United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] Quarterly Report PURSUANT TO Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2011
or
[ ] Transition Report PURSUANT TO Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from _________to _________
Commission file number 0-11137
CENTURY PROPERTIES FUND XVII, LP
(Exact name of registrant as specified in its charter)
Delaware | 94-2782037 |
(State or other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification No.) |
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[X] Yes [ ] No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [X] Yes [ ] No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] | Accelerated filer [ ] |
Non-accelerated filer [ ] (Do not check if a smaller reporting company) | Smaller reporting company [X] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
CENTURY PROPERTIES FUND XVII, LP |
|
CONSOLIDATED BALANCE SHEETS |
(Unaudited) |
(in thousands) |
| September 30, 2011 | December 31, 2010 |
|
Assets |
|
| |
Cash and cash equivalents | $ 1,160 | $ 489 | |
Receivables and deposits | 319 | 428 | |
Restricted escrow | 28 | -- | |
Other assets | 582 | 559 | |
Investment properties: |
|
| |
Land | 4,186 | 4,186 | |
Buildings and related personal property | 56,034 | 61,383 | |
Total investment property | 60,220 | 65,569 | |
Less accumulated depreciation | (45,873) | (50,984) | |
Investment property, net | 14,347 | 14,585 | |
Assets held for sale | -- | 6,438 | |
Total assets | $ 16,436 | $ 22,499 | |
|
|
| |
Liabilities and Partners' Deficit |
|
| |
Liabilities |
|
| |
Accounts payable | $ 400 | $ 507 | |
Tenant security deposit liabilities | 312 | 304 | |
Accrued property taxes | 513 | 626 | |
Distribution payable | 271 | -- | |
Other liabilities | 756 | 676 | |
Due to affiliates | 5,894 | 3,784 | |
Mortgage notes payable | 44,355 | 45,974 | |
Liabilities related to assets held for sale | -- | 13,910 | |
Total liabilities | 52,501 | 65,781 | |
|
|
| |
Partners' Deficit |
|
| |
General partner | (7,552) | (9,322) | |
Limited partners | (28,513) | (33,960) | |
Total partners’ deficit | (36,065) | (43,282) | |
Total liabilities and partners’ deficit | $ 16,436 | $ 22,499 | |
See Accompanying Notes to Consolidated Financial Statements
CENTURY PROPERTIES FUND XVII, LP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||
| 2011 | 2010 | 2011 | 2010 |
Revenues: |
|
|
|
|
Rental income | $ 2,241 | $ 2,151 | $ 6,664 | $ 6,546 |
Other income | 355 | 349 | 954 | 941 |
Total revenues | 2,596 | 2,500 | 7,618 | 7,487 |
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|
|
Expenses: |
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|
|
|
Operating | 1,135 | 1,090 | 3,218 | 3,189 |
General and administrative | 95 | 96 | 292 | 306 |
Depreciation | 665 | 759 | 1,990 | 2,330 |
Interest | 866 | 878 | 2,613 | 2,627 |
Property taxes | 131 | 157 | 499 | 523 |
Loss on early extinguishment of debt | -- | -- | 960 | -- |
Total expenses | 2,892 | 2,980 | 9,572 | 8,975 |
|
|
|
|
|
Loss from continuing operations | (296) | (480) | (1,954) | (1,488) |
Loss from discontinued operations | (1,578) | (75) | (1,313) | (255) |
Gain from sale of discontinued |
|
|
|
|
operations | 17,884 | -- | 17,884 | -- |
Net income (loss) | $16,010 | $ (555) | $14,617 | $(1,743) |
|
|
|
|
|
Net income (loss) allocated to general |
|
|
|
|
partner | $ 2,082 | $ (65) | $ 1,918 | $ (206) |
Net loss allocated to limited partners | $ -- | $ (490) | $(1,023) | $(1,537) |
Net loss allocated to Series A unit |
|
|
|
|
holders | $ (236) | $ -- | $ (398) | $ -- |
Net income allocated to Series B unit |
|
|
|
|
holders | $14,164 | $ -- | $14,120 | $ -- |
|
|
|
|
|
Per limited partnership unit: |
|
|
|
|
Loss from continuing operations | $ -- | $ (5.65) | $(17.15) | $(17.49) |
Series A | (3.14) | -- | (5.30) | -- |
Series B | (0.33) | -- | (0.53) | -- |
Income (loss) from discontinued operations |
-- |
(0.88) |
3.51 |
(3.00) |
Loss from discontinued operations (Series B) |
(18.55) |
-- |
(18.94) |
-- |
Gain from sale of discontinued |
|
|
|
|
operations (Series B) | 207.73 | -- | 207.73 | -- |
Net income (loss) per limited |
|
|
|
|
partnership unit | $185.71 | $ (6.53) | $169.32 | $(20.49) |
Distribution per limited partnership |
|
|
|
|
unit | $ 96.69 | $ -- | $ 96.69 | $ -- |
See Accompanying Notes to Consolidated Financial Statements
CENTURY PROPERTIES FUND XVII, LP
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIENCY) CAPITAL
(Unaudited)
(in thousands)
|
General Partner |
Limited Partners | Series A Unit Holders | Series B Unit Holders | Subtotal Limited Partners |
Total |
|
|
|
|
| ||
|
|
|
|
|
|
|
Partners’ deficit at December 31, 2010 |
$(9,322) |
$(33,960) |
$ -- |
$ -- |
$(33,960) |
$(43,282) |
|
|
|
|
|
|
|
Net loss for the period January 1, 2011 through May 9, 2011 |
(136) |
(1,023) |
-- |
-- |
(1,023) |
(1,159) |
|
|
|
|
|
|
|
Partners’ deficit at May 9, 2011 |
(9,458) |
(34,983) |
-- |
-- |
(34,983) |
(44,441) |
|
|
|
|
|
|
|
Allocation of Units | -- | 34,983 | (28,343) | (6,640) | -- | -- |
|
|
|
|
|
|
|
Distribution to partners | (148) | -- | -- | (7,252) | (7,252) | (7,400) |
|
|
|
|
|
|
|
Net income (loss) for the period May 10, 2011 through September 30, 2011 |
2,054 |
-- |
(398) |
14,120 |
13,722 |
15,776 |
|
|
|
|
|
|
|
Partners’ (deficiency) capital at September 30, 2011 |
$(7,552) |
$ -- |
$(28,741) |
$ 228 |
$(28,513) |
$(36,065) |
|
|
|
|
|
|
|
See Accompanying Notes to Consolidated Financial Statements
CENTURY PROPERTIES FUND XVII, LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
| Nine Months Ended September 30, | |
| 2011 | 2010 |
Cash flows from operating activities: |
|
|
Net income (loss) | $ 14,617 | $ (1,743) |
Adjustments to reconcile net income (loss) to net cash |
|
|
provided by operating activities: |
|
|
Depreciation | 2,423 | 2,997 |
Amortization of loan costs | 49 | 62 |
Gain from sale of discontinued operations | (17,884) | -- |
Loss on early extinguishment of debt | 2,383 | -- |
Casualty gain | (342) | -- |
Change in accounts: |
|
|
Receivables and deposits | 206 | (47) |
Other assets | 4 | (35) |
Accounts payable | (198) | 47 |
Tenant security deposit liabilities | (99) | 42 |
