property and asset management services to the
Partnership, maintain its books and records and oversee its operations.
SCHEDULE III
CENTURY PROPERTIES FUND XVIII
(A Limited Partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
COLUMN COLUMN COLUMN COLUMN COLUMN COLUMN COLUMN COLUMN COLUMN
A B C D E F G H I
Cost Capitalized
Initial Cost Subsequent Gross Amount at Which
to Partnership to Acquisition Carried at Close of Period(1)
-------------- -------------- ------------------------------
Life
on which
Deprecia-
Accumu- Year tion is
Buildings Buildings lated of Date computed
and and Deprecia- Con- of in latest
Encum- Improve- Improve- Carrying Improve- Total tion struc- Acqui- statement of
Description brances Land ments ments Costs Land ments (2) (3) tion sition operations
- ----------- ------- ---- ----- ----- ----- ---- ------ ---- ----- ----- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(Amounts in thousands)
PARTNERSHIP:
Overlook Point
Apartments
Salt Lake
City, Utah $ 8,125 $1,082 $ 8,225 $ 886 $(291) $1,078 $ 8,824 $ 9,902 $3,754 1984 7/83 6 - 30 Yrs.
Oak Run
Apartments
Dallas,
Texas 11,002 6,218 8,713 1,644 - 6,218 10,357 16,575 4,658 1979 11/83 6 - 30 Yrs.
------- ------ ------- ------ ----- ------ ------- ------- ------
TOTAL $19,127 $7,300 $16,938 $2,530 $(291) $7,296 $19,181 $26,477 $8,412
======= ====== ======= ====== ===== ====== ======= ======= ======
</TABLE>
See accompanying notes.
SCHEDULE III
CENTURY PROPERTIES FUND XVIII
(A Limited Partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
NOTES:
<S> <C> <C>
(1) The aggregate cost for Federal income tax purposes is $24,666,000.
(2) Balance, January 1, 1993 $ 85,929,000
Improvements capitalized subsequent to acquisition 643,000
Cost of rental properties disposed of (40,387,000)
------------------
Balance, December 31, 1993 46,185,000
Improvements capitalized subsequent to acquisition 262,000
Cost of rental property disposed of (20,288,000)
------------------
Balance, December 31, 1994 26,159,000
Improvements capitalized subsequent to acquisition 318,000
------------------
Balance, December 31, 1995 $ 26,477,000
------------------
------------------
(3) Balance, January 1, 1993 $ 26,044,000
Additions charged to expense 1,611,000
Accumulated depreciation of rental properties disposed of (12,574,000)
Allowance for impairment of value of rental properties disposed of (1,512,000)
------------------
Balance, December 31, 1993 13,569,000
Additions charged to expense 646,000
Accumulated depreciation of rental property disposed of (6,455,000)
------------------
Balance, December 31, 1994 7,760,000
Additions charged to expense 652,000
------------------
Balance, December 31, 1995 $ 8,412,000
------------------
------------------
</TABLE>
<PAGE>
CENTURY PROPERTIES FUND XIX
CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995
INDEX
Independent Auditors' Reports.............................................F - 2
Consolidated Financial Statements:
Balance Sheets at December 31, 1995 and 1994.........................F - 4
Statements of Operations for the Years Ended December 31,
1995, 1994 and 1993...............................................F - 5
Statements of Partners' Equity for the Years Ended
December 31, 1995, 1994 and 1993..................................F - 6
Statements of Cash Flows for the Years Ended December 31,
1995, 1994 and 1993...............................................F - 7
Notes to Consolidated Financial Statements...........................F - 8
Financial Statement Schedule:
Schedule III - Real Estate and Accumulated Depreciation
at December 31, 1995..........................F - 18
Consolidated financial statements and financial statement schedules not included
have been omitted because of the absence of conditions under which they are
required or because the information is included elsewhere in the consolidated
financial statements.
To the Partners
Century Properties Fund XIX
Greenville, South Carolina
Independent Auditors' Report
We have audited the accompanying consolidated balance sheets of Century
Properties Fund XIX (a limited partnership) (the "Partnership") and its
subsidiaries as of December 31, 1995 and 1994, and the related consolidated
statements of operations, partners' equity and cash flows for the years then
ended. Our audits also included the additional information supplied pursuant to
Item 14(a)(2). These consolidated financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Century
Properties Fund XIX and its subsidiaries 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,
the related financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly, in
all material respects, the information set forth therein.
IMOWITZ KOENIG & CO., LLP
Certified Public Accountants
New York, N.Y.
February 20, 1996
INDEPENDENT AUDITORS' REPORT
Century Properties Fund XIX:
We have audited the accompanying consolidated statements of operations,
partners' equity and cash flows of Century Properties Fund XIX (a limited
partnership) (the "Partnership") and its wholly-owned subsidiaries for the year
ended December 31, 1993. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit 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 audit provides a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the results of operations and cash flows of the Partnership
and its wholly-owned subsidiaries for the year ended December 31, 1993 in
conformity with generally accepted accounting principles.
The accompanying 1993 consolidated financial statements have been prepared
assuming that the Partnership will continue as a going concern. As discussed
in the first paragraph of Note 10 to the financial statements, the Partnership
has balloon payments totaling $10,800,000 due in December 1994, which raises
substantial doubt about the Partnership's ability to continue as a going
concern. Management's plans in regard to this matter are also described in
Note 10. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
DELOITTE & TOUCHE LLP
San Francisco, California
March 18, 1994
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
---------------------------
1995 1994
------------ ------------
ASSETS
Cash and cash equivalents $ 2,868,000 $ 218,000
Restricted cash -- 787,000
Other assets and deferred costs 1,977,000 1,643,000
Real Estate:
Real estate 94,428,000 94,106,000
Accumulated depreciation (34,394,000 (31,650,000)
Allowance for impairment of value (500,000) (500,000)
------------ ------------
Real estate, net 59,534,000 61,956,000
------------ ------------
Total assets $ 64,379,000 $ 64,604,000
============ ============
LIABILITIES AND PARTNERS' EQUITY
Accrued expenses and other liabilities (including $ 1,374,000 $ 1,195,000
$27,000 to a related party in 1995)
Notes payable 62,342,000 59,063,000
------------ ------------
Total liabilities 63,716,000 60,258,000
------------ ------------
Partners' Equity (Deficit):
General partner (8,992,000) (8,558,000)
Limited partners (89,292 units outstanding at
December 31, 1995 and 1994) 9,655,000 12,904,000
------------ ------------
Total partners' equity 663,000 4,346,000
------------ ------------
Total liabilities and partners' equity $ 64,379,000 $ 64,604,000
============ ============
See notes to consolidated financial statements.
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31,
-------------------------------------------
1995 1994 1993
----------- ----------- -----------
Revenues:
Rental $14,630,000 $13,709,000 $14,052,000
Interest income 101,000 59,000 62,000
Gain on sale of property - - 576,000
----------- ----------- -----------
Total revenues 14,731,000 13,768,000 14,690,000
----------- ----------- -----------
Expenses (including $1,401,000,
$690,000 and $57,000 paid to
the general partner and
affiliates in 1995,1994
and 1993):
Interest 6,001,000 5,959,000 6,807,000
Operating 7,826,000 7,260,000 6,992,000
Depreciation 2,744,000 2,766,000 2,840,000
General and administrative 207,000 239,000 693,000
Loss on sale of property - 149,000 44,000
Provision for impairment
of value - 500,000 -
----------- ----------- -----------
Total expenses 16,778,000 16,873,000 17,376,000
----------- ----------- -----------
Loss before extraordinary
item (2,047,000) (3,105,000) (2,686,000)
Extraordinary item:
Loss on extinguishment
of debt (1,636,000) - -
----------- ----------- -----------
Net loss $(3,683,000) $(3,105,000) $(2,686,000)
=========== =========== ===========
Net loss per limited
partnership unit:
Loss before extraordinary
item $ (20.23) $ (30.67) $ (26.53)
Extraordinary item (16.16) - -
----------- ----------- -----------
Net loss $ (36.39) $ (30.67) $ (26.53)
=========== =========== ===========
See notes to consolidated financial statements.
