FORM 10-QSB--Quarterly or Transitional Report Under Section 13 or 15(d) Of
the Securities Exchange Act of 1934
Quarterly or Transitional Report
United States SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2001
[ ] 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 0-11934
CENTURY PROPERTIES FUND XVIII
(Exact name of small business issuer as specified in its charter)
California 94-2834149
(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
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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. Yes X No____
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
CENTURY PROPERTIES FUND XVIII
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 2001
Assets
Cash and cash equivalents $ 376
Receivables and deposits 57
Restricted escrows 58
Other assets 305
Investment properties:
Land $ 7,296
Buildings and related personal property 21,188
28,484
Less accumulated depreciation (12,229) 16,255
$ 17,051
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 46
Other liabilities 203
Accrued property taxes 126
Tenant security deposit liabilities 70
Mortgage notes payable 18,952
Partners' (Deficit) Capital
General partner $ (6,245)
Limited partners (75,000 units issued and
outstanding) 3,899 (2,346)
$ 17,051
See Accompanying Notes to Consolidated Financial Statements
b)
CENTURY PROPERTIES FUND XVIII
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
2001 2000
Revenues:
Rental income $ 1,247 $ 1,193
Other income 76 59
Total revenues 1,323 1,252
Expenses:
Operating 417 403
General and administrative 88 56
Depreciation 213 196
Interest 341 348
Property tax 136 111
Total expenses 1,195 1,114
Net income $ 128 $ 138
Net income allocated to general partner (9.9%) $ 13 $ 14
Net income allocated to limited partners (90.1%) 115 124
$ 128 $ 138
Net income per limited partnership unit $ 1.53 $ 1.65
Distributions per limited partnership unit $ 5.15 $ 2.91
See Accompanying Notes to Consolidated Financial Statements
c)
CENTURY PROPERTIES FUND XVIII
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Original capital contributions 75,000 $ -- $75,000 $75,000
Partners' (deficit) capital
at December 31, 2000 75,000 $(6,254) $ 4,170 $(2,084)
Distributions to partners -- (4) (386) (390)
Net income for the three months
ended March 31, 2001 -- 13 115 128
Partners' (deficit) capital
at March 31, 2001 75,000 $(6,245) $ 3,899 $(2,346)
See Accompanying Notes to Consolidated Financial Statements
d)
CENTURY PROPERTIES FUND XVIII
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
2001 2000
Cash flows from operating activities:
Net income $ 128 $ 138
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 213 196
Amortization of loan costs 14 19
Change in accounts:
Receivables and deposits -- 378
Other assets (49) (32)
Accounts payable (19) (21)
Other liabilities 15 (39)
Accrued property taxes (241) (246)
Tenant security deposit liabilities (6) (1)
Net cash provided by operating activities 55 392
Cash flows from investing activities:
Property improvements and replacements (72) (188)
Net deposits to restricted escrows (27) (27)
Net cash used in investing activities (99) (215)
Cash flows used in financing activities:
Distributions to partners (390) (220)
Payments on mortgage notes payable (60) (39)
Net cash used in financing activities (450) (259)
Net decrease in cash and cash equivalents (494) (82)
Cash and cash equivalents at beginning of period 870 462
Cash and cash equivalents at end of period $ 376 $ 380
Supplemental disclosure of cash flow information:
Cash paid for interest $ 327 $ 218
See Accompanying Notes to Consolidated Financial Statements
e)
CENTURY PROPERTIES FUND XVIII
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Century
Properties Fund XVIII (the "Partnership" or "Registrant") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The Partnership's general partner is Fox Partners. The
general partners of Fox Partners are Fox Capital Management Corporation ("FCMC"
or the "Managing General Partner"), Fox Realty Investors ("FRI") and Fox
Partners 82. The Managing General Partner, as well as the managing general
partner of FRI, are affiliates of Apartment Investment and Management Company
("AIMCO"), a publicly traded real estate investment trust. In the opinion of the
Managing General Partner, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three month period ended March 31, 2001 are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 31, 2001. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Partnership's Annual
Report on Form 10-KSB for the year ended December 31, 2000.
Principles of Consolidation
The Partnership's financial statements include the accounts of the Partnership
and its wholly-owned partnership, Oak Run LP, the entity which holds title to
Oak Run Apartments.
