FORM 10-Q--QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
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 June 30, 1998
or
[ ] Transition Report Pursuant to Section 13 or 15(D) of the Securities
Exchange Act of 1934
For the transition period from.........to.........
(Amended by Exchange Act Rel. No. 312905, eff. 4/26/93.)
Commission File Number 0-15710
CENTURY PENSION INCOME FUND XXIV
(Exact name of registrant as specified in its charter)
California 94-2984976
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Registrant's telephone number)
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. Yes X . No .
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
CENTURY PENSION INCOME FUND XXIV
BALANCE SHEETS
(in thousands, except unit data)
June 30, December 31,
1998 1997
(Unaudited) (Note)
Assets
Cash and cash equivalents $ 1,963 $ 1,889
Receivables and deposits 247 308
Other assets 156 181
Investments in unconsolidated joint ventures 7,675 7,429
Investment properties:
Land 4,397 4,397
Buildings and related personal property 13,386 13,386
17,783 17,783
Accumulated depreciation (4,427) (4,186)
13,356 13,597
$23,397 $23,404
Liabilities and Partners' Capital
Liabilities
Accounts payable $ 3 $ 4
Tenant security deposit liabilities 36 34
Accrued property taxes 84 81
Other liabilities 17 27
Partners' Capital
General partner -- --
Limited partner (73,341 units issued
and outstanding at June 30, 1998
and December 31, 1997) 23,257 23,258
Total partners' capital 23,257 23,258
$23,397 $23,404
Note: The balance sheet at December 31, 1997, has been derived from the
audited financial statements at that date but does not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements.
See Accompanying Notes to Financial Statements
b)
CENTURY PENSION INCOME FUND XXIV
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
Revenues:
Rental income $ 498 $ 513 $1,033 $1,020
Other income 23 27 47 53
Total revenues 521 540 1,080 1,073
Expenses:
Operating 84 111 162 218
General and administrative 136 152 282 271
Depreciation 120 120 241 240
Property taxes 43 42 86 84
Total expenses 383 425 771 813
Income before equity in income of
unconsolidated joint ventures 138 115 309 260
Equity in income of
unconsolidated joint ventures 99 90 246 177
Net income $ 237 $ 205 $ 555 $ 437
Net income allocated to
general partner $ 3 $ 2 $ 6 $ 5
Net income allocated to
limited partners 234 203 549 432
$ 237 $ 205 $ 555 $ 437
Net income per limited
partnership unit $ 3.20 $ 2.76 $ 7.49 $ 5.89
Distributions per
limited partnership unit $ 3.75 $ 3.75 $ 7.50 $ 7.50
See Accompanying Notes to Financial Statements
c)
CENTURY PENSION INCOME FUND XXIV
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners' Partners' Total
Original capital contributions 73,341 $ -- $36,671 $36,671
contributions
Partners' capital
at December 31, 1996 73,341 -- $24,193 $24,193
Net income for the six months
ended June 30, 1997 -- 5 432 437
Distributions to partners -- (5) (550) (555)
Partners' capital
at June 30, 1997 73,341 $ -- $24,075 $24,075
Partners' capital
at December 31, 1997 73,341 $ -- $23,258 $23,258
Net income for the six months
ended June 30, 1998 -- 6 549 555
Distributions to partners -- (6) (550) (556)
Partners' capital
at June 30, 1998 73,341 $ -- $23,257 $23,257
See Accompanying Notes to Financial Statements
d)
CENTURY PENSION INCOME FUND XXIV
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
1998 1997
Cash flows from operating activities:
Net income $ 555 $ 437
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 241 240
Amortization of lease commissions 25 21
Equity in income of unconsolidated joint ventures (246) (177)
Change in accounts:
Receivables and deposits 61 72
Other assets -- (16)
Accounts payable (1) (10)
Tenant security deposit liabilities 2 (5)
Accrued property taxes 3 18
Other liabilities (10) 5
Net cash provided by operating activities 630 585
Cash flows from investing activities:
Property improvements and replacements -- (2)
Cash flows from financing activities:
Distributions paid to partners (556) (555)
Increase in cash and cash equivalents 74 28
Cash and cash equivalents at beginning of period 1,889 1,929
Cash and cash equivalents at end of period $1,963 $1,957
See Accompanying Notes to Financial Statements
e)
CENTURY PENSION INCOME FUND XXIV
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements of Century Pension Income Fund
XXIV (the "Partnership") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 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. In the
opinion of Fox Capital Management Corporation, a California corporation (the
"Managing General Partner" or "FCMC"), the Managing General Partner of the
general partner of the Partnership, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three and six month periods ended June 30,
1998, are not necessarily indicative of the results that may be expected for the
fiscal year ending December 31, 1998. For further information, refer to the
financial statements and footnotes thereto included in the Partnership's annual
report on Form 10-K for the year ended December 31, 1997.
Certain reclassifications have been made to the 1997 information to conform to
the 1998 presentation.
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 Managing General Partner is wholly-owned by Insignia
Properties Trust ("IPT"), an affiliate of Insignia Financial Group, Inc.