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
General Limited Total
Partners' Partners' Partners'
(Deficit) Equity Equity
----------- ----------- -----------
Balance - January 1, 1993 $(7,875,000) $18,012,000 $10,137,000
Net loss (317,000) (2,369,000) (2,686,000)
----------- ----------- -----------
Balance - December 31, 1993 (8,192,000) 15,643,000 7,451,000
Net loss (366,000) (2,739,000) (3,105,000)
----------- ----------- -----------
Balance - December 31, 1994 (8,558,000) 12,904,000 4,346,000
Loss before extraordinary item (241,000) (1,806,000) (2,047,000)
Extraordinary item (193,000) (1,443,000) (1,636,000)
----------- ----------- -----------
Balance - December 31, 1995 $(8,992,000) $ 9,655,000 $ 663,000
=========== =========== ===========
See notes to consolidated financial statements.
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (3,683,000) $ (3,105,000) $ (2,686,000)
Adjustments to reconcile net loss to net cash (used in) provided
by operating activities:
Depreciation and amortization 3,048,000 3,172,000 3,199,000
Extraordinary item - extinguishment of debt 1,636,000 - -
Accrued interest added to note payable principal - 29,000 -
Costs expensed on attempted property refinancing - - 64,000
Provision for impairment of value - 500,000 -
Gain on sale of property - - (576,000)
Loss on sale of property - 149,000 44,000
Deferred costs refunded - - 523,000
Changes in operating assets and liabilities:
Other assets and deferred costs (72,000) (374,000) (166,000)
Accrued expenses and other liabilities 97,000 196,000 (1,905,000)
------------ ------------ ------------
Net cash (used in) provided by operating activities 1,026,000 567,000 (1,503,000)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Restricted cash decrease (increase) 787,000 729,000 (691,000)
Additions to real estate (322,000) (240,000) (658,000)
Net proceeds from sale of rental property - 485,000 11,259,000
Cost of sale of rental property - (3,000) (772,000)
------------ ------------ ------------
Net cash provided by investing activities 465,000 971,000 9,138,000
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable to affiliate of the
general partner - - 291,000
Repayment of notes payable to affilliate of general partner - (370,000) (1,309,000)
Notes payable proceeds 46,450,000 - 20,375,000
Repayment of notes payable (42,807,000) - (25,249,000)
Financing costs paid (729,000) (90,000) (497,000)
Notes payable principal payments (364,000) (979,000) (1,274,000)
Costs paid to extinguish debt (1,391,000) - -
------------ ------------ ------------
Net cash provided by (used in) financing activities 1,159,000 (1,439,000) (7,663,000)
------------ ------------ ------------
Increase (Decrease) in Cash and Cash Equivalents 2,650,000 99,000 (28,000)
Cash and Cash Equivalents at Beginning of Year 218,000 119,000 147,000
------------ ------------ ------------
Cash and Cash Equivalents at End of Year $ 2,868,000 $ 218,000 $ 119,000
============ ============ ============
Supplemental Disclosure of Cash Flow Information:
Interest paid in cash during the year $ 5,662,000 $ 5,449,000 $ 7,826,000
============ ============ ============
Supplemental Disclosure of Non-cash Investing and Financing
Activities:
Accrued interest added to note payable principal $ - $ 2,139,000 $ -
============ ============ ============
Refinancing of notes payable (see Note 5)
Disposition of rental property in 1994 and 1993 - (see Note 8).
See notes to consolidated financial statements.
</TABLE>
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Century Properties Fund XIX (the "Partnership") is a limited partnership
organized under the laws of the State of California to acquire, hold for
investment, and ultimately sell income-producing real estate. The
Partnership currently owns three residential apartment complexes in
Atlanta, Georgia, two residential apartment complexes in Phoenix, Arizona
and one residential apartment complex in St. Petersburg, Florida, Dallas,
Texas and Charlotte, North Carolina. The general partner of the
Partnership is Fox Partners II, a California general partnership. The
general partners of Fox Partners II are Fox Capital Management
Corporation ("FCMC"), a California corporation, Fox Realty Investors
("FRI"), a California general partnership, and Fox Partners 83, a
California general partnership. The capital contributions of $89,292,000
($1,000 per unit) were made by the limited partners, including 100
Limited Partnership Units purchased by FCMC.
On December 6, 1993, the shareholders of FCMC entered into a Voting Trust
Agreement with NPI Equity Investments II, Inc. ("NPI Equity" or the
"Managing General Partner") pursuant to which NPI Equity was granted the
right to vote 100 percent of the outstanding stock of FCMC and NPI Equity
became the managing general partner of FRI. As a result, NPI Equity
became responsible for the operation and management of the business and
affairs of the Partnership and the other investment partnerships
originally sponsored by FCMC and/or FRI. NPI Equity is a wholly-owned
subsidiary of National Property Investors, Inc. ("NPI, Inc."). The
shareholders of FCMC and the partners in FRI retain indirect economic
interests in the Partnership and such other investment limited
partnerships, but have ceased to be responsible for the operation and
management of the Partnership and such other partnerships.
In October 1994, DeForest Ventures I L.P. ("DeForest I") made a tender
offer for limited partnership interests in the partnership, as well as
eleven affiliated limited partnerships. DeForest Ventures II, L.P.
("DeForest II") made tender offers for limited partnership interests in
seven affiliated limited partnerships. Shareholders who controlled
DeForest Capital I Corporation, the sole general partner of DeForest I,
also controlled NPI, Inc. As of December 31, 1995, DeForest I had
acquired approximately 28% of total limited partnership units of the
Partnership (see Note 11).
On January 19, 1996, the stockholders of NPI, Inc. sold all of the issued
and outstanding stock of NPI, Inc. to an affiliate of Insignia
Financial Group, Inc. ("Insignia"). In addition, an affiliate of
Insignia acquired the limited partnership interests of the Partnership
held by DeForest I and certain of its affiliates (see Note 11).
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Consolidation
The consolidated financial statements include the statements of the
Partnership and its wholly-owned subsidiaries, one of which was formed in
May 1993 into which Sunrunner Apartments was transferred and another
which was formed in December 1995 into which Misty Woods Apartments was
transferred. During 1995, two wholly-owned subsidiaries of the
Partnership were terminated and the properties were conveyed back to the
Partnership (see Note 5). All significant intercompany transactions and
balances have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from
those estimates.
Distributions
Cash distributions have been suspended since 1987. As specified in the
modification of the existing mortgage encumbering McMillan Place
Apartments, the Partnership is prohibited from making any distributions
except from sales or refinancing of its properties, until the mortgage
encumbering McMillan Place Apartments is satisfied.
Fair Value of Financial Instruments
In 1995, the Partnership implemented Statement of Financial Accounting
Standards ("SFAS") No. 107, "Disclosures about Fair Value of Financial
Instruments," as amended by SFAS No. 119, "Disclosures about Derivative
Financial Instruments and Fair Value of Financial Instruments," which
requires disclosure of fair value information about financial
instruments, whether or not recognized in the balance sheet, for which it
is practicable to estimate fair value. Fair value is defined in the SFAS
as the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes that the carrying amount of
its financial instruments (except for long term debt) approximates fair
value due to the short term maturity of these instruments. The fair value
of the Partnership's long term debt, after discounting the scheduled loan
payments to maturity, approximates its carrying balance (see Note 5).
Cash and Cash Equivalents
The Partnership considers all highly liquid investments with an original
maturity date of three months or less at the time of purchase to be cash
equivalents.
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Concentration of Credit Risk
The Partnership maintains cash balances at institutions insured up to
$100,000 by the Federal Deposit Insurance Corporation. Balances in excess
of $100,000 are usually invested in repurchase agreements, which are
collateralized by United States Treasury obligations. Cash balances
exceeded these insured levels during the year. At December 31, 1995, the
Partnership had approximately $1,900,000 invested in overnight repurchase
agreements, secured by United States Treasury obligations, which are
included in cash and cash equivalents.
Real Estate
Real estate is stated at cost. Acquisition fees are capitalized as a cost
of real estate. In 1995, the Partnership adopted SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of ", which requires impairment losses to be
recognized for long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows are not sufficient
to recover the asset's carrying amount. The adoption of the SFAS had no
effect on the Partnership's financial statements.
Depreciation
Depreciation is computed by the straight-line method over estimated
useful lives ranging from 27.5 to 30 years for buildings and improvements
and five to seven years for furnishings.