Segment Reporting
Statement of Financial Standards ("SFAS") No. 131, Disclosure about Segments of
an Enterprise and Related Information established standards for the way that
public business enterprises report information about operating segments in
annual financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers. As defined in SFAS No. 131, the
Partnership has only one reportable segment. The Managing General Partner
believes that segment-based disclosures will not result in a more meaningful
presentation than the consolidated financial statements as currently presented.
Note B - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
Partnership activities. The Partnership Agreement provides for (i) payments to
affiliates for services and (ii) reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership. The following payments were made to the
Managing General Partner and affiliates during the three months ended March 31,
2001 and 2000:
2001 2000
(in thousands)
Property management fees (included in operating expenses) $ 67 $ 64
Reimbursement for services of affiliates (included in
operating and general and administrative expenses
and investment properties) 55 30
During the three months ended March 31, 2001 and 2000, affiliates of the
Managing General Partner were entitled to receive 5% of gross receipts from both
of the Registrant's properties for providing property management services. The
Registrant paid to such affiliates approximately $67,000 and $64,000 for the
three months ended March 31, 2001 and 2000, respectively.
An affiliate of the Managing General Partner received reimbursement of
accountable administrative expenses amounting to approximately $55,000 and
$30,000 for the three months ended March 31, 2001 and 2000, respectively.
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. At the present time, the Partnership has no outstanding amounts due
under this line of credit. Based on present plans, the Managing General Partner
does not anticipate the need to borrow in the near future. Other than cash and
cash equivalents, the line of credit is the Partnership's only unused source of
liquidity.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates currently own 39,897.5 limited partnership
units in the Partnership representing 53.20% of the total outstanding units. A
number of these units were acquired pursuant to tender offers made by AIMCO or
its affiliates. It is possible that AIMCO or its affiliates will make one or
more additional offers to acquire additional limited partnership interests in
the Partnership for cash or in exchange for units in the operating partnership
of AIMCO. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters, which
would include without limitation, voting on certain amendments to the
Partnership Agreement and voting to remove the Managing General Partner. As a
result of its ownership of 53.20% of the total outstanding units, AIMCO is in a
position to influence all voting decisions with respect to the Registrant. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the Managing General Partner because of
their affiliation with the Managing General Partner. Insignia Properties L.P.
("IPLP"), an affiliate of AIMCO and the Managing General Partner indirectly, had
agreed for the benefit of non-tendering unitholders, that it would vote its
Units acquired in January 1996: (i) against any increase in compensation payable
to the Managing General Partner or to affiliates; and (ii) on all other matters
submitted by it or its affiliates, in proportion to the votes cast by
non-tendering unitholders. Except for the foregoing, no other limitations are
imposed on IPLP's, AIMCO's or any of their affiliates right to vote each unit
acquired.
Note C - Distributions
During the three months ended March 31, 2001, the Registrant made cash
distributions of approximately $390,000 from prior cumulative undistributed sale
and refinancing proceeds, of which approximately $386,000 was paid to the
limited partners ($5.15 per limited partnership unit). During the three months
ended March 31, 2000, the Registrant made a cash distribution of approximately
$220,000 from prior cumulative undistributed sale and refinancing proceeds, of
which approximately $218,000 was paid to the limited partners ($2.91 per limited
partnership unit).
Note D - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, its Managing General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging, among other things, the acquisition of interests in
certain general partner entities by Insignia Financial Group, Inc. ("Insignia")
and entities which were, at one time, affiliates of Insignia; past tender offers
by the Insignia affiliates to acquire limited partnership units; management of
the partnerships by the Insignia affiliates; and the Insignia Merger. The
plaintiffs seek monetary damages and equitable relief, including judicial
dissolution of the Partnership. On June 25, 1998, the Managing General Partner
filed a motion seeking dismissal of the action. In lieu of responding to the
motion, the plaintiffs filed an amended complaint. The Managing General Partner
filed demurrers to the amended complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, at which time
the Court set a final approval hearing for December 10, 1999. Prior to the
December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Managing General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case and an appeal was taken from the order on
October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff
Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the
putative class. Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001, the Managing General Partner and its affiliates filed a
demurrer to the third amended complaint. The demurrer is scheduled to be heard
on May 14, 2001. The Court has also scheduled a hearing on a motion for class
certification for August 27, 2001. Plaintiffs must file their motion for class
certification no later than June 15, 2001. The Managing General Partner does not
anticipate that costs associated with this case will be material to the
Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB and the other filings with the
Securities and Exchange Commission made by the Registrant from time to time. The
discussion of the Registrant's business and results of operations, including
forward-looking statements pertaining to such matters, does not take into
account the effects of any changes to the Registrant's business and results of
operation. Accordingly, actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.