Accrued property taxes | (210) | (133) |
Other liabilities | (47) | (149) |
Due to affiliates | 108 | 45 |
Net cash provided by operating activities | 1,010 | 1,086 |
|
|
|
Cash flows from investing activities: |
|
|
Net deposits to restricted escrow | (28) | -- |
Property improvements and replacements | (1,739) | (1,137) |
Proceeds from sale of discontinued operations | 22,482 | -- |
Insurance proceeds received | 352 | -- |
Net cash provided by (used in) investing activities | 21,067 | (1,137) |
|
|
|
Cash flows from financing activities: |
|
|
Repayment of mortgage notes payable | (27,609) | -- |
Proceeds from mortgage note payable | 12,869 | -- |
Payments on mortgage notes payable | (518) | (548) |
Advances from affiliate | 3,669 | 856 |
Repayment of advances from affiliate | (1,667) | (211) |
Prepayment penalty paid | (873) | -- |
Loan costs paid | (148) | -- |
Distribution to partners | (7,129) | -- |
Net cash provided by (used in) financing activities | (21,406) | 97 |
|
|
|
Net increase in cash and cash equivalents | 671 | 46 |
Cash and cash equivalents at beginning of period | 489 | 269 |
Cash and cash equivalents at end of period | $ 1,160 | $ 315 |
|
|
|
Supplemental disclosure of cash flow information: |
|
|
Cash paid for interest | $ 3,059 | $ 3,081 |
|
|
|
Supplemental disclosure of non-cash activities: |
|
|
Property improvements and replacements included in accounts payable |
$ 332 |
$ 567 |
Prepayment penalty paid by purchaser | $ 1,323 | $ -- |
Distribution payable to partners | $ 271 | $ -- |
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(Unaudited) |
Note A – Basis of Presentation
The accompanying unaudited consolidated financial statements of Century Properties Fund XVII, LP (the "Partnership" or the "Registrant") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Fox Partners, a California general partnership, is the general partner of the Partnership (the “General Partner”). The general partners of Fox Partners are Fox Capital Management Corporation (“FCMC” or the “Managing General Partner"), Fox Realty Investors (“FRI”), and CPF XVII, LLC. In the opinion of the Managing General Partner, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 2011 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2011. The consolidated balance sheet at December 31, 2010 has been derived from the audited financial statements at that date but does not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership's Annual Report on Form 10-K for the fiscal year ended December 31, 2010. The Managing General Partner and the general partner of FRI are affiliates of Apartment Investment and Management Company ("Aimco"), a publicly traded real estate investment trust.
The Partnership’s management evaluated subsequent events through the time this Quarterly Report on Form 10-Q was filed.
The accompanying consolidated statements of operations for the three and nine months ended September 30, 2010 have been restated to reflect the operations of Hampden Heights Apartments as discontinued operations and the accompanying consolidated balance sheet as of December 31, 2010 has also been restated to reflect the respective assets and liabilities of Hampden Heights Apartments as held for sale due to its sale on July 22, 2011 (see “Note F”).
The following table presents summarized results of operations of Hampden Heights Apartments for the three and nine months ended September 30, 2011 and 2010 (in thousands):
| Three Months Ended September 30, | |
| 2011 | 2010 |
Revenues | $ 152 | $ 763 |
Expenses | (307) | (838) |
Loss on early extinguishment of debt | (1,423) | -- |
Loss from discontinued operations | $(1,578) | $ (75) |
| Nine Months Ended September 30, | |
| 2011 | 2010 |
Revenues | $ 1,623 | $ 2,178 |
Expenses | (1,855) | (2,433) |
Loss on early extinguishment of debt | (1,423) | -- |
Casualty gain | 342 | -- |
Loss from discontinued operations | $ (1,313) | $ (255) |
Certain reclassifications have been made to the 2010 balances to conform to the 2011 presentation.
Organization: On May 9, 2011, the General Partner amended the Partnership’s certificate of limited partnership and the Partnership Agreement to establish and convert the Partnership’s existing partnership interests into two separate series of partnership interests that have separate rights with respect to specified Partnership property. Effective as of the close of business on May 9, 2011 (the “Establishment Date”), each then outstanding interest of the General Partner of the Partnership was converted into one Series A GP Interest and one Series B GP Interest and each then outstanding unit of limited partnership interest in the Partnership was converted into one Series A Unit and one Series B Unit. The Series A GP Interest and the Series A Units are collectively referred to as the “Series A Interests”, and the Series B GP Interest and the Series B Units are collectively referred to as the “Series B Interests”. Except as described below, the Series A Interests and the Series B Interests entitle the holders thereof to the same rights as the holders of partnership interests had prior to the Establishment Date.
From and after the Establishment Date, the Series A Interests will be entitled to all of the Partnership’s interests in any entity in which the Partnership owns an interest, other than the Series B Interests (as defined below), including, but not limited to, all profits, losses and distributions from such entities.
From and after the Establishment Date, the Series B Interests will be entitled to all of the Partnership’s interest in Hampden Heights Apartments (the “Series B Interests”), including, but not limited to, all profits, losses and distributions from Hampden Heights Apartments.
On July 28, 2011, the Partnership entered into an agreement and plan of merger (the “Merger Agreement”) with AIMCO Properties, L.P., a Delaware limited partnership, and AIMCO CPF XVII Merger Sub LLC, a Delaware limited liability company of which AIMCO Properties, L.P. is the sole member (the “Merger Subsidiary”), pursuant to which the Merger Subsidiary will be merged with and into the Partnership, with the Partnership as the surviving entity.
