EXHIBIT 99.1
CORAL PALM PLAZA JOINT VENTURE
FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 and 1996
Exhibit 99.1 (Continued)
CORAL PALM PLAZA JOINT VENTURE
List of Financial Statements
Independent Auditors' Report
Balance Sheets - December 31, 1998 and 1997
Statements of Operations - Years Ended December 31, 1998, 1997 and 1996
Statements of Changes in Partners' Capital - Years Ended December 31,
1998, 1997 and 1996
Statements of Cash Flows - Years Ended December 31, 1998, 1997 and 1996
Notes to Financial Statements
Exhibit 99.1 (Continued)
CORAL PALM PLAZA JOINT VENTURE
Independent Auditors' Report
To the Partners
Coral Palm Plaza Joint Venture
Greenville, South Carolina
We have audited the accompanying balance sheets of Coral Palm Plaza Joint
Venture (the "Partnership") as of December 31, 1998 and 1997, and the related
statements of operations, changes in partners capital and cash flows for each of
the three years in the period ended December 31, 1998. 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 Coral Palm Plaza Joint Venture
as of December 31, 1998 and 1997, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1998 in
conformity with generally accepted accounting principles.
/s/ Imowitz Koenig & Co., LLP
Certified Public Accountants
New York, N.Y.
March 3, 1999
Exhibit 99.1 (continued)
CORAL PALM PLAZA JOINT VENTURE
BALANCE SHEETS
(in thousands)
December 31,
1998 1997
Assets
Cash and cash equivalents $ 702 $ 427
Other assets 523 652
Investment Property:
Land 1,980 1,980
Building and related personal property 5,658 5,532
7,638 7,512
Less accumulated depreciation (3,814) (3,550)
3,824 3,962
$ 5,049 $ 5,041
Liabilities and Partners' Capital
Accrued expenses and other liabilities $ 223 $ 366
Partners' Capital:
Century Pension Income Fund XXIII 3,212 3,111
Century Pension Income Fund XXIV 1,614 1,564
Total partners' capital 4,826 4,675
$ 5,049 $ 5,041
See Accompanying Notes to Financial Statements
Exhibit 99.1 (continued)
CORAL PALM PLAZA JOINT VENTURE
STATEMENTS OF OPERATIONS
(in thousands)
Years Ended December 31,
1998 1997 1996
Revenues:
Rental income $ 951 $ 706 $ 1,157
Other income 36 33 26
Total revenues 987 739 1,183
Expenses:
Operating 378 380 357
General and administrative 16 4 16
Depreciation 264 254 250
Property taxes 178 192 184
Provision for impairment -- 2,067 --
Total expenses 836 2,897 807
Net income (loss) $ 151 $(2,158) $ 376
Allocation of net income (loss):
Century Pension Income Fund XXIII $ 101 $(1,446) $ 252
Century Pension Income Fund XXIV 50 (712) 124
$ 151 $(2,158) $ 376
See Accompanying Notes to Financial Statements
Exhibit 99.1 (continued)
CORAL PALM PLAZA JOINT VENTURE
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(in thousands)
Century Pension Century Pension
Income Fund XXIII Income Fund XXIV Total
Partners' capital at December 31, 1995 $ 4,231 $ 2,114 $ 6,345
Net income for the year ended
December 31, 1996 252 124 376
Contributions from partners 74 38 112
Partners' capital at December 31, 1996 4,557 2,276 6,833
Net loss for the year ended
December 31, 1997 (1,446) (712) (2,158)
Partners' capital at December 31, 1997 3,111 1,564 4,675
Net income for the year ended
December 31, 1998 101 50 151
Partners' capital at December 31, 1998 $ 3,212 $ 1,614 $ 4,826
See Accompanying Notes to Financial Statements
Exhibit 99.1 (continued)
CORAL PALM PLAZA JOINT VENTURE
STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1998 1997 1996
Cash flows from operating activities:
Net income (loss) $ 151 $(2,158) $ 376
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation 264 254 250
Amortization of lease commissions 47 39 37
Provision for impairment of value -- 2,067 --
Change in accounts:
Other assets 82 (78) (226)
Accrued expenses and other liabilities (143) (102) 123
Net cash provided by operating activities 401 22 560
Cash flows from investing activities:
Property improvements and replacements (126) (53) (477)
Net cash used in investing activities (126) (53) (477)
Cash flows provided by financing activities:
Contributions received from partners -- -- 112
Net increase (decrease) in cash and cash equivalents 275 (31) 195
Cash and cash equivalents at beginning of year 427 458 263
Cash and cash equivalents at end of year $ 702 $ 427 $ 458
See Accompanying Notes to Financial Statements
Exhibit 99.1 (continued)
CORAL PALM PLAZA JOINT VENTURE
Notes To Financial Statements
December 31, 1998
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization: Coral Palm Plaza Joint Venture (the "Partnership") is a general
partnership organized in 1987 under the laws of the State of California to
acquire Coral Palm Plaza, a shopping center located in Coral Springs, Florida.
The general partners are Century Pension Income Fund XXIII ("XXIII") and Century
Pension Income Fund XXIV ("XXIV"), California limited partnerships affiliated
through their general partners.
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.
Cash and Cash Equivalents: Cash and cash equivalents include cash on hand and
in banks, money market funds and certificates of deposit with original
maturities of less than 90 days. At certain times, the amount of cash deposited
at a bank may exceed the limit on insured deposits.