("Insignia"). The Partnership Agreement provides for certain payments to
affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership.
The following transactions with affiliates of the Managing General Partner were
charged to expense in 1998 and 1997 (in thousands):
For the Six Months Ended
June 30,
1998 1997
Partnership management fee (included in general
and administrative expenses) $62 $62
Reimbursement for services of affiliates (included
in general and administrative expenses) 61 47
For the period of January 1, 1997 to August 31, 1997, the Partnership insured
its properties under a master policy through an agency affiliated with the
Managing General Partner with an insurer unaffiliated with the Managing General
Partner. An affiliate of the Managing General Partner acquired, in the
acquisition of a business, certain financial obligations from an insurance
agency, which was later acquired by the agent who placed the master policy. The
agent assumed the financial obligations to the affiliate of the Managing General
Partner, which received payments on these obligations from the agent. The
amount of the Partnership's insurance premiums accruing to the benefit of the
affiliate of the Managing General Partner by virtue of the agent's obligations
was not significant.
The General Partner received cash distributions of approximately $6,000 and
$5,000 during the six months ended June 30, 1998 and 1997, respectively. The
limited partners received cash distributions of approximately $550,000 during
each of the six month periods ended June 30, 1998 and 1997.
On March 17, 1998, Insignia entered into an agreement to merge its national
residential property management operations, and its controlling interest in IPT,
with Apartment Investment and Management Company ("AIMCO"), a publicly traded
real estate investment trust. The closing, which is anticipated to happen in
September or October of 1998, is subject to customary conditions, including
government approvals and the approval of Insignia's shareholders. If the
closing occurs, AIMCO will then control the Managing General Partner of the
Partnership.
NOTE C - INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES
The Partnership has investments in two unconsolidated joint ventures as follows:
Coral Palm Plaza Joint Venture
On January 23, 1987, the Partnership acquired a 33.33% ownership interest in
Coral Palm Plaza Joint Venture ("Coral Palm"), a joint venture with Century
Pension Income Fund XXIII, a California Limited Partnership ("CPIF XXIII") and
an affiliate of the Managing General Partner. Also on January 23, 1987, Coral
Palm Plaza Joint Venture acquired the Coral Palm Plaza, a shopping center
located in Coral Springs, Florida. The Partnership's interest in the Coral Palm
Plaza Joint Venture is reported using the equity method of accounting.
Summary financial information for Coral Palm Plaza Joint Venture is as follows
(in thousands):
June 30, December 31,
1998 1997
Total assets $5,001 $5,041
Total liabilities (216) (366)
Total ventures equity $4,785 $4,675
For the Three Months Ended For the Six Months Ended
June 30, June 30,
1998 1997 1998 1997
Total revenues $ 258 $ 222 $ 582 $ 440
Total expenses (254) (179) (432) (420)
Net income $ 4 $ 43 $ 150 $ 20
In 1997, the property owned by the Joint Venture, with a carrying value of
$6,029,000, was determined to be impaired and its value was written down by
$2,067,000 to reflect its fair value at December 31, 1997 of $3,962,000.
The Partnership did not receive a distribution from the Joint Venture during
either of the six month periods ended June 30, 1998 or 1997.
Minneapolis Business Parks Joint Venture
On April 30, 1987, the Partnership acquired a 32% ownership interest in
Minneapolis Business Parks Joint Venture, a joint venture with CPIF XXIII. On
May 5, 1987, Minneapolis Business Parks Joint Venture acquired Alpha Business
Center located in Bloomington, Minnesota; Plymouth Service Center located in
Plymouth, Minnesota, and Westpoint Business Center located in Plymouth,
Minnesota. The Partnership's interest in the Minneapolis Business Parks Joint
Venture is reported using the equity method of accounting.
Summary financial information for Minneapolis Business Park Joint Venture is as
follows (in thousands):
June 30, December 31,
1998 1997
Total assets $18,939 $18,331
Total liabilities (160) (167)
Total ventures equity $18,779 $18,164
For the Three Months Ended For the Six Months Ended
June 30, June 30,
1998 1997 1998 1997
Total revenues $ 820 $ 791 $ 1,673 $ 1,613
Total expenses (515) (552) (1,058) (1,080)
Net income $ 305 $ 239 $ 615 $ 533
The Partnership did not receive a distribution from the Joint Venture during
either of the six month periods ended June 30, 1998 or 1997.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment properties consist of three wholly-owned shopping
centers. The Partnership also has an interest in three business parks and one
shopping center owned by two unconsolidated joint ventures between the
Partnership and an affiliated partnership. The following table sets forth the
average occupancy of the three wholly-owned properties for the six months ended
June 30, 1998 and 1997:
Average
Occupancy
Property 1998 1997
Butler Square Center
Mauldin, South Carolina 100% 100%
Kenilworth Commons Shopping Center
Charlotte, North Carolina 100% 100%
Plantation Pointe Shopping Center
Smyrna, Georgia 96% 98%
The Managing General Partner attributes the decreased occupancy at Plantation
Pointe Shopping Center to the growing competition in the area and to the
investment property's rental rate being higher than the area's average market
rate per square foot.