In the merger, each Series A unit of limited partnership interest (each, a “Series A Unit”) of the Partnership outstanding immediately prior to the consummation of the merger (other than Series A Units held by limited partners who perfect their appraisal rights pursuant to the Merger Agreement) will be converted into the right to receive, at the election of the limited partner, either (i) $311.18 in cash (the “Cash Consideration”) or (ii) a number of partnership common units of AIMCO Properties, L.P. calculated by dividing $311.18 by the average closing price of Aimco common stock, as reported on the New York Stock Exchange, over the ten consecutive trading days ending on the second trading day immediately prior to the effective time of the merger. However, if AIMCO Properties, L.P. determines that the law of the state or other jurisdiction in which a limited partner resides would prohibit the issuance of partnership common units of AIMCO Properties, L.P. in that state or other jurisdiction (or that registration or qualification in that state or jurisdiction would be prohibitively costly), then such limited partner will only be entitled to receive the Cash Consideration for each Series A Unit. Those limited partners who do not make an election will be deemed to have elected to receive the Cash Consideration.
In the merger, AIMCO Properties, L.P.’s membership interest in the Merger Subsidiary will be converted into Series A Units of the Partnership. As a result, after the merger, AIMCO Properties, L.P. will own all of the outstanding Series A Units. The Series B units of limited partnership interest of the Partnership will not be affected by the merger and will remain outstanding following consummation of the merger. Fox Partners will continue to be the general partner of the Partnership after the merger, and the Partnership’s partnership agreement in effect immediately prior to the merger will remain unchanged after the merger.
Completion of the merger is subject to certain conditions, including approval by a majority in interest of the limited partners holding Series A Units. In addition, the terms of the merger may be modified before the merger is completed. As of September 30, 2011, the Partnership had issued and outstanding 75,000 Series A Units, and AIMCO Properties, L.P. and its affiliates owned 52,866 of those Series A Units, or approximately 70.49% of the number of outstanding Series A Units. 25,833.5 of the Series A Units owned by AIMCO IPLP, L.P., an affiliate of Fox Partners and of AIMCO Properties, L.P., are subject to a voting restriction, which requires such Series A Units to be voted in proportion to the votes cast with respect to Series A Units not subject to this voting restriction. AIMCO Properties, L.P. and its affiliates have indicated that they will vote all of their Series A Units that are not subject to the voting restriction described above (27,032.5 or approximately 36.04% of the outstanding Series A Units) in favor of the merger. As a result, AIMCO Properties, L.P. and its affiliates will vote a total of 41,236 Series A Units, or approximately 54.98% of the outstanding Series A Units and have indicated that they intend to take action by written consent to approve the merger.
Note B – Transactions with Affiliated Parties
The Partnership has no employees and depends on the Managing General Partner and its affiliates for the management and administration of all Partnership activities. The Partnership Agreement provides for certain payments to affiliates for services and reimbursement of certain expenses incurred by affiliates on behalf of the Partnership.
Affiliates of the Managing General Partner receive 5% of gross receipts from all of the Partnership's properties as compensation for providing property management services. The Partnership paid to such affiliates approximately $461,000 and $474,000 for the nine months ended September 30, 2011 and 2010, respectively, which are included in operating expenses and loss from discontinued operations.
An affiliate of the Managing General Partner charged the Partnership for reimbursement of accountable administrative expenses amounting to approximately $267,000 and $257,000 for the nine months ended September 30, 2011 and 2010, respectively, which is included in general and administrative expenses, investment properties, assets held for sale and gain from sale of discontinued operations. The portion of these reimbursements included in investment properties, assets held for sale and gain from sale of discontinued operations for the nine months ended September 30, 2011 and 2010 are construction management services provided by an affiliate of the Managing General Partner of approximately $146,000 and $127,000, respectively. At September 30, 2011, approximately $5,000 of these reimbursements are payable to affiliates of the Managing General Partner and are included in due to affiliates. There were no such amounts owed at December 31, 2010.
Pursuant to the Partnership Agreement, for managing the affairs of the Partnership, the Managing General Partner is entitled to receive a Partnership management fee equal to 10% of the Partnership's adjusted cash from operations as distributed. There were no Partnership management fees earned or paid during the nine months ended September 30, 2011 or 2010, as there were no distributions from operations.
AIMCO Properties, L.P., an affiliate of the Managing General Partner, has made available to the Partnership a credit line of up to $150,000 per property owned by the Partnership. Prior to 2010, AIMCO Properties, L.P. exceeded this credit limit. During the nine months ended September 30, 2011, AIMCO Properties, L.P. advanced the Partnership approximately $115,000 to fund real estate taxes at The Village in the Woods Apartments, approximately $275,000 to fund a mortgage refinancing commitment fee related to Creekside Apartments, approximately $2,325,000 to facilitate the refinancing of the mortgage encumbering Creekside Apartments (see “Note D”) and approximately $954,000 to fund capital improvements at Peakview Place Apartments and Creekside Apartments. During the nine months ended September 30, 2010, AIMCO Properties, L.P. advanced the Partnership approximately $191,000 to fund real estate taxes at The Village in the Woods Apartments and approximately $665,000 to fund operating expenses and capital improvements at all of the Partnership’s properties. The advances bear interest at the prime rate plus 2% (5.25% at September 30, 2011). Interest expense for the nine months ended September 30, 2011 and 2010 was approximately $200,000 and $137,000, respectively. During the nine months ended September 30, 2011 and 2010, the Partnership made payments of approximately $1,764,000 and $230,000, respectively, on the advances and associated accrued interest with proceeds from the sale of Hampden Heights Apartments and operating cash flow. At September 30, 2011 and December 31, 2010, the amount of outstanding advances and accrued interest due to AIMCO Properties, L.P. was approximately $5,889,000 and $3,784,000, respectively, and is included in due to affiliates. The Partnership may receive additional advances of funds from AIMCO Properties, L.P. although AIMCO Properties, L.P. is not obligated to provide such advances. For more information on AIMCO Properties, L.P., including copies of its audited balance sheet, please see its reports filed with the Securities and Exchange Commission.
The Partnership insures its properties up to certain limits through coverage provided by Aimco which is generally self-insured for a portion of losses and liabilities related to workers’ compensation, property casualty, general liability and vehicle liability. The Partnership insures its properties above the Aimco limits through insurance policies obtained by Aimco from insurers unaffiliated with the Managing General Partner. During the nine months ended September 30, 2011, the Partnership was charged by Aimco and its affiliates approximately $195,000 for hazard insurance coverage and fees associated with policy claims administration. Additional charges will be incurred by the Partnership during 2011 as other insurance policies renew later in the year. The Partnership was charged by Aimco and its affiliates approximately $342,000 for insurance coverage and fees associated with policy claims administration during the year ended December 31, 2010.