The Partnership's investment properties consist of two apartment complexes. The
following table sets forth the average occupancy of the properties for the three
months ended March 31, 2001 and 2000
Average Occupancy
Property 2001 2000
Oak Run Apartments 93% 92%
Dallas, Texas
Overlook Point Apartments 95% 93%
Salt Lake City, Utah
Results of Operations
The Partnership's net income for the three months ended March 31, 2001 was
approximately $128,000 as compared to approximately $138,000 for the same period
in 2000. The decrease in net income was due to an increase in total expenses,
which was partially offset by an increase in total revenues. The increase in
total revenues was primarily due to an increase in rental revenues and other
income. Rental revenues increased due to increased rental rates and occupancy at
both of the investment properties. Other income increased due to an increase in
interest income as a result of higher cash balances being maintained in interest
bearing accounts.
Total expenses increased due to increases in depreciation, property tax,
operating and general and administrative expenses. Depreciation expense
increased due to property additions during the past twelve months. The increase
in operating expense was attributable to an increase in salaries and related
employee benefits. Property tax expense increased due to an increase in the
assessed value of Oak Run Apartments by the taxing authorities.
General and administrative expense increased due to an increase in the cost of
services provided by the Managing General Partner and its affiliates as allowed
under the Partnership Agreement. Also included in general and administrative
expenses are costs associated with the quarterly and annual communications with
investors and regulatory agencies and the annual audit required by the
Partnership Agreement.
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, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions, there is no guarantee that the
Managing General Partner will be able to sustain such a plan.
Liquidity and Capital Resources
At March 31, 2001, the Partnership had cash and cash equivalents of
approximately $376,000 as compared to approximately $380,000 at March 31, 2000.
Cash and cash equivalents decreased approximately $494,000 for the three month
period ended March 31, 2001 from the Partnership's year ended December 31, 2000.
The decrease in cash and cash equivalents is due to approximately $450,000 of
cash used in financing activities and approximately $99,000 of cash used in
investing activities, which more than offset approximately $55,000 of cash
provided by operating activities. Cash used in financing activities consisted
primarily of distributions to partners, and to a lesser extent, payments of
principal made on the mortgages encumbering the Partnership's properties. Cash
used in investing activities consisted of property improvements and replacements
and net deposits to restricted escrows maintained by the mortgage lender. The
Partnership invests its working capital reserves in interest bearing accounts.
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. At the present time, the Partnership has no outstanding amounts due
under this line of credit. Based on present plans, the Managing General Partner
does not anticipate the need to borrow in the near future. Other than cash and
cash equivalents, the line of credit is the Partnership's only unused source of
liquidity.
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 Registrant and to comply with Federal,
state, and local legal and regulatory requirements. Capital improvements planned
for each of the Registrant's properties are detailed below.
Oak Run Apartments: For 2001, the Partnership has budgeted approximately
$126,000 for capital improvements at Oak Run Apartments consisting of appliance,
plumbing and floor covering replacements and interior decorations. As of March
31, 2001 the property has spent approximately $42,000 in capital expenditures at
the property consisting primarily of interior decorations and floor covering
replacements. These improvements were funded from operations.
Overlook Point Apartments: For 2001, the Partnership has budgeted approximately
$84,000 for capital improvements at Overlook Point Apartments consisting of
appliance, plumbing and floor covering replacements. As of March 31, 2001 the
property has spent approximately $30,000 in capital expenditures at the property
consisting primarily of appliance and floor covering replacements. These
improvements were funded from operations.
