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 September 30, 1994
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OR
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 0-13418
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Century Properties Growth Fund XXII
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(Exact name of Registrant as specified in its charter)
California 94-2939418
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5665 Northside Drive N.W., Ste. 370, Atlanta, Georgia 30328
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (404) 916-9090
N/A
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Former name, former address and fiscal year, if changed since last report.
Indicate by check mark whether 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
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan confirmed by a court.
Yes _____ No _____
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's classes of common stock, as of the latest practicable
date __________________.
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CENTURY PROPERTIES GROWTH FUND XXII - FORM 10-Q - SEPTEMBER 30, 1994
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets
September 30, December 31,
1994 1993
(Unaudited) (Audited)
Assets
Cash and cash equivalents $ 232,000 $ 341,000
Restricted cash 795,000 775,000
Cash investments - 1,187,000
Other assets 1,952,000 520,000
Real Estate:
Real estate 127,667,000 127,614,000
Furnishings 11,962,000 11,626,000
Accumulated depreciation (42,942,000) (39,860,000)
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Net real estate 96,687,000 99,380,000
Deferred financing costs, net 798,000 792,000
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Total assets $ 100,464,000 $102,995,000
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Liabilities and Partners' Equity
Accrued expenses and other liabilities 2,530,000 1,908,000
Notes payable 80,499,000 81,848,000
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Total liabilities 83,029,000 83,756,000
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Partners' equity (deficit):
General partner (7,027,000) (6,814,000)
Limited partners (82,848 units
outstanding at September 30, 1994 and
December 31, 1993) 24,462,000 26,053,000
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Total partners' equity 17,435,000 19,239,000
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Total liabilities and partners' equity $ 100,464,000 $102,995,000
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See notes to consolidated financial statements.
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CENTURY PROPERTIES GROWTH FUND XXII - FORM 10-Q - SEPTEMBER 30, 1994
Consolidated Statements of Operations (Unaudited)
For the Nine Months Ended
September 30 September 30,
1994 1993
Revenues:
Rental $ 14,587,000 $ 13,735,000
Interest and other income 47,000 73,000
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Total revenues 14,634,000 13,808,000
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Expenses:
Operating 7,326,000 6,915,000
Interest 5,609,000 5,777,000
Depreciation 3,082,000 3,114,000
General and administrative 421,000 545,000
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Total expenses 16,438,000 16,351,000
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Net loss $ (1,804,000) $ (2,543,000)
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Net loss per limited partnership unit $ (19) $ (27)
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See notes to consolidated financial statements.
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CENTURY PROPERTIES GROWTH FUND XXII - FORM 10-Q - SEPTEMBER 30, 1994
Consolidated Statements of Operations (Unaudited)
For the Nine Months Ended
September 30 September 30,
1994 1993
Revenues:
Rental $ 4,956,000 $ 4,646,000
Interest and other income 10,000 22,000
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Total revenues 4,966,000 4,668,000
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Expenses:
Operating 2,544,000 2,485,000
Interest 1,897,000 1,931,000
Depreciation 1,030,000 980,000
General and administrative 47,000 160,000
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Total expenses 5,518,000 5,556,000
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Net loss $ (552,000) $ (888,000)
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Net loss per limited partnership unit $ (6) $ (9)
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See notes to consolidated financial statements.
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CENTURY PROPERTIES GROWTH FUND XXII - FORM 10-Q - SEPTEMBER 30, 1994
Consolidated Statements of Cash Flows (Unaudited)
For the Nine Months Ended
September 30 September 30,
1994 1993
Operating Activities:
Net loss $(1,804,000) $(2,543,000)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 3,349,000 3,385,000
Financing costs paid (273,000) (71,000)
Changes in operating assets and liabilities:
Other assets (1,432,000) (131,000)
Accrued expenses and other liabilities 622,000 265,000
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Net cash provided by operating activities 462,000 905,000
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Investing Activities:
Additions to rental properties (389,000) (852,000)
Purchase of cash investments - (1,188,000)
Proceeds from cash investments 1,187,000 595,000
Restricted cash (increase) decrease (20,000) 8,000
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Net cash provided by (used in) investing
activities 778,000 (1,437,000)
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Financing Activities:
Repayment of note on debt modification (805,000) 33,000
Notes payable principal payments (544,000) (442,000)
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Net cash (used in) financing activities (1,349,000) (409,000)
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Decrease in Cash and Cash Equivalents (109,000) (941,000)
Cash and Cash Equivalents at Beginning of Period 341,000 2,236,000
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Cash and Cash Equivalents at End of Period $ 232,000 $ 1,295,000
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Supplemental Disclosure of Cash Flow Information:
Interest paid in cash during the period $ 5,263,000 $ 5,485,000
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See notes to consolidated financial statements.