Note C – Casualty Event
In June 2009, Hampden Heights Apartments sustained damages of approximately $680,000 from a hail storm to one of its apartment buildings. During 2009, the Partnership recognized a casualty gain of approximately $294,000 as a result of the receipt of insurance proceeds of approximately $318,000 which were held by the mortgage lender at December 31, 2009 and released to the Partnership during the fourth quarter of 2010, offset by the write off of undepreciated damaged assets of approximately $24,000. During the fourth quarter of 2010, the Partnership removed approximately $10,000 of undepreciated damaged assets and recorded a corresponding receivable for the estimated insurance proceeds. During the nine months ended September 30, 2011, the Partnership recognized an additional casualty gain of approximately $342,000, which is included in loss from discontinued operations, as a result of the receipt of additional insurance proceeds of approximately $352,000, offset by the write off of undepreciated damaged assets of approximately $10,000.
Note D – Mortgage Financing
On May 2, 2011, the Partnership refinanced the mortgage encumbering Creekside Apartments. The refinancing resulted in the replacement of the existing mortgage loan, which at the time of refinancing had a principal balance of approximately $14,087,000, with a new mortgage loan in the principal amount of $12,869,000. The new loan bears interest at a rate of 5.59% per annum and requires monthly payments of principal and interest of approximately $74,000 beginning on July 1, 2011, through the June 1, 2021 maturity date. The new mortgage loan has a balloon payment of approximately $10,673,000 due at maturity. The Partnership may prepay the mortgage at any time with 30 days written notice to the lender, subject to a prepayment penalty. The Partnership recorded a loss on the early extinguishment of debt of approximately $960,000, as a result of the write off of unamortized loan costs and the payment of a prepayment penalty associated with the repayment of the existing mortgage. Total capitalized loan costs associated with the new mortgage were approximately $148,000 and are included in other assets.
In connection with the refinancing, the Partnership received an advance of approximately $2,325,000 from AIMCO Properties, L.P. This advance and proceeds from the new mortgage loan were then used to pay in full the existing mortgage debt encumbering Creekside Apartments, including a prepayment penalty of approximately $873,000. This advance is unsecured and bears interest at a rate of prime plus 2.00%.
Note E – Fair Value of Financial Instruments
Financial Accounting Standards Board Accounting Standards Codification Topic 825, “Financial Instruments”, requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate fair value. Fair value is defined 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 mortgage notes payable) approximates their fair value due to the short-term maturity of these instruments. The Partnership estimates the fair value of its mortgage notes payable by discounting future cash flows using a discount rate commensurate with that currently believed to be available to the Partnership for similar term, mortgage notes payable. At September 30, 2011, the fair value of the Partnership's mortgage notes payable at the Partnership's incremental borrowing rate was approximately $52,345,000.
Note F – Disposition of Investment Property
On July 22, 2011, the Partnership sold Hampden Heights Apartments to a third party for a gross sale price of $22,750,000. The net proceeds realized by the Partnership were approximately $22,482,000 after payment of closing costs of approximately $268,000. The Partnership used approximately $13,522,000 of the net proceeds to repay the mortgage encumbering the property. As a result of the sale, the Partnership recorded a gain of approximately $17,884,000, which is included in gain from sale of discontinued operations. In addition, the Partnership recorded a loss on the early extinguishment of debt of approximately $1,423,000 due to the write off of unamortized loan costs and a prepayment penalty of approximately $1,323,000, which was paid by the purchaser and is included in loss from discontinued operations.
Note G – Distribution
The Partnership distributed the following amounts to the Series B unit holders during the nine months ended September 30, 2011 and 2010 (in thousands, except per unit data):
|
| Per | Per | |
| Nine months ended | Series B | Nine months ended | Series B |
| September 30, 2011 | Unit | September 30, 2010 | Unit |
|
|
|
|
|
Sale (1) | $7,400 | $96.69 | $ -- | $ -- |
(1) Proceeds from the July 2011 sale of Hampden Heights Apartments.
At September 30, 2011, the distribution payable of approximately $271,000 represents the estimated Colorado withholding taxes to be paid by the Partnership on behalf of certain partners in connection with the sale of Hampden Heights Apartments.
Note H – Contingencies
The Partnership is unaware of any pending or outstanding litigation matters involving it or its investment properties that are not of a routine nature arising in the ordinary course of business.
Environmental
Various Federal, state and local laws subject property owners or operators to liability for management, and the costs of removal or remediation, of certain potentially hazardous materials present on a property, including lead-based paint, asbestos, polychlorinated biphenyls, petroleum-based fuels, and other miscellaneous materials. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release or presence of such materials. The presence of, or the failure to manage or remedy properly, these materials may adversely affect occupancy at affected apartment communities and the ability to sell or finance affected properties. In addition to the costs associated with investigation and remediation actions brought by government agencies, and potential fines or penalties imposed by such agencies in connection therewith, the improper management of these materials on a property could result in claims by private plaintiffs for personal injury, disease, disability or other infirmities. Various laws also impose liability for the cost of removal, remediation or disposal of these materials through a licensed disposal or treatment facility. Anyone who arranges for the disposal or treatment of these materials is potentially liable under such laws. These laws often impose liability whether or not the person arranging for the disposal ever owned or operated the disposal facility. In connection with the ownership, operation and management of its properties, the Partnership could potentially be responsible for environmental liabilities or costs associated with its properties.
Note I – Investment Property
During the nine months ended September 30, 2011, the Partnership retired and wrote off personal property no longer being used that had a cost basis of approximately $9,370,000 and accumulated depreciation of approximately $9,370,000.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements in certain circumstances. Certain information included in this Quarterly Report contains or may contain information that is forward-looking within the meaning of the federal securities laws, including, without limitation, statements regarding the Partnership’s ability to maintain current or meet projected occupancy, rental rates and property operating results and the effect of redevelopments. Actual results may differ materially from those described in these forward-looking statements and, in addition, will be affected by a variety of risks and factors, some of which are beyond the Partnership’s control, including, without limitation: financing risks, including the availability and cost of financing and the risk that the Partnership’s cash flows from operations may be insufficient to meet required payments of principal and interest; natural disasters and severe weather such as hurricanes; national and local economic conditions, including the pace of job growth and the level of unemployment; energy costs; the terms of governmental regulations that affect the Partnership’s properties and interpretations of those regulations; the competitive environment in which the Partnership operates; real estate risks, including fluctuations in real estate values and the general economic climate in local markets and competition for residents in such markets; insurance risk, including the cost of insurance; litigation, including costs associated with prosecuting or defending claims and any adverse outcomes; and possible environmental liabilities, including costs, fines or penalties that may be incurred due to necessary remediation of contamination of properties presently owned or previously owned by the Partnership. Readers should carefully review the Partnership’s consolidated financial statements and the notes thereto, as well as the other documents the Partnership files from time to time with the Securities and Exchange Commission.