Deferred Financing Costs
Financing costs are deferred and amortized over the lives of the related
loans as interest expense or expensed if financing is not obtained. At
December 31, 1995 and 1994, accumulated amortization of deferred
financing costs totaled $114,000 and $974,000, respectively. Net deferred
costs of $872,000 and $610,000 for the years ended December 31, 1995 and
1994, respectively, are included in other assets and deferred costs.
Net Loss Per Limited Partnership Unit
The net loss per limited partnership unit is computed by dividing the net
loss allocated to the limited partners by 89,292 units outstanding.
Income Taxes
Taxable income or loss of the Partnership is reported in the income tax
returns of its partners. Accordingly, no provision for income taxes is
made in the financial statements of the Partnership.
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Reclassification
Certain amounts from 1994 and 1993 have been reclassified to conform to
the 1995 presentation.
2. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES
In accordance with the Partnership Agreement, the Partnership may be
charged by the general partners and affiliates for services provided to
the Partnership. From March 1988 to December 1992 such amounts were
assigned pursuant to a services agreement by the general partner and
affiliates to Metric Realty Services, L.P. ("MRS"), which performed
partnership management and other services for the Partnership.
On January 1, 1993, Metric Management, Inc., ("MMI"), successor to
MRS, a company which is not affiliated with the general partners,
commenced providing certain property and portfolio management
services to the Partnership under a new services agreement. As
provided in the new services agreement, effective January 1, 1993, no
reimbursements were made to the general partners and affiliates after
December 31, 1992. Subsequent to December 31, 1992, reimbursements were
made to MMI. On December 16, 1993, the services agreement with MMI was
modified and, as a result thereof, the Managing General Partner began
directly providing cash management and other Partnership services on
various dates commencing December 23, 1993. On March 1, 1994, an
affiliate of NPI Equity commenced providing certain property management
services (see Notes 1 and 11). Related party fees and expenses for the
years ended December 31, 1995, 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Financing fees $ 27,000 $ - $ -
Property management fees 738,000 557,000 -
Real estate tax reduction fees 66,000 - -
Reimbursement of operational expenses:
Partnership accounting and investor services 148,000 100,000 -
Professional services - 30,000 -
--------- --------- ---------
Total $ 979,000 $ 687,000 $ -
========= ========= =========
Interest expense $ - $ 3,000 $ 57,000
========= ========= =========
</TABLE>
Property management fees and real estate tax reduction fees are included
in operating expenses. Reimbursed expenses are primarily included in
general and administrative expenses. Financing fees have been capitalized
and are being amortized over the life of the loan. Approximately $449,000
of insurance premiums, which were paid to an affiliate of NPI Inc. under
a master insurance policy arranged by such affiliate, are included in
operating expenses for the year ended December 31, 1995.
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES (Continued)
In accordance with the partnership agreement, the general partner
received a partnership management incentive allocation equal to ten
percent of net and taxable income (loss) before gains on property
dispositions. The general partner was also allocated its two percent
continuing interest in the Partnership's net and taxable income (loss)
after the preceding allocation. The general partner is also allocated
gain on property dispositions to the extent it is entitled to receive
distributions and then 12 percent of remaining gain.
3. RESTRICTED CASH
Restricted cash at December 31, 1994, consists of required reserves
maintained in accordance with financing arrangements on the Wood Lake,
Wood Ridge, Plantation Crossing, Greenspoint and Sandspoint Apartments in
order to meet future capital requirements. During 1995, these properties
were refinanced and, as a result of these refinancings, restricted cash
reserves were released.
4. REAL ESTATE
Real estate, at December 31, 1995 and 1994, is summarized as follows:
1995 1994
----------- -----------
Land $11,681,000 $11,681,000
Buildings and improvements 75,225,000 75,029,000
Furnishings 7,522,000 7,396,000
----------- -----------
Total 94,428,000 94,106,000
Accumulated depreciation (34,394,000) (31,650,000)
Allowance for impairment of value (500,000) (500,000)
----------- -----------
Real estate, net $59,534,000 $61,956,000
=========== ===========
5. NOTES PAYABLE
The Partnership's properties are pledged as collateral for the related
notes payable. The Partnership's Wood Lake, Wood Ridge and Plantation
Crossing Apartments are cross-collateralized. The notes currently bear
interest at rates ranging from 7.5% to 10.06%, and are payable monthly
except for the second note on McMillan Apartments whose interest is
compounded monthly and is payable at maturity, August 31, 1999.
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
5. NOTES PAYABLE (Continued)
On December 29, 1995, the Partnership refinanced the mortgage that
encumbered its Misty Woods Apartments property with a new first mortgage
in the amount of $5,450,000. The loan requires monthly payments of
approximately $40,000 at 7.88% interest and matures on January 1, 2006,
with a balloon payment of approximately $4,863,000. The loan may not be
prepaid without penalty. The Partnership incurred closing costs and fees
of $177,000 in connection with the refinancing, of which $95,000 was paid
in 1995. In connection with the refinancing, the Partnership was required
to transfer all the assets and liabilities of Misty Woods Apartments to a
newly formed, wholly-owned subsidiary, Misty Woods CPF 19, L.P.
On December 15, 1995, the partnership refinanced the mortgages that
encumbered their Wood Ridge, Wood Lake and Plantation Crossing Apartments
properties. The new $22,000,000 loan (allocated $9,000,000, $7,750,000
and $5,250,000, respectively) requires total monthly payments of
approximately $163,000 at 7.5% interest and is being amortized over 25
years. The loan matures on January 1, 2003 with a balloon payment of
approximately $19,283,000. A premium is to be calculated under the terms
of the mortgage if the loan is prepaid. In connection with the
refinancings, each of these properties was conveyed from a wholly-owned
subsidiary, Century Woods 19, L.P., back to the Partnership. The
Partnership incurred closing costs and fees of $346,000 in connection
with this refinancing.
On June 29, 1995, the Partnership replaced its maturing mortgage
encumbering Greenspoint Apartments with a new first mortgage in the
amount of $9,000,000. The loan requires monthly payments of approximately
$68,000 at 8.33% interest and is being amortized over 30 years. The loan
matures on May 15, 2005 with a balloon payment of approximately
$7,974,000. A premium is to be calculated under the terms of the mortgage
if the loan is prepaid. In connection with the refinancing, the property
was conveyed from a wholly-owned subsidiary, SGP Properties, L.P., back
to the partnership. The partnership incurred closing costs of $138,000 in
connection with the refinancing.
On June 29, 1995, the Partnership replaced its maturing mortgage
encumbering Sandspoint Apartment with a new first mortgage in the amount
of $10,000,000. The loan requires monthly payments of approximately
$76,000 at 8.33% interest and is being amortized over 30 years. The loan
matures on May 15, 2005 with a balloon payment of approximately
$8,859,000. A premium is to be calculated under the terms of the mortgage
if the loan is prepaid. In connection with the refinancing, the property
was conveyed from a wholly-owned subsidiary, SGP Properties, L.P., back
to the partnership. The Partnership incurred closing costs of $150,000 in
connection with the refinancing.
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
5. NOTES PAYABLE (Continued)
In connection with the above refinancings, the Partnership recognized an
extraordinary loss on extinguishment of debt of $1,636,000, consisting of
the write-off of unamortized deferred financing costs, prepayment
premiums and exit fees.
On September 1, 1994, the Partnership obtained a modification of the
existing mortgage encumbering McMillan Place Apartments in the amount of
$12,939,000 (including accrued interest of $2,139,000). The loan was
split into a first mortgage note of $10,800,000 and a second mortgage
note of $2,139,000. The first mortgage requires monthly payments of
approximately $89,000 at 8.25% interest and is being amortized over a
twenty-two year period. Under the terms of the second mortgage, interest
accrues at 8.25% (with monthly compounding). Quarterly payments, of all
excess cash flow, as defined in the cash management agreement, are
required to be made to the lender. No excess cash flow payments were made
in 1995 or 1994. In addition, the Partnership is prohibited from making
any distributions from operations to its partners. The notes mature on
August 31, 1999, with a balloon payment of approximately $9,767,000 on
the first mortgage plus the outstanding balance and accrued interest on
the second mortgage note. As specified in the modification, the
Partnership is required to make monthly payments of $10,000 to a reserve
account for the term of the loan, which will be used to fund capital
improvements.
The mortgage encumbering the Partnership's Sunrunner Apartments property
matures on January 1, 1997, with a balloon payment of approximately
$3,169,000. Based upon the operations of the property, the Managing
General Partner anticipates that the maturing mortgage can be replaced.
