EXHIBIT 99.1
CORAL PALM PLAZA JOINT VENTURE
FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 and 1995
List of Financial Statements
Independent Auditors' Report
Balance Sheets - December 31, 1997 and 1996
Statements of Operations-Years Ended December 31, 1997, 1996 and 1995
Statements of Changes in Partners' Capital-Years Ended December 31,
1997, 1996 and 1995
Statements of Cash Flows-Years Ended December 31, 1997, 1996 and 1995
Notes to Financial Statements
To the Partners
Coral Palm Plaza Joint Venture
Greenville, South Carolina
Independent Auditors' Report
We have audited the accompanying balance sheets of Coral Palm Plaza Joint
Venture (the "Partnership") as of December 31, 1997 and 1996, 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, 1997. 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 audit 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, 1997 and 1996, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1997 in
conformity with generally accepted accounting principles.
/s/ Imowitz Koenig & Co., LLP
Certified Public Accountants
New York, N.Y.
February 12, 1998
CORAL PALM PLAZA JOINT VENTURE
BALANCE SHEETS
(in thousands)
December 31,
1997 1996
Assets
Cash and cash equivalents $ 427 $ 458
Other assets 652 613
Investment properties:
Land 1,980 2,393
Buildings and related personal property 5,532 7,133
7,512 9,526
Less accumulated depreciation (3,550) (3,296)
3,962 6,230
$ 5,041 $ 7,301
Liabilities and Partners' Capital
Accrued expenses and other liabilities $ 366 $ 468
Partners' Capital:
Century Pension Income Fund XXIII 3,111 4,557
Century Pension Income Fund XXIV 1,564 2,276
Total partners' capital 4,675 6,833
$ 5,041 $ 7,301
<FN>
See Accompanying Notes to Financial Statements
</FN>
CORAL PALM PLAZA JOINT VENTURE
STATEMENTS OF OPERATIONS
(in thousands)
Years Ended December 31,
1997 1996 1995
Revenues:
Rental income $ 706 $ 1,157 $ 939
Other income 33 26 717
Total revenues 739 1,183 1,656
Expenses:
Operating 572 541 625
General and administrative 4 16 11
Depreciation 254 250 217
Provision for impairment
of value 2,067 -- --
Total expenses 2,897 807 853
Net (loss) income $(2,158) $ 376 $ 803
Allocation of net (loss) income:
Century Pension Income Fund XXIII $(1,446) $ 252 $ 535
Century Pension Income Fund XXIV (712) 124 268
$(2,158) $ 376 $ 803
<FN>
See Accompanying Notes to Financial Statements
</FN>
CORAL PALM PLAZA JOINT VENTURE
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
Years Ended December 31, 1997, 1996, and 1995
(in thousands)
Century Pension Century Pension
Income Fund XXIII Income Fund XXIV Total
Partners' capital at December 31, 1994 $ 4,339 $ 2,169 $ 6,508
Net income for the year ended
December 31, 1995 535 268 803
Distributions to partners (643) (323) (966)
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
<FN>
See Accompanying Notes to Financial Statements
</FN>
CORAL PALM PLAZA JOINT VENTURE
STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1997 1996 1995
Cash flows from operating activities:
Net (loss) income $(2,158) $ 376 $ 803
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Depreciation 254 250 217
Amortization of lease commissions 39 37 32
Provision for impairment of value 2,067 -- --
Change in accounts:
Other assets (78) (226) 512
Accrued expenses and other liabilities (102) 123 (499)
Net cash provided by operating activities 22 560 1,065
Cash flows from investing activities:
Property improvements and replacements (53) (477) (75)
Net cash used in investing activities (53) (477) (75)
Cash flows from financing activities:
Joint venture partners'
distributions paid -- -- (966)
Contributions received from Partners -- 112 --
Net Cash provided by (used in) financing activities -- 112 (966)
Net (decrease) increase in Cash and Cash Equivalents (31) 195 24
Cash and Cash Equivalents at Beginning of Year 458 263 239
Cash and Cash Equivalents at End of Year $ 427 $ 458 $ 263
<FN>
See Accompanying Notes to Financial Statements
</FN>
CORAL PALM PLAZA JOINT VENTURE
Notes To Financial Statements
December 31, 1997
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 amount 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
receivables and 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 $28,000 and $119,000 more in rental income than was collected in
1997 and 1996, 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: Investment properties 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. The Partnership has 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, 1997 and 1996 deferred leasing
commissions totaled $324,000 and $221,000 and accumulated amortization totaled
$104,000 and $85,000, 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 1996 and 1995
balances to conform to the 1997 presentation.
NOTE B - RELATED PARTY TRANSACTIONS
During 1997 and 1996, the Partnership paid property management fees totaling
$31,000 and $23,000, respectively, to an affiliate of the General Partner.
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 December 1994, the Partnership accepted a lease buy-out of $800,000 from a
significant tenant that had occupied 27,000 square feet. The payment was
received in 1995. During 1995, management re-leased all of the unoccupied
space, on similar terms, and recognized the remaining portion of the lease buy-
out in the amount of $699,000 as other income.
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 - MINIMUM FUTURE RENTAL REVENUES
Minimum future rental revenues from operating leases having non-cancelable lease
terms in excess of one year at December 31, 1997 are as follows:
1998 $1,043
1999 1,024
2000 943
2001 828
2002 759
Thereafter 2,042
Total $6,639
Rental revenue from one tenant was 22 percent, 12 percent and 20 percent of
total rental revenues in 1997, 1996 and 1995, respectively. Rental revenue from
another tenant was 13 percent, 12 percent and 19 percent of total rental
revenues in 1997, 1996 and 1995, respectively.
Rental revenues included percentage and other contingent rentals of $33,000 and
$59,000 in 1996 and 1995, respectively. There was not any percentage or
contingent rental revenue in 1997.
Amortization of deferred leasing commissions totaled $39,000, $37,000 and
$32,000 for the years ended December 31, 1997, 1996, and 1995, respectively.
NOTE F - REAL ESTATE AND ACCUMULATED DEPRECIATION
(dollar amounts in thousands)
Initial Cost to Partnership
Buildings Net Cost Capitalized
and Related (written down) Subsequent
Description Encumbrances Land Personal Property to Acquisition
Coral Palm Plaza
Coral Springs,
Florida $ -- $ 5,009 $11,046 $(8,543)
Gross Amount at Which Carried
at December 31, 1997
Buildings
and Related Accumulated Year of Date of Depreciable
Description Land Personal Property Total Depreciation Construction Acquisition Life-Years
Coral Palm Plaza $1,980 $5,532 $7,512 $3,550 1985 1/87 4 to 39 Years
Reconciliation of Real Estate and Accumulated Depreciation (in thousands)
Real Estate:
Years Ended December 31,
1997 1996 1995
Balance at beginning of year $ 9,526 $ 9,049 $ 8,974
Property improvements 53 477 75
Allowance for impairment of value (2,067) -- --
Balance at end of year $ 7,512 $ 9,526 $ 9,049
Accumulated Depreciation:
Balance at beginning of year $ 3,296 $ 3,046 $ 2,829
Additions charged to expense 254 250 217
Balance at end of year $ 3,550 $ 3,296 $ 3,046
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1997 and 1996, is approximately $17,098,000 and $17,044,000,
respectively. Accumulated depreciation for Federal income tax purposes at
December 31, 1997 and 1996, is approximately $3,678,000 and $3,324,000,
respectively.