The Partnership's investment properties consist of three apartment complexes. The following table sets forth the average occupancy of the properties for the nine months ended September 30, 2011 and 2010:
| Average Occupancy | |
Property | 2011 | 2010 |
|
|
|
Peakview Place Apartments | 98% | 98% |
Englewood, Colorado |
|
|
Creekside Apartments | 98% | 97% |
Denver, Colorado |
|
|
The Village in the Woods Apartments (1) | 92% | 96% |
Cypress, Texas |
|
|
(1) The Managing General Partner attributes the decrease in occupancy at The Village in the Woods Apartments to poor economic conditions in the Houston area.
The Partnership’s financial results depend upon a number of factors including the ability to attract and maintain tenants at the investment properties, interest rates on mortgage loans, costs incurred to operate the investment properties, general economic conditions and weather. As part of the ongoing business plan of the Partnership, the Managing General Partner monitors the rental market environment of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the Managing General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, the Managing General Partner may use rental concessions and rental rate reductions to offset softening market conditions; accordingly, there is no guarantee that the Managing General Partner will be able to sustain such a plan. Further, a number of factors which are outside the control of the Partnership such as the local economic climate and weather can adversely or positively impact the Partnership’s financial results.
Results of Operations
The Partnership’s net income was approximately $16,010,000 and $14,617,000 for the three and nine months ended September 30, 2011, respectively, compared to net loss of approximately $555,000 and $1,743,000 for the three and nine months ended September 30, 2010, respectively. The consolidated statements of operations for the three and nine months ended September 30, 2010 have been restated to reflect the operations of Hampden Heights Apartments as discontinued operations and the consolidated balance sheet as of December 31, 2010 has also been restated to reflect the respective assets and liabilities of Hampden Heights Apartments as held for sale due to its sale on July 22, 2011.
The following table presents summarized results of operations of Hampden Heights Apartments for the three and nine months ended September 30, 2011 and 2010 (in thousands):
| Three Months Ended September 30, | |
| 2011 | 2010 |
Revenues | $ 152 | $ 763 |
Expenses | (307) | (838) |
Loss on early extinguishment of debt | (1,423) | -- |
Loss from discontinued operations | $(1,578) | $ (75) |
| Nine Months Ended September 30, | |
| 2011 | 2010 |
Revenues | $ 1,623 | $ 2,178 |
Expenses | (1,855) | (2,433) |
Loss on early extinguishment of debt | (1,423) | -- |
Casualty gain | 342 | -- |
Loss from discontinued operations | $ (1,313) | $ (255) |
On July 22, 2011, the Partnership sold Hampden Heights Apartments to a third party for a gross sale price of $22,750,000. The net proceeds realized by the Partnership were approximately $22,482,000 after payment of closing costs of approximately $268,000. The Partnership used approximately $13,522,000 of the net proceeds to repay the mortgage encumbering the property. As a result of the sale, the Partnership recorded a gain of approximately $17,884,000, which is included in gain from sale of discontinued operations. In addition, the Partnership recorded a loss on the early extinguishment of debt of approximately $1,423,000 due to the write off of unamortized loan costs and a prepayment penalty of approximately $1,323,000, which was paid by the purchaser and is included in loss from discontinued operations.
In June 2009, Hampden Heights Apartments sustained damages of approximately $680,000 from a hail storm to one of its apartment buildings. During 2009, the Partnership recognized a casualty gain of approximately $294,000 as a result of the receipt of insurance proceeds of approximately $318,000 which were held by the mortgage lender at December 31, 2009 and released to the Partnership during the fourth quarter of 2010, offset by the write off of undepreciated damaged assets of approximately $24,000. During the fourth quarter of 2010, the Partnership removed approximately $10,000 of undepreciated damaged assets and recorded a corresponding receivable for the estimated insurance proceeds. During the nine months ended September 30, 2011, the Partnership recognized an additional casualty gain of approximately $342,000, which is included in loss from discontinued operations, as a result of the receipt of additional insurance proceeds of approximately $352,000, offset by the write off of undepreciated damaged assets of approximately $10,000.
Total expenses decreased for the three months ended September 30, 2011 due to decreases in depreciation and property tax expenses, partially offset by an increase in operating expense. General and administrative and interest expenses remained relatively constant for the three months ended September 30, 2011. Total expenses increased for the nine months ended September 30, 2011 due to the recognition of a loss on early extinguishment of debt during May 2011 as a result of the refinancing of the mortgage encumbering Creekside Apartments, as discussed in “Liquidity and Capital Resources” and an increase in operating expense, partially offset by decreases in general and administrative, depreciation and property tax expenses. Interest expense remained relatively constant for the nine months ended September 30, 2011. Depreciation expense decreased for both periods primarily due to property improvements and replacements placed into service in prior years at Peakview Place Apartments and The Village in the Woods Apartments becoming fully depreciated during 2010. Property tax expense decreased for both periods primarily due to a decrease in the assessed value of Creekside Apartments. Operating expenses increased for the three months ended September 30, 2011 primarily due to increases in salaries and related benefits at both Peakview Place Apartments and Creekside Apartments. Operating expenses increased for the nine months ended September 30, 2011 primarily due to increases in resident application screening costs at all three of the Partnership’s investment properties and costs associated with the appeals of the assessed values of Peakview Place Apartments and The Village in the Woods Apartments.
General and administrative expense decreased for the nine months ended September 30, 2011 primarily due to a decrease in professional expenses associated with the administration of the Partnership. Also included in general and administrative expenses for the three and nine months ended September 30, 2011 and 2010 are reimbursements to the Managing General Partner as allowed under the Partnership Agreement, costs associated with the quarterly and annual communications with investors and regulatory agencies and the annual audit required by the Partnership Agreement.
Total revenues increased for both periods due to an increase in rental income. Other income remained relatively constant for both periods. Rental income increased for both periods primarily due to increases in the average rental rate at Peakview Place Apartments and Creekside Apartments, partially offset by a decrease in occupancy at The Village in the Woods Apartments.
Liquidity and Capital Resources
At September 30, 2011, the Partnership had cash and cash equivalents of approximately $1,160,000, compared to approximately $489,000 at December 31, 2010. The increase in cash and cash equivalents of approximately $671,000 is due to approximately $21,067,000 and $1,010,000 of cash provided by investing and operating activities, respectively, partially offset by approximately $21,406,000 of cash used in financing activities. Cash provided by investing activities consisted of net proceeds from the sale of Hampden Heights Apartments and insurance proceeds received, partially offset by property improvements and replacements and net deposits to a restricted escrow. Cash used in financing activities consisted of the repayment of the existing mortgages encumbering Creekside Apartments and Hampden Heights Apartments, a distribution to partners, repayment of advances received from an affiliate of the Managing General Partner, payment of a prepayment penalty, principal payments made on the mortgages encumbering the Partnership’s investment properties and loan costs paid, partially offset by proceeds received from the new mortgage encumbering Creekside Apartments and advances received from an affiliate of the Managing General Partner.