Principal payments at December 31, 1995 are required as follows:
1996 $ 763,000
1997 3,933,000
1998 826,000
1999 12,691,000
2000 689,000
Thereafter 43,440,000
-------------
Total $ 62,342,000
=============
Amortization of deferred financing costs totaled $304,000, $416,000 and
$349,000 for 1995, 1994 and 1993, respectively.
6. NOTES PAYABLE TO AFFILIATE OF THE GENERAL PARTNER
The Partnership repaid $370,000 in principal and $3,000 in interest to an
affiliate of the general partner in 1994.
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
7. ALLOWANCE FOR IMPAIRMENT OF VALUE
In 1994, the Partnership determined that, based upon current economic
conditions and projected future operational cash flow, the decline in
value of Sunrunner Apartments located in St. Petersburg, Florida was
other than temporary and that recovery of its carrying value was not
likely. Accordingly, a provision for impairment of value of $500,000 was
recognized by the Partnership to reduce the property's carrying value to
its estimated fair value.
8. DISPOSITION OF RENTAL PROPERTIES
In February 1994, the Partnership sold Plantation Forest Apartments,
located in Atlanta, Georgia for $2,450,000. After assumption of the
existing loan of $1,965,000 and costs of sale of $3,000, the proceeds to
the Partnership were $482,000. The carrying value of the property at the
time of the sale was $2,590,000 and $6,000 in unamortized financing
costs. The net loss on the sale was $149,000.
In May 1993, the Partnership sold Parkside Village Apartments, located in
Aurora, Colorado for $11,259,000. After payment of the existing loan of
$7,667,000 and costs of the sale of $728,000 (including $281,000 real
estate commission paid to an outside broker and $400,000 prepayment
premium on the existing loan), the net proceeds to the Partnership were
$2,864,000. The carrying value of the property at the time of sale, net
of the $1,895,000 provision for impairment of value recognized in 1992,
was $9,955,000. The net gain on the sale was $576,000.
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
9. RECONCILIATION TO INCOME TAX METHOD OF ACCOUNTING
The differences between the accrual method of accounting for income tax
reporting and the accrual method of accounting used in the consolidated
financial statements are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------------- --------------- ---------------
<S> <C> <C> <C>
Net loss - financial statements $ (3,683,000) $ (3,105,000) $ (2,686,000)
Differences resulted from:
Amortization of notes payable discount - - 8,000
Depreciation (948,000) (980,000) (1,887,000)
Amortization of deferred financing costs and
organization expenses - - (114,000)
Construction period interest and taxes 3,000 (331,000) (471,000)
Provision for impairment of value - 500,000 -
Operating - receivership - - 158,000
Interest expense - short-term borrowings - (66,000) (29,000)
Prepayment penalty - - (400,000)
Gain on property dispositions - net - 910,000 6,301,000
Other (27,000) 21,000 (12,000)
--------------- --------------- ---------------
Net (loss) income - income tax method $ (4,655,000) $ (3,051,000) $ 868,000
=============== =============== ===============
Taxable (loss) income per limited partnership unit
after giving effect to the allocation to the
general partner $ (46) $ (30) $ 8
=============== =============== ===============
Partners' equity - financial statements $ 663,000 $ 4,346,000 $ 7,451,000
Differences resulted from:
Sales commissions and organization expenses 12,413,000 12,413,000 12,413,000
Payments credited to rental properties 215,000 215,000 215,000
Amortization of notes payable discount - - 448,000
Depreciation (23,081,000) (22,133,000) (22,059,000)
Interest expense - - (1,347,000)
Construction period interest and taxes (4,648,000) (4,651,000) (4,320,000)
Provision for impairment of value 500,000 500,000 -
Interest expense - short-term borrowings - - 66,000
Other (927,000) (900,000) (26,000)
=============== =============== ===============
Partners' deficit - income tax method $ (14,865,000) $ (10,210,000) $ (7,159,000)
=============== =============== ===============
</TABLE>
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
10. BASIS OF PRESENTATION AND OPERATING STRATEGY FOR THE YEAR ENDED
DECEMBER 31, 1993
The accompanying consolidated financial statements for the year ended
December 31, 1993, have been prepared on a going concern basis which
contemplates the realization of assets and satisfaction of liabilities in
the normal course of business. The Partnership, after taking into account
accrued but unpaid interest on certain notes payable for which the
Partnership had suspended debt service payments, has experienced cash
flow deficiencies during recent years. At December 31, 1993, the
Partnership had borrowed a total of $370,000 from affiliates of the
general partner for working capital needs. The Partnership holds
investments in and operates properties in real estate markets that are or
were experiencing unfavorable economic conditions. Many of the
Partnership's properties are or were located in oil industry related and
other weakened markets and have experienced operating difficulties. In
addition, markets in some areas remained depressed due in part to
overbuilding which continued to depress residential rental rates. The
level of sales of existing properties have been affected by the limited
availability of financing in real estate markets. The Partnership had a
balloon payment of $10,800,000 on McMillan Place Apartments due in
December 1994. The Partnership's ability to hold and operate its
remaining properties was dependent on obtaining refinancing or debt
restructuring as required. If the Partnership was unable to obtain debt
modification or refinancing, it was likely that dispositions of
properties operating at a deficit or with significant balloon payments
would have occurred through sale, foreclosure or transfer to the lenders.
The Partnership sold Plantation Forest in February 1994 and with the
proceeds from the sale paid off the remaining loans from an affiliate of
the general partner. The Partnership believed this strategy, combined
with cash generated from the Partnership's properties with positive
operations would allow the Partnership to meet its capital and operating
requirements. The outcome of these uncertainties could not be determined.
The consolidated financial statements do not include any adjustments that
might have resulted from the ultimate outcome of these uncertainties.
The Partnership obtained a modification of the McMillan Place debt during
1994 and refinanced numerous properties during 1995, which resulted in
significant net proceeds to the Partnership. Cash flow from operations
improved in 1994 and 1995, as compared to 1993 (see Note 5).
11. SUBSEQUENT EVENT
On January 19, 1996, the stockholders of NPI, Inc. sold all of the issued
and outstanding stock of NPI, Inc. to an affiliate of Insignia. In
addition, an affiliate of Insignia acquired the limited partnership
interests of the Partnership held by DeForest I and certain of its
affiliates (see Note 1). As a result of the transaction, the Managing
General Partner of the Partnership is controlled by Insignia. Insignia
affiliates now provide property and asset management services to the
Partnership, maintain its books and records and oversee its operations.
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
COLUMN COLUMN COLUMN COLUMN COLUMN
A B C D E
Cost Capitalized
Initial Cost Subsequent Gross Amount at Which
to Partnership to Acquisition Carried at Close of Period(1)
-------------- ---------------- -----------------------------
Buildings Buildings
and and
Encum- Improve- Improve- Carrying Improve-
Description brances Land ments ments Costs Land ments Total (2)
- ----------- ------- ---- -------- -------- -------- ---- --------- ---------
(Amounts in thousands)
PARTNERSHIP:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Wood Lake Apartments
Atlanta, Georgia $ 7,750 $ 1,206 $10,980 $ 499 $ - $ 1,206 $11,479 $12,685
Sandspoint Apartments
Phoenix, Arizona 9,968 2,124 13,158 633 (44) 2,146 13,725 15,871
Greenspoint
Apartments
Phoenix, Arizona 8,972 2,165 11,199 324 (153) 2,140 11,395 13,535
Wood Ridge
Apartments
Atlanta, Georgia 9,000 1,632 12,321 592 - 1,632 12,913 14,545
Plantation Crossing
Apartments
Atlanta, Georgia 5,250 1,062 7,576 368 - 1,062 7,944 9,006
McMillan Place
Apartments
Dallas, Texas 12,710 2,399 10,826 509 (11) 2,427 11,296 13,723
Subsidiaries:
Sunrunner Apartments
St. Petersburg,
Florida 3,242 634 6,485 497 - 634 6,982 7,616
Misty Woods
Apartments
Charlotte,
North Carolina 5,450 429 6,846 179 (7) 434 7,013 7,447
------- ------- ------- ----- ------- ------- ------- -------
Total $62,342 $11,651 $79,391 $3,601 $ (215) $11,681 $82,747 $94,428
======= ======= ======= ====== ======= ======= ======= =======
COLUMN COLUMN COLUMN COLUMN COLUMN
A F G H I
Accumu- Life
lated on which
Deprecia- Deprecia-
tion Year tion is
and of Date computed
Impairment Con- of in latest
of value struc- Acqui- statement of
Description (3) tion sition operations
- ----------- ---------- ----- ------ ----------
PARTNERSHIP:
<S> <C> <C> <C> <C>
Wood Lake Apartments
Atlanta, Georgia $ 4,913 1983 12/83 5 - 30 yrs
Sandspoint Apartments
Phoenix, Arizona 5,603 1986 2/84 6 - 30 yrs
Greenspoint
Apartments
Phoenix, Arizona 4,634 1986 2/84 6 - 30 yrs
Wood Ridge
Apartments
Atlanta, Georgia 5,431 1982 4/84 6 - 30 yrs
Plantation Crossing
Apartments
Atlanta, Georgia 3,334 1980 6/84 6 - 30 yrs
McMillan Place
Apartments
Dallas, Texas 4,704 1985 6/85 6 - 30 yrs
Subsidiaries:
Sunrunner Apartments
St. Petersburg,
Florida 3,441 1981 7/84 6 - 30 yrs
Misty Woods
Apartments
Charlotte,
North Carolina 2,834 1986 6/85 6 - 30 yrs
-------
Total $34,894
=======
</TABLE>
See accompanying notes.