The additional capital expenditures planned will be incurred only to the extent
of cash available from operations and Partnership reserves. To the extent that
such budgeted capital improvements are completed, the Registrant's distributable
cash flow, if any, may be adversely affected at least in the short term.
The Registrant's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Registrant. The mortgage
indebtedness of approximately $18,952,000 is amortized over thirty years with
balloon payments of approximately $9,728,000 and $8,127,000 due on October 2004,
and September 2005, respectively. The Managing General Partner will attempt to
refinance such indebtedness and/or sell the properties prior to such maturity
dates. If the properties cannot be refinanced or sold for a sufficient amount,
the Partnership may risk losing such properties through foreclosure.
During the three months ended March 31, 2001, the Registrant made cash
distributions of approximately $390,000 from prior cumulative undistributed sale
and refinancing proceeds, of which approximately $386,000 was paid to the
limited partners ($5.15 per limited partnership unit). During the three months
ended March 31, 2000, the Registrant made a cash distribution of approximately
$220,000 from prior cumulative undistributed sale and refinancing proceeds, of
which approximately $218,000 was paid to the limited partners ($2.91 per limited
partnership unit). Future cash distributions will depend on the levels of net
cash generated from operations, the availability of cash reserves, and the
timing of debt maturities, refinancings and/or property sales. The Registrant's
distribution policy is reviewed on a quarterly basis. There can be no assurance,
however, that the Registrant will generate sufficient funds from operations
after required capital improvements expenditures to permit any additional
distributions to its partners during the remainder of 2001 or subsequent
periods.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates currently own 39,897.5 limited partnership
units in the Partnership representing 53.20% of the total outstanding units. A
number of these units were acquired pursuant to tender offers made by AIMCO or
its affiliates. It is possible that AIMCO or its affiliates will make one or
more additional offers to acquire additional limited partnership interests in
the Partnership for cash or in exchange for units in the operating partnership
of AIMCO. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters, which
would include without limitation, voting on certain amendments to the
Partnership Agreement and voting to remove the Managing General Partner. As a
result of its ownership of 53.20% of the total outstanding units, AIMCO is in a
position to influence all voting decisions with respect to the Registrant. When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner favorable to the interest of the Managing General Partner because of
their affiliation with the Managing General Partner. Insignia Properties L.P.
("IPLP"), an affiliate of AIMCO and the Managing General Partner indirectly, had
agreed for the benefit of non-tendering unitholders, that it would vote its
Units acquired in January 1996: (i) against any increase in compensation payable
to the Managing General Partner or to affiliates; and (ii) on all other matters
submitted by it or its affiliates, in proportion to the votes cast by
non-tendering unitholders. Except for the foregoing, no other limitations are
imposed on IPLP's, AIMCO's or any of their affiliates right to vote each unit
acquired.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, its Managing General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging, among other things, the acquisition of interests in
certain general partner entities by Insignia Financial Group, Inc. ("Insignia")
and entities which were, at one time, affiliates of Insignia; past tender offers
by the Insignia affiliates to acquire limited partnership units; management of
the partnerships by the Insignia affiliates; and the Insignia Merger. The
plaintiffs seek monetary damages and equitable relief, including judicial
dissolution of the Partnership. On June 25, 1998, the Managing General Partner
filed a motion seeking dismissal of the action. In lieu of responding to the
motion, the plaintiffs filed an amended complaint. The Managing General Partner
filed demurrers to the amended complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, at which time
the Court set a final approval hearing for December 10, 1999. Prior to the
December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Managing General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case and an appeal was taken from the order on
October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff
Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the
putative class. Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001, the Managing General Partner and its affiliates filed a
demurrer to the third amended complaint. The demurrer is scheduled to be heard
on May 14, 2001. The Court has also scheduled a hearing on a motion for class
certification for August 27, 2001. Plaintiffs must file their motion for class
certification no later than June 15, 2001. The Managing General Partner does not
anticipate that costs associated with this case will be material to the
Partnership's overall operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
None.
b) Reports on Form 8-K:
None filed during the quarter ended March 31, 2001.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CENTURY PROPERTIES FUND XVIII
By: FOX PARTNERS
Its General Partner
By: FOX CAPITAL MANAGEMENT CORPORATION
Its Managing General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President and
Controller
Date: