FORM 10-Q--QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(As last amended in Rel. No. 312905, eff. 4/26/93.)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period.........to.........
(Amended by Exchange Act Rel. No. 312905, eff. 4/26/93.)
Commission file number 0-14528
CENTURY PENSION INCOME FUND XXIII
(Exact name of registrant as specified in its charter)
California 94-2963120
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza
Greenville, South Carolina 29615
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (864) 239-1000
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 XXIII
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
March 31, December 31,
1996 1995
(Unaudited) (Note)
Assets
Cash and cash equivalents $ 6,425 $ 6,378
Restricted cash -- 158
Other assets 1,379 894
Mortgage loans receivable, net 1,137 1,137
Deferred sales commissions, net 758 823
Deferred organization expenses, net 451 489
Deferred costs, net 835 857
Investment properties:
Land 18,436 18,436
Buildings and related personal 68,404 68,076
86,840 86,512
Less accumulated depreciation (19,737) (19,094)
67,103 67,418
$ 78,088 $ 78,154
Liabilities and Partners' Deficit
Liabilities
Accrued expenses and other liabilities $ 1,217 $ 738
Accrued interest - notes payable 784 714
Notes payable 16,956 16,956
Non-recourse promissory notes:
Principal 41,939 41,939
Deferred interest payable 30,260 30,092
Minority interest in consolidated
joint ventures 7,485 7,383
Partners' Deficit
General partner (2,127) (2,089)
Limited partners (95,789 units issued and
outstanding at March 31, 1996 and
December 31, 1995) (18,426) (17,579)
(20,553) (19,668)
$ 78,088 $ 78,154
Note: The balance sheet at December 31, 1995, 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 Consolidated Financial Statements
b) CENTURY PENSION INCOME FUND XXIII
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended
March 31,
1996 1995
Revenues:
Rental $ 2,862 $ 2,928
Interest income on mortgage loans 20 20
Interest income 112 66
Total revenues 2,994 3,014
Expenses:
Interest to promissory note holders 1,216 1,216
Amortization 166 169
Operating 1,042 996
Depreciation 643 629
Interest 432 408
General and administrative 295 256
Provision for impairment of value -- 978
Total expenses 3,794 4,652
Loss before minority interest in joint
ventures' operations (800) (1,638)
Minority interest in joint ventures (64) (96)
Net loss $ (864) $(1,734)
Net loss allocated to general partners $ (17) $ (35)
Net loss allocated to limited partners (847) (1,699)
$ (864) $(1,725)
Net loss per Limited Partner Unit $ (8.84) $(17.74)
<FN>
See Accompanying Notes to Consolidated Financial Statements
c) CENTURY PENSION INCOME FUND XXIII
STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners' Partners' Total
Original capital contributions 95,789 $ 958 $ 47,894 $ 48,852
Partners' deficit
at December 31, 1995 95,789 $(2,089) $ (17,579) $ (19,668)
Distributions -- (21) -- (21)
Net loss for the three
months ended March 31, 1996 -- (17) (847) (864)
Partners' deficit
at March 31, 1996 95,789 $(2,127) $ (18,426) $ (20,553)
<FN>
See Accompanying Notes to Consolidated Financial Statements
d) CENTURY PENSION INCOME FUND XXIII
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
1996 1995
Operating activities:
Net loss $ (864) $ (1,734)
Adjustments to reconcile net loss to cash
provided by operating activities:
Depreciation 643 629
Amortization 166 169
Provision for impairment of value -- 978
Minority interest in joint ventures 64 96
Deferred interest added to note payable principal 70 5
Deferred costs paid -- (43)
Deferred interest on non-recourse promissory notes 692 692
Change in accounts:
Receivables and other assets (526) 340
Accrued expenses and other liabilities (45) (123)
Net cash provided by
operating activities 200 1,009
Investing activities:
Property replacements and improvements (328) (114)
Restricted cash 158 26
Net cash used in investing activities (170) (88)
Financing activities:
Contribution from minority interest in joint venture 38 --
Cash distribution to general partner (21) (21)
Net cash provided by (used in)
financing activities 17 (21)
Increase in cash and cash equivalents 47 900
Cash and cash equivalents at beginning of period 6,378 5,202
Cash and cash equivalents at end of period $ 6,425 $ 6,102
Supplemental disclosure of cash flow information:
Cash paid for interest - notes payable $ 164 $ 400
Cash paid for interest - non-recourse promissory notes $ 1,048 $ 1,048
Supplemental Disclosure of non-cash investing and
financing activities:
Deferred interest added to note payable principal $ -- $ 3
<FN>
See Accompanying Notes to Consolidated Financial Statements
e) CENTURY PENSION INCOME FUND XXIII
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements of Century Properties Income
Fund XXIII (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 NPI Equity Investment II, Inc. ("NPI Equity" or 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, 1996, are not necessarily indicative of the
results that may be expected for the fiscal year ending December 31, 1996. 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, 1995.
Certain reclassifications have been made to the 1995 information to conform to
the 1996 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 Partnership Agreement provides for payments to
affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership.
The following transactions with Insignia Financial Group, Inc. ("Insignia"),
National Property Investors, Inc. ("NPI Inc."), and affiliates were charged to
expense in 1996 and 1995:
For the Three Months Ended
March 31,
1996 1995
(in thousands)
Property management fees (included in operating
expense) $ 19 $ 25
Reimbursement for services of affiliates (included
in general and administrative expenses) 41 24
Services relating to successful real estate tax
appeals (included in operating expenses) -- 16
Partnership management fee (included in general
and administrative expenses) 55 55
For the period from January 19, 1996, to March 31, 1996, the Partnership insured
its property under a master policy through an agency and 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 current
year's master policy. The current agent assumed the financial obligations to
the affiliate of the Managing General Partner who 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 is not significant.
An affiliate of the general partner is entitled to receive a partnership
management fee in an amount equal to 10 percent of cash available for
distribution before interest payments to the Promissory Note Holders.
The general partner received cash distributions totaling $21,000 which is equal
to 2 percent of interest paid to Promissory Note holders, during the three month
periods ended March 31, 1996 and 1995.
The general partner of the Partnership is Fox Partners V, a California general
partnership, whose general partners are Fox Capital Management Corporation
("FCMC"), a California corporation and Fox Realty Investors ("FRI"), a
California general partnership.
On December 6, 1993, the shareholders of the FCMC entered into a Voting Trust
Agreement with NPI Equity II pursuant to which NPI Equity II was granted the
right to vote 100% of the outstanding stock of FCMC and NPI Equity II became the
Managing General Partner of FRI. As a result, NPI Equity II became responsible
for the operation and management of the business and affairs of the Partnership
and the other investment partnerships originally sponsored by FCMC and/or FRI.
NPI Equity is a wholly-owned subsidiary of NPI, Inc. The shareholders of FCMC
and the partners in FRI retained indirect economic interests in the Partnership
and such other investment limited partnerships, but have ceased to be
responsible for the operation and management of the Partnership and such other
partnerships.
On August 17, 1995, the stockholders of NPI, Inc. entered into an agreement to
sell to IFGP corporation, a Delaware corporation, an affiliate of Insignia, a
Delaware corporation, all of the issued and outstanding common stock of NPI,
Inc., for an aggregate purchase price of $1,000,000. The closing of the
transactions contemplated by the above mentioned agreement (the "Closing")
occurred on January 19, 1996.
Upon the Closing, the officers and directors of NPI, Inc. and the Managing
General partner resigned and IFGP Corporation caused new officers and directors
of each of those entities to be elected.
Note C - Subsequent Event
The Sunnymead Towne Shopping Center ("Sunnymead") located in Moreno Valley,
California, had a significant tenant, which occupied 98,000 square feet, vacate
in 1995. During February 1996, another major tenant vacated 11,000 square feet,
leaving the property approximately 25% physically occupied. Effective March 1,
1996, the Partnership ceased making debt service payments and does not intend to
make any future payments as the value of Sunnymead is less than the debt. At
March 31, 1996, the note had a principal balance of approximately $10,100,000
with accrued interest of approximately $675,000. The lender has notified the
Partnership of its intent to foreclose on the property. The Partnership does
not plan to challenge the foreclosure proceedings, which are expected to be
concluded during the three months ended September 30, 1996. The property was
placed in receivership on May 1, 1996.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment properties consist of one apartment complex, three
business parks and three shopping centers, as well as three business parks and a
shopping center owned by two consolidated joint ventures between the Registrant
and an affiliated partnership. The following table sets forth the average
occupancy for the three months ended March 31, 1996 and 1995:
Average
Occupancy
Property 1996 1995
Commerce Plaza 92% 100%
Tampa, Florida
Regency Centre 99% 99%
Lexington, Kentucky
Highland Park Commerce
Center - Phase III 97% 92%
Charlotte, North Carolina
Interrich Plaza 64% 98%
Richardson, Texas
Centre Stage
Shopping Center 96% 96%
Norcross, Georgia
Sunnymead Towne Center (1) 83% 91%
Moreno Valley, California
The Enclaves 95% 96%
Atlanta, Georgia
Coral Palm Plaza Joint Venture:
Coral Palm Plaza 76% 68%
Coral Springs, Florida
Minneapolis Business Parks
Joint Venture:
Alpha Business Center 93% 95%
Bloomington, Minnesota
Plymouth Service Center 100% 100%
Plymouth, Minnesota
Westpoint Business Center 96% 91%
Plymouth, Minnesota
(1) Vacated tenant, which previously occupied 98,000 square feet, continues to
make lease payments. Property is physically 25 percent occupied at March
31, 1996.