SCHEDULE III
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
<TABLE>
<S> <C>
NOTES:
(1) The aggregate cost for Federal income tax purposes is $89,059,000.
(2) Balance, January 1, 1993 $ 137,828,000
Improvements capitalized subsequent to acquisition 658,000
Cost of rental property disposed of (41,050,000)
-------------
Balance, December 31, 1994 97,436,000
Improvements capitalized subsequent to acquisition 240,000
Cost of rental property disposed of (3,570,000)
-------------
Balance, December 31, 1994 94,106,000
Improvements capitalized subsequent to acquisition 322,000
-------------
Balance, December 31, 1995 $ 94,428,000
=============
(3) Balance, January 1, 1993 $ 41,635,000
Additions charged to expense 2,840,000
Accumulated depreciation on rental property disposed (11,012,000)
Allowance for impairment of value on rental properties disposed of (3,589,000)
-------------
Balance, December 31, 1993 29,874,000
Additions charged to expense 2,766,000
Allowance for impairment of value 500,000
Accumulated depreciation on rental property disposed (990,000)
-------------
Balance, December 31, 1994 32,150,000
Additions charged to expense 2,744,000
-------------
Balance, December 31, 1995 $ 34,894,000
=============
</TABLE>
<PAGE>
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995
INDEX
Page
Independentt Auditors' Reports............................................. F-2
Consolidated Financial Statements:
Balance Sheets at December 31, 1995 and 1994............................. F-4
Statements of Operations for the Years Ended
December 31, 1995, 1994 and 1993...................................... F-5
Statements of Partners' Equity for the Years Ended
December 31, 1995, 1994 and 1993....................................... F-6
Statements of Cash Flows for the Years Ended
December 31, 1995, 1994 and 1993....................................... F-7
Notes to Consolidated Financial Statements............................... F-8
Financial Statement Schedule:
Schedule III - Real Estate and Accumulated Depreciation
at December 31, 1995................................................. F - 17
Consolidated financial statements and financial statement schedules not included
have been omitted because of the absence of conditions under which they are
required or because the information is included elsewhere in the consolidated
financial statements.
To the Partners
Century Properties Growth Fund XXII
Greenville, South Carolina
Independent Auditors' Report
We have audited the accompanying consolidated balance sheets of Century
Properties Growth Fund XXII (a limited partnership) (the "Partnership") and its
subsidiaries as of December 31, 1995 and 1994, and the related consolidated
statements of operations, partners' equity and cash flows for the years then
ended. Our audits also included the additional information supplied pursuant to
Item 14(a)(2). These consolidated financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Century
Properties Growth Fund XXII and its subsidiaries 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, the related financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
Imowitz Koenig & Co., LLP
Certified Public Accountants
New York, N.Y.
January 23, 1996
Independent Auditors' Report by
Deloitte & Touche
INDEPENDENT AUDITORS' REPORT
Century Properties Fund XXII:
We have audited the accompanying consolidated statements of operations,
partners' equity and cash flows of Century Properties Fund XXII (a limited
partnership) (the "Partnership") and its wholly-owned subsidiaries for the year
ended December 31, 1993. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit. We conducted our audit 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
audit provides a reasonable basis for our opinion. In our opinion, such
consolidated financial statements present fairly, in all material respects, the
results of operations and cash flows of the Partnership and its wholly-owned
subsidiaries for the year ended December 31, 1993 in conformity with generally
accepted accounting principles. The accompanying 1993 consolidated financial
statements have been prepared assuming that the Partnership will continue as a
going concern. As discussed in the first paragraph of Note 8 to the financial
statements, the Partnership has balloon payments totaling $11,869,000 and
$27,511,000 due in 1994 and 1995, respectively, which raises substantial doubt
about the Partnership's ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 8. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
DELOITTE & TOUCHE LLP
San Francisco, California
March 18, 1994
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
------------------------------
1995 1994
----------- -----------
ASSETS
Cash and cash equivalents $ 4,717,000 $ 475,000
Restricted cash 500,000 500,000
Other assets 1,186,000 862,000
Real Estate:
Real estate 128,394,000 139,861,000
Accumulated depreciation (44,342,000) (43,985,000)
----------- -----------
Real estate, net 84,052,000 95,876,000
Deferred financing costs, net 893,000 734,000
----------- -----------
Total assets $91,348,000 $98,447,000
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Notes payable $74,111,000 $80,889,000
Accrued expenses and other liabilities
(including $116,000 to a related party
in 1995). 1,465,000 1,361,000
----------- -----------
Total liabilities 75,576,000 82,250,000
----------- -----------
Partners' Equity (Deficit):
General partner (7,173,000) (7,173,000)
Limited partners (82,848 units outstanding at
December 31, 1995 and 1994) 22,945,000 23,370,000
----------- -----------
Total partners' equity 15,772,000 16,197,000
----------- -----------
Total liabilities and partners' equity $91,348,000 $98,447,000
=========== ===========
See notes to consolidated financial statements.
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31,
-------------------------------------
1995 1994 1993
----------- ----------- -----------
Revenues:
Rental $20,123,000 $19,603,000 $18,522,000
Interest and other income 156,000 183,000 94,000
Gain on property disposition 2,033,000 -- --
----------- ----------- -----------
Total revenues 22,312,000 19,786,000 18,616,000
----------- ----------- -----------
Expenses (including $1,802,000 and
$1,003,000 paid to the general
partner and affiliates in 1995
and 1994):
Operating 10,567,000 10,353,000 9,182,000
Interest 7,192,000 7,397,000 7,685,000
Depreciation 4,002,000 4,125,000 4,171,000
General and administrative 265,000 423,000 721,000
----------- ----------- -----------
Total expenses 22,026,000 22,298,000 21,759,000
----------- ----------- -----------
Income (loss) before extraordinary item 286,000 (2,512,000) (3,143,000)
Extraordinary item:
Loss on extinguishment of debt (711,000) (530,000) --
----------- ----------- -----------
Net loss $(425,000) $(3,042,000) $(3,143,000)
=========== =========== ===========
Net income (loss) per limited partnership
unit:
Income (loss) before extraordinary
item $ 2.44 $ (26.74) $ (33.46)
Extraordinary item (7.57) (5.64) --
----------- ----------- -----------
Net loss $ (5.13) $ (32.38) $ (33.46)
=========== =========== ===========
See notes to consolidated financial statements.
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
General Limited Total
partner's partners' partners'
(deficit) equity equity
----------- ------------ ------------
Balance - January 1, 1993 $(6,443,000) $28,825,000 $22,382,000
Net loss (371,000) (2,772,000) (3,143,000)
----------- ------------ ------------
Balance - December 31, 1993 (6,814,000) 26,053,000 19,239,000
Net loss before extraordinary item (296,000) (2,216,000) (2,512,000)
Extraordinary item (63,000) (467,000) (530,000)
----------- ------------ ------------
Balance - December 31, 1994 (7,173,000) 23,370,000 16,197,000
Net income before extraordinary
item 84,000 202,000 286,000
Extraordinary item (84,000) (627,000) (711,000)
----------- ------------ ------------
Balance - December 31, 1995 $(7,173,000) $(22,945,000) $(15,772,000)
=========== ============ ============
See notes to consolidated financial statements.
