EXHIBIT 99.2
MINNEAPOLIS BUSINESS PARKS JOINT VENTURE
FINANCIAL STATEMENTS
DECEMBER 31, 1998, 1997 and 1996
Exhibit 99.2 (continued)
MINNEAPOLIS BUSINESS PARKS 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 99.2 (continued)
MINNEAPOLIS BUSINESS PARKS JOINT VENTURE
Independent Auditors' Report
To the Partners
Minneapolis Business Parks Joint Venture
Greenville, South Carolina
We have audited the accompanying balance sheets of Minneapolis Business Parks
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 Minneapolis Business Parks
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 99.2 (continued)
MINNEAPOLIS BUSINESS PARKS JOINT VENTURE
BALANCE SHEETS
(in thousands)
December 31,
1998 1997
Assets
Cash and cash equivalents $ 4,191 $ 2,751
Receivables and other assets 1,033 650
Investment Properties:
Land 4,523 4,523
Building and related personal property 16,489 16,184
21,012 20,707
Less accumulated depreciation (6,362) (5,777)
14,650 14,930
$19,874 $18,331
Liabilities and Partners' Capital
Accrued expenses and other liabilities $ 539 $ 167
Partners' Capital:
Century Pension Income Fund XXIII 13,088 12,299
Century Pension Income Fund XXIV 6,247 5,865
Total partners' capital 19,335 18,164
$19,874 $18,331
See Accompanying Notes to Financial Statements
Exhibit 99.2 (continued)
MINNEAPOLIS BUSINESS PARKS JOINT VENTURE
STATEMENTS OF OPERATIONS
(in thousands)
Years Ended December 31,
1998 1997 1996
Revenues:
Rental income $3,121 $3,052 $3,000
Other income 172 138 136
Total revenues 3,293 3,190 3,136
Expenses:
Operating 773 931 837
General and administrative 19 5 16
Depreciation 585 581 593
Property taxes 745 745 756
Total expenses 2,122 2,262 2,202
Net income $1,171 $ 928 $ 934
Allocation of net income:
Century Pension Income Fund XXIII $ 789 $ 631 $ 635
Century Pension Income Fund XXIV 382 297 299
$1,171 $ 928 $ 934
See Accompanying Notes to Financial Statements
Exhibit 99.2 (continued)
MINNEAPOLIS BUSINESS PARKS 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 $11,033 $ 5,269 $16,302
Net income for the year ended
December 31, 1996 635 299 934
Partners' capital at December 31, 1996 11,668 5,568 17,236
Net income for the year ended
December 31, 1997 631 297 928
Partners' capital at December 31, 1997 12,299 5,865 18,164
Net income for the year ended
December 31, 1998 789 382 1,171
Partners' capital at December 31, 1998 $13,088 $ 6,247 $19,335
See Accompanying Notes to Financial Statements
Exhibit 99.2 (continued)
MINNEAPOLIS BUSINESS PARKS JOINT VENTURE
STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1998 1997 1996
Cash flows from operating activities:
Net income $1,171 $ 928 $ 934
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 585 581 593
Amortization 80 71 84
Change in accounts:
Receivables and other assets (463) (214) (155)
Accrued expenses and other liabilities 372 (9) 19
Net cash provided by operating activities 1,745 1,357 1,475
Cash flows from investing activities:
Property improvements and replacements (305) (149) (91)
Cash used in investing activities (305) (149) (91)
Cash flows from financing activities: -- -- --
Net increase in cash and cash equivalents 1,440 1,208 1,384
Cash and cash equivalents at beginning of year 2,751 1,543 159
Cash and cash equivalents at end of year $4,191 $2,751 $1,543
See Accompanying Notes to Financial Statements
Exhibit 99.2 (continued)
MINNEAPOLIS BUSINESS PARKS JOINT VENTURE
Notes to Financial Statements
December 31, 1998
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization: Minneapolis Business Parks Joint Venture (the "Partnership") is a
general partnership organized in 1987 under the laws of the State of California
to acquire three business parks in Minnesota. The general partners are Century
Pension Income Fund XXIII ("XXIII") and Century Pension Income Fund XXIV
("XXIV"), California limited partnerships which are 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.
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. Cash collections exceeded the straight-line
basis of revenue recognition by approximately $43,000 in 1998. The straight-
line basis recognized approximately $23,000 more in rental income than was
collected in 1997. For all other leases, minimum rents are recognized over the
terms of the leases.
Investment Properties: Investment properties include three commercial
properties and are 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.
Depreciation: Depreciation is computed by the straight-line method over
estimated useful lives ranging from five to thirty-nine years for buildings and
improvements and related personal property.
Deferred Leasing Commission: Leasing commissions 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
$422,000 and $452,000 and accumulated amortization totaled approximately
$236,000 and $221,000, respectively.
Net Income Allocation: Net income 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 - 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 $1,891
2000 1,286
2001 712
2002 294
2003 167
Thereafter 7
Total $4,357
Amortization of deferred leasing commissions totaled $80,000, $62,000 and
$84,000 for the years ended December 31, 1998, 1997, and 1996, respectively.
NOTE C - REAL ESTATE AND ACCUMULATED DEPRECIATION
Initial Cost to Partnership
(in thousands)
Buildings and Net Cost Capitalized
Related Personal (Removed) Subsequent
Description Encumbrances Land Property to Acquisition
(in thousands)
Alpha Business Center $ -- $ 3,199 $ 6,735 $ 733
Plymouth Service -- 475 2,306 37
Westpoint Business -- 1,166 5,987 374
Total $ -- $ 4,840 $15,028 $ 1,144
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)
Alpha Business Center $ 3,002 $ 7,665 $10,667 $ 3,025 1979 5/87 5-39 Years
Plymouth Service 419 2,399 2,818 871 1979 5/87 5-39 Years
Westpoint Business 1,102 6,425 7,527 2,466 1979 5/87 5-39 Years
Total $ 4,523 $16,489 $21,012 $ 6,362
Reconciliation of Real Estate and Accumulated Depreciation (in thousands)
Years Ended December 31,
1998 1997 1996
Real Estate
Balance at beginning of year $20,707 $20,558 $20,467
Property improvements 305 149 91
Balance at end of year $21,012 $20,707 $20,558
Accumulated Depreciation:
Balance at beginning of year $ 5,777 $ 5,196 $ 4,603
Additions charged to expense 585 581 593
Balance at end of year $ 6,362 $ 5,777 $ 5,196
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1998 and 1997, is approximately $22,236,000 and $22,040,000,
respectively. Accumulated depreciation for Federal income tax purposes at
December 31, 1998 and 1997, is approximately $5,517,000 and $5,004,000,
respectively.