AIMCO Properties, L.P., an affiliate of the Managing General Partner, has made available to the Partnership a credit line of up to $150,000 per property owned by the Partnership. Prior to 2010, AIMCO Properties, L.P. exceeded this credit limit. During the nine months ended September 30, 2011, AIMCO Properties, L.P. advanced the Partnership approximately $115,000 to fund real estate taxes at The Village in the Woods Apartments, approximately $275,000 to fund a mortgage refinancing commitment fee related to Creekside Apartments, approximately $2,325,000 to facilitate the refinancing of the mortgage encumbering Creekside Apartments (as discussed below) and approximately $954,000 to fund capital improvements at Peakview Place Apartments and Creekside Apartments. During the nine months ended September 30, 2010, AIMCO Properties, L.P. advanced the Partnership approximately $191,000 to fund real estate taxes at The Village in the Woods Apartments and approximately $665,000 to fund operating expenses and capital improvements at all of the Partnership’s properties. The advances bear interest at the prime rate plus 2% (5.25% at September 30, 2011). Interest expense for the nine months ended September 30, 2011 and 2010 was approximately $200,000 and $137,000, respectively. During the nine months ended September 30, 2011 and 2010, the Partnership made payments of approximately $1,764,000 and $230,000, respectively, on the advances and associated accrued interest with proceeds from the sale of Hampden Heights Apartments and operating cash flow. At September 30, 2011 and December 31, 2010, the amount of outstanding advances and accrued interest due to AIMCO Properties, L.P. was approximately $5,889,000 and $3,784,000, respectively, and is included in due to affiliates. The Partnership may receive additional advances of funds from AIMCO Properties, L.P. although AIMCO Properties, L.P. is not obligated to provide such advances. For more information on AIMCO Properties, L.P., including copies of its audited balance sheet, please see its reports filed with the Securities and Exchange Commission.
The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the properties to adequately maintain the physical assets and other operating needs of the Partnership and to comply with Federal, state, and local legal and regulatory requirements. The Managing General Partner monitors developments in the area of legal and regulatory compliance. Capital improvements planned for each of the Partnership's properties are detailed below.
Peakview Place Apartments
During the nine months ended September 30, 2011, the Partnership completed approximately $1,112,000 of capital improvements at Peakview Place Apartments, consisting primarily of roof replacement, parking area upgrades and floor covering replacement. These improvements were funded from operating cash flow and advances from an affiliate of the Managing General Partner. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during the remainder of 2011. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.
Creekside Apartments
During the nine months ended September 30, 2011, the Partnership completed approximately $277,000 of capital improvements at Creekside Apartments, consisting primarily of parking area upgrades, HVAC upgrades and floor covering replacement. These improvements were funded from operating cash flow and advances from an affiliate of the Managing General Partner. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during the remainder of 2011. Such capital expenditures will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property.
Hampden Heights Apartments
During the nine months ended September 30, 2011, the Partnership completed approximately $78,000 of capital improvements at Hampden Heights Apartments, consisting primarily of floor covering replacement. These improvements were funded from operating cash flow and insurance proceeds. The Partnership sold Hampden Heights Apartments to a third party on July 22, 2011.
The Village in the Woods Apartments
During the nine months ended September 30, 2011, the Partnership completed approximately $363,000 of capital improvements at The Village in the Woods Apartments consisting primarily of parking area upgrades, HVAC upgrades, swimming pool upgrades and floor covering replacement. These improvements were funded from operating cash flow. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during the remainder of 2011. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.
Capital expenditures will be incurred only if cash is available from operations, Partnership reserves or advances from AIMCO Properties, L.P., although AIMCO Properties, L.P. is not obligated to fund such advances. To the extent that capital improvements are completed, the Partnership’s distributable cash flow, if any, may be adversely affected at least in the short term.
The Partnership's assets are thought to be generally sufficient for any near-term needs (exclusive of capital improvements and repayment of amounts owed to affiliates) of the Partnership. On May 2, 2011, the Partnership refinanced the mortgage encumbering Creekside Apartments. The refinancing resulted in the replacement of the existing mortgage loan, which at the time of refinancing had a principal balance of approximately $14,087,000, with a new mortgage loan in the principal amount of $12,869,000. The new loan bears interest at a rate of 5.59% per annum and requires monthly payments of principal and interest of approximately $74,000 beginning on July 1, 2011, through the June 1, 2021 maturity date. The new mortgage loan has a balloon payment of approximately $10,673,000 due at maturity. The Partnership may prepay the mortgage at any time with 30 days written notice to the lender, subject to a prepayment penalty. The Partnership recorded a loss on the early extinguishment of debt of approximately $960,000, as a result of the write off of unamortized loan costs and the payment of a prepayment penalty associated with the repayment of the existing mortgage. Total capitalized loan costs associated with the new mortgage were approximately $148,000 and are included in other assets.
In connection with the refinancing, the Partnership received an advance of approximately $2,325,000 from AIMCO Properties, L.P. This advance and proceeds from the new mortgage loan were then used to pay in full the existing mortgage debt encumbering Creekside Apartments, including a prepayment penalty of approximately $873,000. This advance is unsecured and bears interest at a rate of prime plus 2.00%.
The Partnership’s mortgage indebtedness of approximately $44,355,000 is amortized over varying periods. The debt encumbering Peakview Place Apartments matures in 2018 and 2020, at which time balloon payments of approximately $2,697,000 and $8,121,000, respectively, will be due. The debt encumbering The Village in the Woods Apartments matures in 2020, at which time balloon payments of approximately $16,553,000 will be due. The Managing General Partner will attempt to refinance the indebtedness encumbering the Partnership’s investment properties and/or sell the properties prior to such maturity dates. If the properties cannot be refinanced or sold for a sufficient amount, the Partnership will risk losing such properties through foreclosure.
| Per | Per | ||
| Nine months ended | Series B | Nine months ended | Series B |
| September 30, 2011 | Unit | September 30, 2010 | Unit |
|
|
|
|
|
Sale (1) | $7,400 | $96.69 | $ -- | $ -- |
(1) Proceeds from the July 2011 sale of Hampden Heights Apartments.
At September 30, 2011, the distribution payable of approximately $271,000 represents the estimated Colorado withholding taxes to be paid by the Partnership on behalf of certain partners in connection with the sale of Hampden Heights Apartments.