Tenant Security Deposits: The Partnership requires security deposits from
lessees for the duration of the lease and such deposits are included in other
assets. Deposits are refunded when the tenant vacates, provided the tenant has
not damaged its space and is current on its rental payments.
Leases: The Partnership leases certain commercial space to tenants under
various lease terms. The leases are accounted for as operating leases in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 13,
"Accounting for Leases."
Some of the leases contain stated rental increases during their term. For
leases with fixed rental increases, rents are recognized on a straight-line
basis over the terms of the lease. This straight-line basis recognized
approximately $6,000 and $28,000 more in rental income than was collected in
1998 and 1997, respectively. This amount will be collected in future years as
cash collections under the terms of the leases exceed the straight-line basis of
revenue recognition. For all other leases, minimum rents are recognized over
the terms of the leases.
Investment Properties: The Partnership's investment property, which consists of
one shopping center, is stated at cost. Acquisition fees are capitalized as a
cost of real estate. The Partnership records impairment losses on long-lived
assets used in operations when events and circumstances indicate that the assets
might be impaired and the undiscounted cash flows estimated to be generated by
those assets are less than the carrying amounts of those assets. The
Partnership had determined that Coral Palm Plaza with a carrying amount of
$6,029,000 was impaired and wrote its value down by $2,067,000 to reflect its
fair value at December 31, 1997 of $3,962,000.
Depreciation: Depreciation is computed by the straight-line method over
estimated useful lives ranging from four to thirty-nine years for buildings and
improvements and related personal property.
Deferred Leasing Commission: Leasing commissions, which are included in other
assets, are deferred and amortized over the lives of the related leases, which
range from one to eleven years. At December 31, 1998 and 1997 deferred leasing
commissions totaled approximately $340,000 and $324,000 and accumulated
amortization totaled approximately $150,000 and $104,000, respectively.
Net Income (Loss) Allocation: Net income (loss) is allocated based on the ratio
of each partner's capital contribution to the Joint Venture.
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 reclassifications have been made to the 1997 and 1996
balances to conform to the 1998 presentation.
NOTE B - RELATED PARTY TRANSACTIONS
During 1998 and 1997, the Partnership paid property management fees of
approximately $34,000 and $31,000, respectively, to an affiliate of the general
partners. These fees were allocated 66.67% to XXIII and 33.33% to XXIV, in
accordance with the partnership agreement.
NOTE C - PROVISION FOR IMPAIRMENT OF VALUE
In December 1997, two significant tenants that had occupied 36,000 square feet
(27% of leasable space) at Coral Palm Plaza moved out. The Partnership
determined that, based on economic conditions at the time as well as projected
future operational cash flows, a decline in value had occurred which was other
than temporary. Accordingly, the property's carrying value was reduced to an
amount equal to its estimated fair value and an impairment write down of
$2,067,000 was recorded at December 31, 1997.
NOTE D - TERMINATION AGREEMENT WITH FORMER TENANT
In October 1995, the Partnership accepted a lease buy-out and termination
agreement with a former tenant at the Partnership's property. The $300,000
termination payment, has been deferred and is being amortized into income on a
straight-line basis over the remaining three years of the former tenant's lease.
Management is currently attempting to re-lease the space.
NOTE E - REAL ESTATE AND ACCUMULATED DEPRECIATION
Initial Cost to Partnership
(in thousands)
Buildings Net Cost Capitalized
and Related (written down) Subsequent
Description Encumbrances Land Personal Property to Acquisition
(in thousands)
Coral Palm
Plaza $ -- $ 5,009 $11,046 $(8,417)
Gross Amount at Which Carried
at December 31, 1998
(in thousands)
Buildings
and Related
Personal Accumulated Year of Acquired Depreciable
Description Land Property Total Depreciation Construction Date Life-Years
(in thousands)
Coral Palm Plaza $1,980 $5,658 $7,638 $3,814 1985 1/87 4 to 39 Years
Reconciliation of Real Estate and Accumulated Depreciation (in thousands)
Years Ended December 31,
1998 1997 1996
Real Estate:
Balance at beginning of year $ 7,512 $ 9,526 $ 9,049
Property improvements 126 53 477
Allowance for impairment of value -- (2,067) --
Balance at end of year $ 7,638 $ 7,512 $ 9,526
Accumulated Depreciation:
Balance at beginning of year $ 3,550 $ 3,296 $ 3,046
Additions charged to expense 264 254 250
Balance at end of year $ 3,814 $ 3,550 $ 3,296
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1998 and 1997, is approximately $17,224,000 and $17,098,000,
respectively. Accumulated depreciation for Federal income tax purposes at
December 31, 1998 and 1997, is approximately $4,034,000 and $3,678,000,
respectively.
NOTE F - MINIMUM FUTURE RENTAL REVENUES
Minimum future rental revenues from operating leases having non-cancelable lease
terms in excess of one year at December 31, 1998 are as follows (in thousands):
1999 $ 818
2000 795
2001 637
2002 663
2003 549
Thereafter 993
Total $4,455
Rental revenue from one tenant was 20 percent, 22 percent and 12 percent of
total rental revenues in 1998, 1997 and 1996, respectively. Rental revenue from
another tenant was 11 percent, 13 percent and 12 percent of total rental
revenues in 1998, 1997 and 1996, respectively.
Rental revenues included percentage and other contingent rentals of
approximately $60,000 in 1998 and approximately $33,000 in 1996. There was no
percentage or contingent rental revenue in 1997.
Amortization of deferred leasing commissions totaled $47,000, $39,000 and
$37,000 for the years ended December 31, 1998, 1997, and 1996, respectively, and
are included in operating expense.