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
------------------------------------------
1995 1994 1993
------------- ------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (425,000) $ (3,042,000) $(3,143,000)
------------- ------------- ------------
Adjustments to reconcile net loss to
net cash (used in) provided by
operating activities:
Depreciation and amortization 4,152,000 4,179,000 4,528,000
Extraordinary item -
extinguishment of debt 711,000 530,000 --
Gain on property disposition (2,033,000) -- --
Changes in operating assets and
liabilities:
Other assets (324,000) (342,000) (203,000)
Accrued expenses and other
liabilities (147,000) (674,000) 70,000
------------- ------------- ------------
Net cash provided by operating
activities 1,934,000 651,000 1,252,000
------------- ------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate (430,000) (621,000) (1,305,000)
Purchase of cash investments -- -- (1,782,000)
Proceeds from maturity of cash
investments -- 1,187,000 595,000
Restricted cash decrease (increase) -- 275,000 11,000
Net proceeds on sale of property 2,926,000 -- --
------------- ------------- ------------
Net cash provided by (used in)
investing activities 2,496,000 841,000 (2,481,000)
------------- ------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Notes payable proceeds 23,200,000 30,000,000 --
Notes payable principal payments (2,037,000) (703,000) (605,000)
Repayment of notes payable (20,582,000) (30,256,000) --
Deferred financing costs paid (506,000) (399,000) (94,000)
Deferred financing costs refunded -- -- 33,000
Costs paid to extinguish debt (263,000) -- --
------------- ------------- ------------
Net cash (used in) financing
activities (188,000) (1,358,000) (666,000)
------------- ------------- ------------
Increase (Decrease) in Cash and Cash
Equivalents 4,242,000 134,000 (1,895,000)
Cash and Cash Equivalents at
Beginning of year 475,000 341,000 2,236,000
------------- ------------- ------------
Cash and Cash Equivalents at
End of Year $ 4,717,000 $ 475,000 $ 341,000
============= ============= ============
Supplemental Disclosure of Cash
Flow Information:
Interest paid in cash during
the year $ 7,142,000 $ 7,513,000 $ 7,284,000
============= ============= ============
Supplemental Disclosure of Non-cash
Investing and Financing Activities:
Mortgage assumed on property sale
(see Note 6) $7,359,000 $ -- $ --
============= ============= ============
Refinancing of notes payable
(see Note 5)
See notes to consolidated financial statements.
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Century Properties Growth Fund XXII (the "Partnership") is a limited partnership
organized in 1984 under the laws of the State of California to acquire, hold for
investment, and ultimately sell income-producing real estate. The Partnership
currently owns nine residential apartment complexes, located in Arizona,
Georgia, Texas, Kansas, South Carolina, Illinois and Virginia. The general
partner of the Partnership is Fox Partners IV, a California general partnership.
The general partners of Fox Partners IV are Fox Capital Management Corporation
("FCMC"), a California corporation, Fox Realty Investors ("FRI"), a California
general partnership, Fox Partners 85, a California general partnership and Fox
Associates 84, a California general partnership. The capital contributions of
$82,848,000 ($1,000 per unit) were made by the limited partners.
On December 6, 1993, the shareholders of FCMC entered into a Voting Trust
Agreement with NPI Equity Investments II, Inc. ("NPI Equity" or the "Managing
General Partner") pursuant to which NPI Equity was granted the right to vote 100
percent of the outstanding stock of FCMC and NPI Equity became the managing
general partner of FRI. As a result, NPI Equity became responsible for the
operation and management of the business and affairs of the Partnership and the
other investment partnerships originally sponsored by FCMC and/or FRI. NPI
Equity is a wholly-owned subsidiary of National Property Investors, Inc. ("NPI,
Inc."). The shareholders of FCMC and the partners in FRI retain indirect
economic interests in the Partnership and such other investment limited
partnerships, but have ceased to be responsible for the operation and management
of the Partnership and such other partnerships.
In October 1994, DeForest Ventures I L.P. ("DeForest I") made a tender offer for
limited partnership interests in the partnership, as well as eleven affiliated
limited partnerships. DeForest Ventures II, L.P. ("DeForest II") made tender
offers for limited partnership interests in seven affiliated limited
partnerships. Shareholders who controlled DeForest Capital I Corporation, the
sole general partner of DeForest I, also controlled NPI, Inc. As of December 31,
1995, DeForest I had acquired approximately 20% of total limited partnership
units of the Partnership (see Note 9).
On January 19, 1996, the stockholders of NPI, Inc. sold all of the issued and
outstanding stock of NPI, Inc. to an affiliate of Insignia Financial Group,
Inc. ("Insignia"). In addition, an affiliate of Insignia acquired the limited
partnership interests of the Partnership held by DeForest I and certain of its
affiliates (see Note 9).
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Consolidation
The consolidated financial statements include the statements of the
Partnership, a wholly-owned subsidiary, which was formed in 1991 and four
wholly-owned subsidiaries which were formed in 1995 (see Note 5) All significant
intercompany transactions and balances have been eliminated.
Distributions
On January 11, 1996, the Partnership distributed $2,548,000 ($30.76 per unit) to
the limited partners and $52,000 to the general partners from the proceeds
received from the sale of the Partnership's Monterey Village Apartments
property.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Fair Value of Financial Instruments
In 1995, the Partnership implemented Statement of Financial Accounting Standards
("SFAS") No. 107, "Disclosures about Fair Value of Financial Instruments," as
amended by SFAS No. 119, "Disclosures about Derivative Financial Instruments and
Fair Value of Financial Instruments," which requires disclosure of fair value
information about financial instruments, whether or not recognized in the
balance sheet, for which it is practicable to estimate fair value. Fair value is
defined in the SFAS as the amount at which the instrument could be exchanged in
a current transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes that the carrying amount of its
financial instruments (except for long term debt) approximates fair value due to
the short term maturity of these instruments. The fair value of the
Partnership's long term debt, after discounting the scheduled loan payments to
maturity, approximates its carrying balance.
Cash and Cash Equivalents
The Partnership considers all highly liquid investments with an original
maturity of three months or less at the time of purchase to be cash equivalents.
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Concentration of Credit Risk
The Partnership maintains cash balances at institutions insured up to $100,000
by the Federal Deposit Insurance Corporation. Balances in excess of $100,000 are
usually invested in repurchase agreements, which are collateralized by United
States Treasury obligations. Cash balances exceeded these insured levels during
the year. At December 31, 1995, the Partnership had approximately $4,450,000
invested in overnight repurchase agreements, secured by United States Treasury
obligations, which are included in cash and cash equivalents.
Real Estate
Real estate is stated at cost. Acquisition fees are capitalized as a cost of
real estate. In 1995, the Partnership adopted SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of ",
which requires impairment losses to be recognized for long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows are not sufficient to recover the asset's carrying amount. The impairment
loss is measured by comparing the fair value of the asset to its carrying
amouThe adoption of the SFAS had no effect on the Partnership's financial
statements.
Depreciation
Depreciation is computed by the straight-line method over estimated useful lives
currently ranging from 27.5 to 30 years for buildings and improvements and six
to seven years for furnishings.
Deferred Financing Costs
Deferred financing costs are amortized as interest expense over the lives of the
related loans or expensed if financing is not obtained. At December 31, 1995 and
1994, accumulated amortization of deferred financing costs totaled $322,000 and
$679,000, respectively.
Net Loss Per Limited Partnership Unit
The net loss per limited partnership unit is computed by dividing the net loss
allocated to the limited partners by 82,848 units outstanding.
Income Taxes
Taxable income or loss of the Partnership is reported in the income tax returns
of its partners. Accordingly, no provision for income taxes is made in the
financial statements of the Partnership.
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Reclassifications
Certain amounts in 1994 and 1993 have been reclassified to conform to the 1995
presentation.
2. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES
In accordance with the partnership agreement, the Partnership may be charged by
the general partner and affiliates for services provided to the Partnership.
From March 1988 to December 1992, such amounts were assigned pursuant to a
services agreement by the general partner and affiliates to Metric Realty
Services, L.P. ("MRS"), which performed partnership management and other
services for the Partnership.
