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 March 31, 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)
March 31, December 31,
1998 1997
(Unaudited) (Note)
Assets
Cash and cash equivalents $ 1,949 $ 1,889
Receivables and deposits 242 308
Other assets 162 181
Investments in unconsolidated joint ventures 7,576 7,429
Investment properties:
Land 4,397 4,397
Buildings and related personal property 13,386 13,386
17,783 17,783
Accumulated depreciation (4,307) (4,186)
13,476 13,597
$ 23,405 $ 23,404
Liabilities and Partners' Capital
Liabilities
Accounts payable $ 3 $ 4
Tenant security deposit liabilities 36 34
Accrued property taxes 42 81
Other liabilities 26 27
Partners' Capital
General partners' -- --
Limited partners' (73,341 units issued and
outstanding at March 31, 1998 and
December 31, 1997) 23,298 23,258
Total partners' capital 23,298 23,258
$ 23,405 $ 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
March 31,
1998 1997
Revenues:
Rental income $ 535 $ 507
Other income 24 26
Total revenues 559 533
Expenses:
Operating 78 107
General and administrative 146 119
Depreciation 121 120
Property taxes 43 42
Total expenses 388 388
Income before equity in income of
unconsolidated joint ventures 171 145
Equity in income of unconsolidated
joint ventures 147 87
Net income $ 318 $ 232
Net income allocated to general partner $ 3 $ 3
Net income allocated to limited partners 315 229
$ 318 $ 232
Net income per limited partnership unit $ 4.29 $ 3.13
Distributions per limited partnership unit $ 3.75 $ 3.75
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
Partners' capital
at December 31, 1996 73,341 $ -- $ 24,193 $ 24,193
Net income for the three months
ended March 31, 1997 -- 3 229 232
Distributions to partners -- (3) (275) (278)
Partners' capital
at March 31, 1997 73,341 $ -- $ 24,147 $ 24,147
Partners' capital
at December 31, 1997 73,341 $ -- $ 23,258 $ 23,258
Net income for the three months
ended March 31, 1998 -- 3 315 318
Distributions to partners -- (3) (275) (278)
Partners' capital
at March 31, 1998 73,341 $ -- $ 23,298 $ 23,298
See Accompanying Notes to Financial Statements
d)
CENTURY PENSION INCOME FUND XXIV
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
1998 1997
Cash flows from operating activities:
Net income $ 318 $ 232
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 121 120
Amortization of lease commissions 13 11
Equity in income of unconsolidated joint venture (147) (87)
Change in accounts:
Receivables and deposits 66 154
Other assets 6 (6)
Accounts payable (1) 1
Tenant security deposit liabilities 2 (5)
Accrued property taxes (39) (24)
Other liabilities (1) (4)
Net cash provided by operating activities 338 392
Cash flows from investing activities -- --
Cash flows from financing activities:
Distributions to partners (278) (278)
Increase in cash and cash equivalents 60 114
Cash and cash equivalents at beginning of period 1,889 1,929
Cash and cash equivalents at end of period $ 1,949 $ 2,043
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 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 (the "Managing General
Partner"), 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 month period ended March 31, 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 Three Months Ended
March 31,
1998 1997
Partnership management fee (included in general
and administrative expenses) $ 31 $ 31
Reimbursement for services of affiliates (included
in general and administrative expenses) 33 15
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 $3,000 during
each of the three month periods ended March 31, 1998 and 1997. The limited
partners received cash distributions of approximately $275,000 during each of
the three month periods ended March 31, 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
the third quarter 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):
March 31, December 31,
1998 1997
Total assets $ 5,097 $ 5,041
Total liabilities (275) (366)
Total ventures equity $ 4,822 $ 4,675
For the Three Months Ended
March 31,
1998 1997
Total revenues $ 324 $ 218
Total expenses (178) (241)
Net income (loss) $ 146 $ (23)
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 distributions from the Joint Venture during
either of the three month periods ended March 31, 1998 and 1997,
Minneapolis Business Parks Joint Venture
On April 30, 1987, the Partnership acquired a 32% ownership interest in
Minneapolis Business Parks Joint Venture ("Minneapolis"), 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):
March 31, December 31,
1998 1997
Total assets $18,825 $18,331
Total liabilities (351) (167)
Total ventures' equity $18,474 $18,164
For the Three Months Ended
March 31,
1998 1997
Total revenues $ 853 $ 822
Total expenses (543) (528)
Net income $ 310 $ 294
The Partnership did not receive distributions from the Joint Venture during
either of the three month periods ended March 31, 1998 and 1997.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This item should be read in conjunction with the financial statements and other
items contained elsewhere in this report.
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 three months
ended March 31, 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 Plantation
Pointe's rental rate being higher than the area's average market rate per square
foot.
Results of Operations
The Partnership's net income for the three months ended March 31, 1998 was
approximately $318,000 versus approximately $232,000 for the three months ended
March 31, 1997. The increase in net income is primarily attributable to
increases in rental income and in equity in income of the Partnership's
unconsolidated joint ventures. The increase in rental income is due to
increases in rental rates for several of the tenants at the Partnership's
investment properties partially offset by the decline in occupancy at Plantation
Pointe Shopping Center.
The increase in equity in income of the unconsolidated joint ventures is
primarily attributable to net increases in rental income for the joint ventures'
properties and a decrease in total expenses for the 33% owned Coral Palm joint
venture property. The net increase in rental income is due to increased rental
rates at Coral Palm and at Alpha Business Center, part of the 32% owned
Minneapolis joint venture property. Partially offsetting these increases to
rental income was a decrease in income at Westpoint Business Center (Minneapolis
property) due to a decline in average occupancy. Also contributing to the
increase in equity in income of the unconsolidated joint ventures was a decrease
in property tax expense at Coral Palm due to a successful appeal of the 1997
assessment during the three months ended March 31, 1998.
For the three months ended March 31, 1998, there were no major repairs and
maintenance performed at the Partnership's investment properties. Approximately
$7,000 of major repairs and maintenance, comprised primarily of major
landscaping, was included in operating expense for the three months ended March
31, 1997.
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 $1,949,000 at
March 31, 1998 compared to approximately $2,043,000 at March 31, 1997. The net
increase in cash and cash equivalents was approximately $60,000 and $114,000 for
the three months ended March 31, 1998 and 1997, respectively. Net cash provided
by operating activities decreased primarily due to a lesser increase in
receivables and deposits. The decrease in cash provided by receivables and
deposits is a result of the timing of collections and receipts. Net cash used
in financing activities remained constant, representing distributions to
partners during both periods.
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 $278,000 to the partners (including $3,000 to the general partner)
during each of the three month periods ended March 31, 1998 and 1997. The
Managing General Partner anticipates making a distribution of approximately
$278,000 in May 1998. Future cash distributions will depend on the levels of
cash generated from operations, property sales, and the availability of cash
reserves. The level of such distributions will be contingent upon successful
future operations.
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
not 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. The Managing Partner was only recently served with the
complaint which it believes to be without merit, and intends to vigorously
defend the action.
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 March 31, 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: May 14, 1998