If the merger transaction (as discussed below) is not consummated, future cash distributions will depend on the levels of net cash generated from operations, the timing of debt maturities, refinancings and/or property sales. The Partnership's cash available for distribution is reviewed on a monthly basis. In light of the amounts accrued and payable to affiliates of the Managing General Partner at September 30, 2011, there can be no assurance that the Partnership will generate sufficient funds from operations, after capital improvement expenditures, to permit any distributions to the Series A unit holders during 2011 or subsequent periods.
Other
In addition to its indirect ownership of the general partner interest in the Partnership, Aimco and its affiliates owned 52,866 Series A and 52,866 Series B limited partnership units (the "Units") in the Partnership representing 70.49% of the outstanding Units at September 30, 2011. A number of these Units were acquired pursuant to tender offers made by Aimco or its affiliates. Pursuant to the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters that include, but are not limited to, voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. As a result of its ownership of 70.49% of the outstanding Units, Aimco and its affiliates are in a position to influence all voting decisions with respect to the Partnership. However, DeForest Ventures I L.P., from whom Aimco, through its merger with Insignia Financial Group, Inc., acquired 25,833.5 (approximately 34.45%) of its Units, had agreed for the benefit of third party unitholders, that it would vote such Units: (i) against any increase in compensation payable to the General Partner and (ii) on all other matters submitted by it or its affiliates, in proportion to the votes cast by third party Unit holders. Except for the foregoing, no other limitations are imposed on Aimco and its affiliates right to vote each Unit held. Although the General Partner owes fiduciary duties to the limited partners of the Partnership, the Managing General Partner owes fiduciary duties to both the General Partner and Aimco as the sole stockholder of the Managing General Partner. As a result, the duties of the Managing General Partner, as managing general partner, to the Partnership and its limited partners may come into conflict with the duties of the Managing General Partner to Aimco as its sole stockholder.
On July 28, 2011, the Partnership entered into an agreement and plan of merger (the “Merger Agreement”) with AIMCO Properties, L.P., a Delaware limited partnership, and AIMCO CPF XVII Merger Sub LLC, a Delaware limited liability company of which AIMCO Properties, L.P. is the sole member (the “Merger Subsidiary”), pursuant to which the Merger Subsidiary will be merged with and into the Partnership, with the Partnership as the surviving entity.
In the merger, each Series A unit of limited partnership interest (each, a “Series A Unit”) of the Partnership outstanding immediately prior to the consummation of the merger (other than Series A Units held by limited partners who perfect their appraisal rights pursuant to the Merger Agreement) will be converted into the right to receive, at the election of the limited partner, either (i) $311.18 in cash (the “Cash Consideration”) or (ii) a number of partnership common units of AIMCO Properties, L.P. calculated by dividing $311.18 by the average closing price of Aimco common stock, as reported on the New York Stock Exchange, over the ten consecutive trading days ending on the second trading day immediately prior to the effective time of the merger. However, if AIMCO Properties, L.P. determines that the law of the state or other jurisdiction in which a limited partner resides would prohibit the issuance of partnership common units of AIMCO Properties, L.P. in that state or other jurisdiction (or that registration or qualification in that state or jurisdiction would be prohibitively costly), then such limited partner will only be entitled to receive the Cash Consideration for each Series A Unit. Those limited partners who do not make an election will be deemed to have elected to receive the Cash Consideration.
In the merger, AIMCO Properties, L.P.’s membership interest in the Merger Subsidiary will be converted into Series A Units of the Partnership. As a result, after the merger, AIMCO Properties, L.P. will own all of the outstanding Series A Units. The Series B units of limited partnership interest of the Partnership will not be affected by the merger and will remain outstanding following consummation of the merger. Fox Partners will continue to be the general partner of the Partnership after the merger, and the Partnership’s partnership agreement in effect immediately prior to the merger will remain unchanged after the merger.
Completion of the merger is subject to certain conditions, including approval by a majority in interest of the limited partners holding Series A Units. In addition, the terms of the merger may be modified before the merger is completed. As of September 30, 2011, the Partnership had issued and outstanding 75,000 Series A Units, and AIMCO Properties, L.P. and its affiliates owned 52,866 of those Series A Units, or approximately 70.49% of the number of outstanding Series A Units. 25,833.5 of the Series A Units owned by AIMCO IPLP, L.P., an affiliate of Fox Partners and of AIMCO Properties, L.P., are subject to a voting restriction, which requires such Series A Units to be voted in proportion to the votes cast with respect to Series A Units not subject to this voting restriction. AIMCO Properties, L.P. and its affiliates have indicated that they will vote all of their Series A Units that are not subject to the voting restriction described above (27,032.5 or approximately 36.04% of the outstanding Series A Units) in favor of the merger. As a result, AIMCO Properties, L.P. and its affiliates will vote a total of 41,236 Series A Units, or approximately 54.98% of the outstanding Series A Units and have indicated that they intend to take action by written consent to approve the merger.
Critical Accounting Policies and Estimates
The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States which require the Partnership to make estimates and assumptions. The Partnership believes that of its significant accounting policies, the following may involve a higher degree of judgment and complexity.
Impairment of Long-Lived Assets
Investment properties are recorded at cost, less accumulated depreciation, unless the carrying amount of the asset is not recoverable. If events or circumstances indicate that the carrying amount of a property may not be recoverable, the Partnership will make an assessment of its recoverability by comparing the carrying amount to the Partnership’s estimate of the undiscounted future cash flows, excluding interest charges, of the property. If the carrying amount exceeds the estimated aggregate undiscounted future cash flows, the Partnership would recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property.
Real property investment is subject to varying degrees of risk. Several factors may adversely affect the economic performance and value of the Partnership’s investment properties. These factors include, but are not limited to, general economic climate; competition from other apartment communities and other housing options; local conditions, such as loss of jobs or an increase in the supply of apartments that might adversely affect apartment occupancy or rental rates; changes in governmental regulations and the related cost of compliance; increases in operating costs (including real estate taxes) due to inflation and other factors, which may not be offset by increased rents; changes in tax laws and housing laws, including the enactment of rent control laws or other laws regulating multi-family housing; and changes in interest rates and the availability of financing. Any adverse changes in these and other factors could cause an impairment of the Partnership’s assets.
Revenue Recognition
The Partnership generally leases apartment units for twelve-month terms or less. The Partnership will offer rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area. Rental income attributable to leases, net of any concessions, is recognized on a straight-line basis over the term of the lease. The Partnership evaluates all accounts receivable from residents and establishes an allowance, after the application of security deposits, for accounts greater than 30 days past due on current tenants and all receivables due from former tenants.