On January 1, 1993, Metric Management, Inc. ("MMI"), successor to MRS, a company
which is not affiliated with the general partner, commenced providing certain
property and portfolio management services to the Partnership under a new
services agreement. As provided in the new services agreement, effective January
1, 1993, no reimbursements were made to the general partner and affiliates after
December 31, 1992. Subsequent to December 31, 1992, reimbursements were made to
MMI. On December 16, 1993, the services agreement with MMI was modified and, as
a result thereof, the Managing General Partner began directly providing cash
management and other Partnership services on various dates commencing December
23, 1993. On March 1, 1994, an affiliate of NPI Equity commenced providing
certain property management services (see Notes 1 and 9). Related party fees and
expenses for the years ended December 31, 1995, 1994, and 1993 were as follows:
1995 1994 1993
---------- ---------- -----------
Financing fees $ 116,000 $ -- $ --
Property management fees 1,011,000 825,000 --
Real estate tax reduction fees 43,000 -- --
Reimbursement of expenses:
Partnership accounting and
investor services 174,000 158,000 --
Professional services -- 20,000 --
---------- ----------- -----------
Total $1,344,000 $ 1,003,000 $ --
========== =========== ===========
Property management fees and real estate tax reduction fees are included in
operating expenses. Reimbursed expenses are primarily included in general and
administrative expenses. Financing fees have been capitalized and are being
amortized over the life of the loans. In addition, approximately $574,000 of
insurance premiums which were paid to an affiliate of NPI Inc. under a master
insurance policy arranged by such affiliate, are included in operating expenses
for the year ended December 31, 1995.
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES (Continued)
In accordance with the partnership agreement, the general partner received a
Partnership management incentive allocation equal to ten percent of net and
taxable losses and cash distributions. The general partner was also allocated
its two percent continuing interest in the Partnership's net and taxable losses
and cash distributions after the above allocation of the Partnership management
incentive. Gains from the disposition of Partnership properties were allocated
first to the general partner to the extent of distributions received or they are
entitled to receive, then 12% of the remainder until any deficit in their
capital account is eliminated.
3. RESTRICTED CASH
Restricted cash of $500,000 at December 31, 1995 and 1994, consists of required
reserves maintained in accordance with Partnership financing agreements.
4. REAL ESTATE
Real estate, at December 31, 1995 and 1994, is summarized as follows:
1995 1994
------------- ------------
Land $ 14,396,000 $ 15,829,000
Buildings and improvements 103,304,000 112,257,000
Furnishings 10,694,000 11,775,000
------------ ------------
Total 128,394,000 139,861,000
Accumulated depreciation (44,342,000) (43,985,000)
------------ ------------
Real estate, net $ 84,052,000 $ 95,876,000
============ ============
5. NOTES PAYABLE
Individual rental properties are pledged as collateral for the related notes
payable. At December 31, 1995, the notes, which are payable monthly, bear
interest at rates ranging from 7.4 to 9.4 percent.
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
5. NOTES PAYABLE (Continued)
On December 29, 1995, the Partnership refinanced the mortgage that encumbered
its Hampton Greens Apartments property with a new first mortgage in the amount
of $5,800,000. The loan requires monthly payments of approximately $42,000 at
7.88% interest and matures on January 1, 2006, with a balloon payment of
approximately $5,175,000. The loan may not be prepaid without penalty. The
Partnership incurred closing costs and fees of $170,000 in connection with the
refinancing, of which $129,000 was paid in 1995. In connection with the
refinancing, the Partnership was required to transfer all the assets and
liabilities of Hampton Greens Apartments to a newly formed, wholly-owned
subsidiary, Hampton Greens CPGF 22, L.P.
On December 29, 1995, the Partnership refinanced the mortgage that encumbered
its Stoney Creek Apartments property with a new first mortgage in the amount of
$7,050,000. The loan requires monthly payments of approximately $51,000 at 7.88%
interest and matures on January 1, 2006, with a balloon payment of approximately
$6,291,000. The loan may not be prepaid without penalty. The Partnership
incurred closing costs and fees of $230,000 in connection with the refinancing,
of which $151,000 was paid in 1995. In connection with the refinancing, the
Partnership was required to transfer all the assets and liabilities of Stoney
Creek Apartments to a newly formed, wholly-owned subsidiary, Stoney Creek CPGF
22, L.P.
On December 29, 1995, the Partnership refinanced the mortgage that encumbered
its Cooper's Pointe Apartments property with a new first mortgage in the amount
of $4,250,000. The loan requires monthly payments of approximately $31,000 at
7.88% interest and matures on January 1, 2006, with a balloon payment of
approximately $3,792,000. The loan may not be prepaid without penalty. The
Partnership incurred closing costs and fees of $135,000 in connection with the
refinancing, of which $78,000 was paid in 1995. In connection with the
refinancing, the Partnership was required to transfer all the assets and
liabilities of Cooper's Pointe Apartments to a newly formed, wholly-owned
subsidiary, Cooper's Pointe CPGF 22, L.P.
On December 29, 1995, the Partnership refinanced the mortgage that encumbered
its Copper Mill Apartments property with a new first mortgage in the amount of
$6,100,000. The loan requires monthly payments of approximately $44,000 at 7.88%
interest and matures on January 1, 2006, with a balloon payment of approximately
$5,443,000. The loan may not be prepaid without penalty. The Partnership
incurred closing costs and fees of $210,000 in connection with the refinancing,
of which $135,000 was paid in 1995. In connection with the refinancing, the
Partnership was required to transfer all the assets and liabilities of Copper
Mill Apartments to a newly formed, wholly-owned subsidiary, Copper Mill CPGF 22,
L.P.
In 1995 and 1994, in connection with the refinancing of mortgages, the
Partnership recognized an extraordinary loss on extinguishment of debt of
$494,000 and $530,000, respectively, consisting of the write-off of unamortized
deferred loan costs and prepayment premiums.
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
5. NOTES PAYABLE (Continued)
The mortgage encumbering the Partnership's Autumn Run Apartments property
matures on June 1, 1996, with a balloon payment of approximately $10,575,000.
The Partnership will attempt to extend the due date of this loan or find
replacement financing. If, however, this loan is not refinanced or extended, or
the property is not sold, the Partnership could lose this property through
foreclosure.
The note payable on Four Winds Apartments with a balloon payment of $10,452,000
was due in September 1995. The Partnership extended the due date of the note to
April 1996. In connection with the loan extension, the Partnership incurred fees
of $13,000. On January 17, 1996, the Partnership replaced the mortgage
encumbering Four Winds Apartments with a new first mortgage in the amount of
$9,675,000 (see Note 9).
The notes payable on the Partnership's Plantation Creek and Wood Creek
properties, which were due to mature in July 1996 and December 1999,
respectively, were refinanced on January 17, 1996 (see Note 9).
Principal payments at December 31, 1995 are required as follows:
1996 $ 11,006,000
1997 487,000
1998 528,000
1999 4,911,000
2000 618,000
Thereafter 59,080,000
------------
76,630,000
Less:
Additional proceeds received from
January 17, 1996 refinancings (2,519,000)
------------
Total $ 74,111,000
============
Principal payments reflect the refinancings that occurred on January 17, 1996,
regardless of their original due date. Approximately $2,500,000 of additional
proceeds were received from the January 17, 1996 refinancings.
Amortization of deferred financing costs totaled $150,000, $54,000 and $357,000
for the years ended December 31, 1995, 1994, and 1993, respectively.
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
6. DISPOSITION OF RENTAL PROPERTY
On August 18, 1995, the Partnership sold its Monterey Village Apartments to an
unaffiliated third party for $10,609,000. After assumption of the mortgage
balance of $7,359,000, and closing costs of $324,000, the partnership received
net proceeds of $2,926,000. For financial reporting purposes the sale resulted
in a gain of $2,033,000.
In connection with the write-off of unamortized deferred loan costs and the
assumption of debt, the Partnership recognized an extraordinary loss on
extinguishment of debt of $217,000 in 1995.