Occupancy at Commerce Plaza declined due to a major tenant's reduction of its
leased space during the second quarter of 1995. Occupancy at Interrich Plaza
declined due to a major tenant vacating its space during the second quarter of
1995. Occupancy at Coral Palm Plaza increased due to the Partnership's ability
to re-lease space vacated by a lease buyout from a major tenant in December
1994. Occupancy at Sunnymead Town Center has decreased due to tenants vacating
their space and poor economic conditions in the local area. Occupancy at
Westpoint Business Center increased due to the execution of new leases and lease
renewals during the second quarter of 1995. Occupancy at Highland Park Commerce
Center increased due to the execution of new leases and lease renewals during
the third quarter of 1995.
The Partnership's net loss for the three months ended March 31, 1996, was
approximately $864,000 versus a net loss of approximately $1,734,000 for the
same period of 1995. The decrease in the net loss is attributable to an
increase in interest income and a decrease in the provision for impairment of
value expense. The increase in interest income is due to an increase in cash
reserves as compared to the first quarter of 1995. The provision for impairment
of value expense decreased due to the write-down in the three months ended March
31, 1995. Partially offsetting the decrease in net loss was an increase in
general and administrative expense due to increased costs associated with the
operation of two partnership administration offices and the relocation of the
partnership administration offices during the three months ended March 31, 1996.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of its investment property 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.
At March 31, 1996, the Partnership had unrestricted cash of $6,425,000 as
compared to $6,102,000 at March 31, 1995. Net cash provided by operating
activities decreased primarily as a result of the increase in receivables and
other assets. Receivables and other assets increased due to an increase in
tenant reimbursements, receivables and tax escrows. Net cash used in investing
activities increased due to increased property replacements and improvements.
Net cash provided by financing activities increased due to a contribution from
the minority interest in the joint venture.
The Sunnymead Towne Shopping Center ("Sunnymead") located in Moreno Valley,
California, had a significant tenant, which occupied 98,000 square feet, vacate
in 1995. During February 1996, another major tenant vacated 11,000 square feet,
leaving the property approximately 25% physically occupied. Effective March 1,
1996, the Partnership ceased making debt service payments and does not intend to
make any future payments as the value of Sunnymead is less than the debt. At
March 31, 1996, the note had a principal balance of approximately $10,100,000
with accrued interest of approximately $675,000. The lender has notified the
Partnership of its intent to foreclose on the property. The Partnership does
not plan to challenge the foreclosure proceedings, which are expected to be
concluded during the three months ended September 30, 1996. The property was
placed in receivership on May 1, 1996.
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 mortgage
indebtedness of $6,856,000, excluding the Sunnymead indebtedness, requires
interest only payments with a balloon payment due in 2001. Also, the
Partnership's Non-Recourse Promissory Notes of $72,199,000, including deferred
interest of $30,260,000, require minimum interest payments of 5% on principal
per year and mature on February 15, 1999. Future cash distributions will depend
on the levels of cash generated from operations, property sales, and the
availability of cash reserves. Cash distributions totaling approximately
$21,000, which were equal to 2 percent of interest paid to Promissory Note
holders, were paid to the general partner during the three months ended March
31, 1996 and 1995. At this time it appears that the original investment
objective of capital growth will not be attained and that investors will not
receive a return of all their invested capital.
PART II - OTHER INFORMATION
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:
A Form 8-K dated January 19, 1996, was filed reporting the change
in control of the registrant.
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 XXIII,
A California Limited Partnership
By: FOX PARTNERS V
Its General Partner
By: FOX CAPITAL MANAGEMENT CORPORATION,
A General Partner
/s/William H. Jarrard, Jr.
William H. Jarrard, Jr.
President and Director
/s/Ronald Uretta
Ronald Uretta
Principal Financial Officer
and Principal Accounting Officer
Date: May 15, 1996