Results of Operations
The Partnership realized net income of approximately $237,000 and $555,000
during the three and six months ended June 30, 1998, respectively, compared to
net income of approximately $205,000 and $437,000 for the three and six months
ended June 30, 1997, respectively. The increase in net income is primarily
attributable to a decrease in operating expenses and to increases in equity in
income of both of the Partnership's unconsolidated joint ventures. Other items
of expense and revenues remained relatively consistent for the comparable
periods. The decrease in operating expenses is due primarily to decreases in
major repairs and maintenance costs at the Partnership's investment properties
in the first half of 1998 as compared to the same period of 1997 (as described
below). Operating expenses also decreased due to repairs of a water leak at
Plantation Pointe in the last half of 1997 and to the absence of worker's
compensation audit adjustments during the six months ended June 30, 1998.
The increases in equity in income of the unconsolidated joint ventures are
primarily attributable to net increases in rental income due to increased rental
rates at Coral Palm and to an increase in occupancy at Alpha Business Center,
part of the 32% owned Minneapolis joint venture property. Partially offsetting
these increases to rental income was a decrease in rental income at Westpoint
Business Center and Plymouth Service Center (Minneapolis properties) due to a
decline in average occupancy.
For the six months ended June 30, 1998, approximately $5,000 of major repairs
and maintenance, comprised primarily of landscaping costs was included in
operating expense. For the six months ended June 30, 1997, approximately
$35,000 of major repairs and maintenance, comprised primarily of landscaping,
parking lot repairs, and exterior painting costs, was included in operating
expense.
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 expense. 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
The Partnership held cash and cash equivalents of approximately $1,963,000 at
June 30, 1998 compared to approximately $1,957,000 at June 30, 1997. The net
increase in cash and cash equivalents was approximately $74,000 and 28,000 for
the six months ended June 30, 1998 and 1997, respectively. Net cash provided by
operating activities increased primarily due to the increase in net income, as
discussed above. Net cash used in financing activities remained constant,
representing distributions paid to partners during each of the six month periods
ended June 30, 1998 and 1997.
The Partnership has no material capital programs scheduled to be performed in
1998, although certain routine capital expenditures and maintenance expenses
have been budgeted.
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 property to adequately maintain the physical assets
and other operating needs of the Partnership. Such assets are currently thought
to be sufficient for any near-term needs of the Partnership. The Partnership
distributed approximately $556,000 and $555,000 to the partners (including
approximately $6,000 and $5,000 to the general partner) during the six months
ended June 30, 1998 and 1997, respectively. Future cash distributions will
depend on the levels of cash generated from operations, property sales, and the
availability of cash reserves, however, quarterly distributions are expected to
continue throughout 1998. The level of such distributions will be contingent
upon successful future operations. The Managing General Partner believes all of
the Partnership's investment properties have reached their peak in market
performance, and is currently evaluating the possibility of marketing the
properties for sale. However, there can be no assurance that the Partnership
will be successful in its attempt to sell the properties.
Year 2000
The Partnership is dependent upon the Managing General Partner and Insignia for
management and administrative services. Insignia has completed an assessment
and will have to modify or replace portions of its software so that its computer
systems will function properly with respect to dates in the year 2000 and
thereafter (the "Year 2000 Issue"). The project is estimated to be completed no
later than December 31, 1998, which is prior to any anticipated impact on its
operating systems. The Managing General Partner believes that with
modifications to existing software and conversions to new software, the Year
2000 Issue will not pose significant operational problems for its computer
systems. However, if such modifications and conversions are not made, or are not
completed timely, the Year 2000 Issue could have a material impact on the
operations of the Partnership.
Other
Certain items discussed in this quarterly report may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (the "Reform Act") and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Partnership to be materially different from any future
results, performance or achievements expressed or implied by such forward-
looking statements. Such forward-looking statements speak only as of the date
of this quarterly report. The Partnership expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in the Partnership's
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
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, the Managing General Partner and several of their affiliated
partnerships and corporate entities. The complaint purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships which are named as nominal defendants, challenging the
acquisition by Insignia and its affiliates of interests in certain general
partner entities, past tender offers by Insignia affiliates to acquire limited
partnership units, the management of partnerships by Insignia affiliates as well
as a recently announced agreement between Insignia and AIMCO. The complaint
seeks 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 have filed an amended complaint. The Managing General Partner
believes the action to be without merit, and intends to vigorously defend it.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature. The Managing General Partner of the Partnership
believes that all such other pending or outstanding litigation will be resolved
without a material adverse effect upon the business, financial condition or
operations of the Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
b) Reports on Form 8-K:
None were filed for the quarter ended June 30, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CENTURY PENSION INCOME FUND XXIV,
By: Fox Partners VI
Its General Partner
By: Fox Capital Management Corporation
Its Managing General Partner
By: /s/William H. Jarrard, Jr.
William H. Jarrard, Jr.
President and Director
By: /s/Ronald Uretta
Ronald Uretta
Principal Financial Officer
and Principal Accounting Officer
Date: August 12, 1998