Assets Held for Sale
The Partnership classifies long-lived assets as held for sale in the period in which all of the following criteria are met: management, having the authority to approve the action, commits to a plan to sell the asset; the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets; an active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated; the sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale, within one year; the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Depreciation is not recorded during the period in which the long-lived asset is classified as held for sale. When the asset is designated as held for sale, the related results of operations are presented as discontinued operations.
Item 4. Controls and Procedures.
(a) Disclosure Controls and Procedures.
The Partnership’s management, with the participation of the principal executive officer and principal financial officer of the Managing General Partner, who are the equivalent of the Partnership’s principal executive officer and principal financial officer, respectively, has evaluated the effectiveness of the Partnership’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the principal executive officer and principal financial officer of the Managing General Partner, who are the equivalent of the Partnership’s principal executive officer and principal financial officer, respectively, have concluded that, as of the end of such period, the Partnership’s disclosure controls and procedures are effective.
(b) Changes in Internal Control Over Financial Reporting.
There has been no change in the Partnership’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that has materially affected, or is reasonably likely to materially affect, the Partnership’s internal control over financial reporting.
Item 6. Exhibits.
See Exhibit Index.
The agreements included as exhibits to this Form 10-Q contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:
- should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
- have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
- may apply standards of materiality in a way that is different from what may be viewed as material to an investor; and
- were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. The Partnership acknowledges that, notwithstanding the inclusion of the foregoing cautionary statements, it is responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this Form 10-Q not misleading. Additional information about the Partnership may be found elsewhere in this Form 10-Q and the Partnership’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| CENTURY PROPERTIES FUND XVII, LP |
|
|
| By: Fox Partners |
| General Partner |
|
|
| By: Fox Capital Management Corporation |
| Managing General Partner |
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Date: November 9, 2011 | By: /s/Steven D. Cordes |
| Steven D. Cordes |
| Senior Vice President |
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|
Date: November 9, 2011 | By: /s/Stephen B. Waters |
| Stephen B. Waters |
| Senior Director of Partnership Accounting |
|
|
|
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CENTURY PROPERTIES FUND XVII, LP
EXHIBIT INDEX
Exhibit Number Description of Exhibit
2.5 Master Indemnity Agreement incorporated by reference to Exhibit 2.5 to the Registrant’s Current Report on Form 8-K filed by Insignia with the Securities and Exchange Commission on September 1, 1995.
3.1 Amendment to Certificate of Limited Partnership of Registrant, dated May 9, 2011, incorporated by reference to the Registrant’s Current Report on Form 8-K, dated May 9, 2011.
3.4 Agreement of Limited Partnership incorporated by reference to Exhibit A to the Prospectus of the Registrant dated March 29, 1982 and as thereafter supplemented contained in the Registrant's Registration Statement on Form S-11 (Reg. No. 2-75411).
3.5 Certificate of Merger of Century Properties Fund, XVII into Century Properties Fund XVII, LP, dated October 29, 2008, incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008.
3.6 Amendment to Amended and Restated Limited Partnership Agreement of Registrant, dated September 18, 2008, incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008.
3.7 Amendment to the Amended and Restated Limited Partnership Agreement of Registrant, dated May 9, 2011, incorporated by reference to the Registrant’s Current Report on Form 8-K, dated May 9, 2011.
10.1 Agreement and Plan of Merger, dated July 28, 2011, by and among Century Properties XVII, LP, AIMCO Properties, L.P. and AIMCO CPF XVII Merger Sub LLC. (Incorporated by reference to the Partnership’s Current Report on Form 8-K dated July 28, 2011).
10.2 Multifamily Note dated January 27, 2000, by and between Century Properties Fund XVII, a California limited partnership, and GMAC Commercial Mortgage Corporation, a California Corporation; incorporated by reference to the Partnership's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1999.
10.10 Multifamily Note dated August 31, 2007 between Apartment CCG 17, L.P., a California limited partnership, and Capmark Bank, a Utah industrial bank, and incorporated by reference to the Registrant’s Current Report on Form 8-K dated August 31, 2007.
10.11 Amended and Restated Multifamily Note dated August 31, 2007 between Apartment CCG 17, L.P., a California limited partnership, and Federal Home Loan Mortgage Corporation, and incorporated by reference to the Registrant’s Current Report on Form 8-K dated August 31, 2007.
10.12 Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing dated June 25, 2008 between Capmark Bank and Century Properties Fund XVII, a California limited partnership, incorporated by reference to the Registrant’s Current Report on Form 8-K dated June 25, 2008.
10.13 Multifamily Note dated June 25, 2008 between Capmark Bank and Century Properties XVII, a California limited partnership, incorporated by reference to the Registrant’s Current Report on Form 8-K dated June 25, 2008.
10.18 Amended and Restated Multifamily Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (Recast Transaction) dated June 25, 2008 between Century Properties Fund XVII, a California limited partnership, and Federal Home Loan Mortgage Corporation, incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008.
10.19 Amended and Restated Multifamily Note (Recast Transaction) dated June 25, 2008 between Century Properties Fund XVII, a California limited partnership, and Federal Home Loan Mortgage Corporation, incorporated by reference to the Registrant’s Quarterly Report Form 10-Q for the quarterly period ended June 30, 2008.
10.21 Multifamily Note dated May 2, 2011 between Keycorp Real Estate Capital Markets, Inc., an Ohio corporation, and CPF Creekside, LLC, a Delaware limited liability company, incorporated by reference to the Registrant’s Current Report on Form 8-K dated May 2, 2011.
10.22 Purchase and Sale Contract between Apartment Lodge 17A LLC, a Colorado limited liability company, and FF Realty LLC, a Delaware limited liability company, incorporated by reference to the Registrant’s Current Report on Form 8-K dated May 23, 2011.
10.23 First Amendment to Purchase and Sale Contract between Apartment Lodge 17A LLC, a Colorado limited liability company, and FF Realty LLC, a Delaware limited liability company, incorporated by reference to the Registrant’s Current Report on Form 8-K dated June 3, 2011.
10.24 Second Amendment of Purchase and Sale Contract between Apartment Lodge 17A LLC, a Colorado limited liability company, and FF Realty LLC, a Delaware limited liability company, incorporated by reference to the Registrant’s Current Report on Form 8-K dated July 1, 2011.
31.1 Certification of equivalent of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of equivalent of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of the equivalent of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101 XBRL (Extensible Business Reporting Language). The following materials from Century Properties Fund XVII LP’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2011, formatted in XBRL: (i) consolidated balance sheets, (ii) consolidated statements of operations, (iii) consolidated statement of changes in partners’ (deficiency) capital, (iv) consolidated statements of cash flows, and (v) notes to consolidated financial statements (1)