7. RECONCILIATION TO INCOME TAX METHOD OF ACCOUNTING
The difference between the accrual method of accounting for income tax reporting
and the accrual method of accounting used in the consolidated financial
statements are as follows:
1995 1994 1993
------------- ----------- ------------
Net loss - financial statements $ (425,000) $ (3,042,000) $(3,143,000)
Differences resulted from:
Gain on property disposition 582,000 -- --
Depreciation (1,085,000) (1,286,000) (1,505,000)
Interest expense -- 110,000 131,000
Construction period interest
amortization (187,000) (315,000) (374,000)
Other 48,000 32,000 5,000
------------ ----------- ------------
Net loss - income tax method $ (1,067,000) $ (4,501,000) $(4,886,000)
============ =========== ============
Taxable loss per limited
partnership unit after giving
effect to the allocation to the
general partner $ (12) $ (48) $ (52)
============ =========== ============
Partners' equity - financial
statements $ 15,772,000 $ 16,197,000 $ 19,239,000
Differences resulted from:
Sales commissions and
organization expenses 12,427,000 12,427,000 12,427,000
Depreciation (28,279,000) (27,562,000) (26,273,000)
Payments credited to rental
properties 2,014,000 2,056,000 2,056,000
Interest expense 287,000 287,000 177,000
Construction period interest
amortization (3,498,000) (3,567,000) (3,252,000)
Other 53,000 5,000 (27,000)
------------ ----------- ------------
Partners' (deficit) equity -
income tax method $ (1,224,000) $ (157,000) $ 4,347,000
============ =========== ============
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
8. BASIS OF PRESENTATION AND OPERATING STRATEGY FOR THE YEAR ENDED DECEMBER 31,
1993
The accompanying consolidated financial statements for the year ended December
31, 1993, have been prepared on a going concern basis which contemplates the
realization of assets and satisfaction of liabilities in the normal course of
business. As of December 31, 1993, the Partnership had balloon payments totaling
$11,869,000 due on two properties, Monterey Village and Copper Mill in August
and December of 1994, respectively. In addition, balloon payments totaling
$27,511,000 were due in 1995 on Four Winds, Woodcreek and Cooper's Pointe. The
Partnership believed that its current strategy, combined with cash generated
from the Partnership's properties with positive operations would allow the
Partnership to meet its capital and operating requirements. The outcome of this
uncertainty could not be determined. The consolidated financial statements do
not include any adjustments that might result from the ultimate outcome of this
uncertainty.
The Partnership sold Monterey Village and has refinanced the other properties as
of January 17, 1996 (see Notes 5 and 6).
9. SUBSEQUENT EVENTS
On January 19, 1996, the stockholders of NPI, Inc. sold all of the issued and
outstanding stock of NPI, Inc. to an affiliate of Insignia. In addition, an
affiliate of Insignia acquired the limited partnership interests of the
Partnership held by DeForest I and certain of its affiliates (see Note 1). As a
result of the transaction, the Managing General Partner of the Partnership is
controlled by Insignia. Insignia affiliates now provide property and asset
management services to the Partnership, maintain its books and records and
oversee its operations.
On January 17, 1996, the Partnership refinanced the mortgage that encumbered its
Wood Creek Apartments property with a new first mortgage in the amount of
$12,900,000. The loan requires monthly payments of approximately $94,000 at
7.93% interest and matures on February 1, 2006, with a balloon payment of
approximately $11,524,000. The loan may not be prepaid without penalty.
On January 17, 1996, the Partnership refinanced the mortgage that encumbered its
Plantation Creek Apartments property with a new first mortgage in the amount of
$15,900,000. The loan requires monthly payments of approximately $116,000 at
7.93% interest and matures on February 1, 2006, with a balloon payment of
approximately $14,204,000. The loan may not be prepaid without penalty.
On January 17, 1996, the Partnership refinanced the mortgage that encumbered its
Four Winds Apartments property with a new first mortgage in the amount of
$9,675,000. The loan requires monthly payments of approximately $71,000 at 7.93%
interest and matures on February 1, 2006, with a balloon payment of
approximately $8,643,000. The loan may not be prepaid without penalty.
In connection with the above refinancings the Partnership was required to
transfer all the assets and liabilities of each of the properties to its own
newly formed, wholly-owned subsidiary.
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
Cost capitalized Gross amount
Initial cost subsequent to carried at
to Partnership acquisition close of period (1)
----------------------- -------------------------- ------------------------------
Buildings and Carrying Buildings and
Description Encumbrances Land Improvements Improvements Costs Land Improvements Total (2)
----------- ------------ ---- ------------ ------------ ----- ---- ------------ ---------
(Amounts in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SUBSIDIARIES:
Copper Mill
Apartments
Richmond, Virginia $ 6,100 $ 933 $ 8,061 $ 325 $ (45) $ 929 $ 8,345 $ 9,274
Cooper's Pointe
Apartments
Charleston, South
Carolina 4,250 513 6,696 269 (111) 510 6,857 7,367
Wood Creek
Apartments
Mesa, Arizona 12,500 2,130 13,440 502 (118) 2,117 13,837 15,954
Stoney Creek
Apartments
Dallas, Texas 7,050 1,803 12,509 575 (927) 1,689 12,271 13,960
Promontory Point
Apartments
Austin, Texas 4,340 1,690 10,129 294 (694) 1,595 9,824 11,419
Hampton Greens
Apartments
Dallas, Texas 5,800 2,086 9,474 477 -- 2,086 9,951 12,037
PARTNERSHIP:
Plantation Creek
Apartments
Atlanta, Georgia $13,046 $ 2,653 $ 20,827 $1,823 $ -- $ 2,655 $ 22,648 $ 25,303
Four Winds Apartments
Overland Park,
Kansas 10,409 1,363 14,288 400 (92) 1,357 14,602 15,959
Autumn Run
Apartments
Naperville,
Illinois 10,616 1,462 14,957 729 (27) 1,458 15,663 17,121
------ ------ ------- -------- -------- ------ ------- -------
TOTAL $ 74,111 $ 14,633 $110,381 $ 5,394 $ (2,014) $ 14,396 $113,998 $128,394
======== ======== ======== ======== ========= ======== ======== ========
<CAPTION>
Column A Column F Column G Column H Column I
-------- -------- -------- -------- --------
Life
on which
depreciation
is computed
Accumulated in latest
Depreciation Year of Date statement of
Description (3) Construction Acquired operations
----------- ----------- ------------ -------- ----------
<S> <C> <C> <C> <C>
SUBSIDIARIES:
Copper Mill
Apartments
Richmond, Virginia $ 2,875 1987 9/86 6 - 30 yrs
Cooper's Pointe
Apartments
Charleston, South
Carolina 2,721 1986 11/85 6 - 30 yrs
Wood Creek
Apartments
Mesa, Arizona 5,897 1985 5/84 6 - 30 yrs
Stoney Creek
Apartments Dallas,
Texas 5,047 1983 6/85 6 - 30 yrs
Promontory Point
Apartments
Austin, Texas 3,961 1984 10/85 6 - 30 yrs
Hampton Greens
Apartments
Dallas, Texas 4,079 1986 12/85 6 - 30 yrs
PARTNERSHIP:
Plantation Creek
Apartments
Atlanta, Georgia $ 9,227 1977/1978 6/84 6 - 30 yrs
Four Winds Apartments
Overland Park,
Kansas 5,007 1987 9/85 6 - 30 yrs
Autumn Run
Apartments
Naperville,
Illinois 5,528 1987 6/86 6 - 30 yrs
--------
TOTAL $ 44,342
========
</TABLE>
See accompanying notes.
SCHEDULE III
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
NOTES:
(1) The aggregate cost for Federal income tax purposes is $127,398,000.
(2) Balance, January 1, 1993 $ 137,935,000
Improvements capitalized subsequent to acquisition 1,305,000
-------------
Balance, December 31, 1993 139,240,000
Improvements capitalized subsequent to acquisition 621,000
-------------
Balance, December 31, 1994 139,861,000
Improvements capitalized subsequent to acquisition 430,000
Cost of rental property sold (11,897,000)
-------------
Balance, December 31, 1995 $ 128,394,000
=============
(3) Balance, January 1, 1993 $ 35,689,000
Additions charged to expense 4,171,000
-------------
Balance, December 31, 1993 39,860,000
Additions charged to expense 4,125,000
-------------
Balance, December 31, 1994 43,985,000
Additions charged to expense 4,002,000
Accumulated depreciation on rental property sold (3,645,000)
-------------
Balance, December 31, 1995 $ 44,342,000
=============
<PAGE>
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 hereunto duly authorized.
INSIGNIA FINANCIAL GROUP, INC.
By: /s/ John K. Lines
-------------------------
John K. Lines
General Counsel
Date: December 10, 1996