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CENTURY PROPERTIES GROWTH FUND XXII - FORM 10-Q - SEPTEMBER 30, 1994
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. General
The accompanying consolidated financial statements, footnotes and
discussions should be read in conjunction with the consolidated financial
statements, related footnotes and discussions contained in the Partnership's
Annual Report for the year ended December 31, 1993. Certain accounts have
been reclassified in order to conform to the current period.
The financial information contained herein is unaudited. In the opinion of
management, all adjustments necessary for a fair presentation of such
financial information have been included. All adjustments are of a normal
recurring nature.
The results of operations for the nine and three months ended September 30,
1994 and 1993 are not necessarily indicative of the results to be expected
for the full year.
2. Transactions with Related Parties
(a) Affiliates of the Managing General Partner ("MGP") received
reimbursements of administrative expenses amounting to $136,000 during
the nine months ended September 30, 1994. These reimbursements are
primarily included in general and administrative expenses.
(b) On August 10, 1994, NPI Property Management Corporation ("NPI
Management") transferred its management agreement to NPI-AP Management,
L.P. ("NPI-AP Management"), an affiliate of MGP. NPI Management and
NPI-AP Management are entitled to receive a management fee equal to 5%
of annual gross receipts from certain properties it manages. For the
nine months ended September 30, 1994, NPI Management and NPI-AP
Management received $563,000. These fees are included in operating
expenses.
3. Notes Payable
(a) The Partnership finalized a debt modification agreement with the
Monterey Village Apartments mortgagee in January 1994. The terms of the
loan include a seven year extension with a reduction in the interest
rate from 10.50 percent to 8.25 percent and a 30 year amortization
period in exchange for a principal payment of $805,000. In connection
with the modification, the Partnership incurred extension fees and costs
totalling $78,000. The amount of financing costs paid during the
period ended September 30, 1994 was $53,000.
(b) On September 1, 1994, the Partnership completed a debt modification
agreement with the Cooper s Pointe Apartments mortgagee. The loan
requires monthly payments of $46,000 at 8.25% and is being amortized
over 20 years. The loan matures on August 31, 1999 with a balloon
payment of $4,746,000. As specified in the loan documents, the
Partnership is required to make monthly deposits of $7,000 to a
replacement reserve for future capital improvements. The Partnership
incurred costs and extension fees in connection with this modification
of $49,000.
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CENTURY PROPERTIES GROWTH FUND XXII - FORM 10-Q - SEPTEMBER 30, 1994
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Notes Payable (Continued)
(c) On September 1, 1994, the Partnership completed a debt modification
agreement with the Copper Mill Apartments mortgagee. The loan requires
monthly payments of $31,000 at 8.25% and is being amortized over 20
years. The loan matures on August 31, 1999 with a balloon payment of
$3,240,000. As specified in the loan documents, the Partnership is
required to make monthly deposits of $5,000 to a replacement reserve for
future capital improvements. The Partnership incurred costs and
extension fees in connection with this modification of $121,000.
The loans securing Copper Mill Apartments and Cooper Pointe Apartments
are cross collateralized.
The Partnership has balloon payments due as follows:
Property Maturity Date Payment
Hampton Greens Apartments 1/95 $5,750,000
Stoney Creek Apartments 1/95 $6,750,000
The Partnership has received a loan commitment to refinance the Hampton
Greens, Stoney Creek, Wood Creek and Promontory Point Apartment notes.
The Wood Creek and Promontory Point Apartments mortgages mature November
1995 and April 1997, respectively. In September 1994, the Partnership
paid a $50,000 application fee in connection with the proposed
refinancing of the four referenced properties. It is anticipated that
these loan refinancings will be finalized in the fourth quarter of 1994.
The ability to hold and operate these properties is dependent on the
Partnership s ability to obtain refinancing or debt modification as
required.
4. Subsequent Events
On October 12, 1994, National Property Investors, Inc. ("NPI"), sold
one-third of its stock to an affiliate of Apollo Real Estate Advisors, L.P.
("Apollo"). NPI is the parent of NPI Equity Investments, Inc., the entity
which controls the Managing General Partner of the Partnership.
On October 17, 1994, DeForest Ventures I L.P. ("DeForest I") offered to
purchase up to 40,595 outstanding units of limited partnership interest (the
"Units") of the Partnership, representing approximately 49% of the units
outstanding, at a purchase price (the "Purchase Price") of $80 per unit, net
to the seller in cash, without interest, upon the terms and conditions set
forth in the offer to purchase (the "Offer"). Because of the conflict of
interest inherent in the fact that MGP is an affiliate of the Purchaser, the
Partnership in its Schedule 14D-9, filed with the Securities and Exchange
Commission, made no recommendation and is remaining neutral as to whether
Unitholders should tender their Units pursuant to the Offer. The majority
limited partner of DeForest I is NPI-AP Management and the shareholders who
control DeForest Capital I Corporation, the sole general partner of DeForest
I, also control NPI.
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CENTURY PROPERTIES GROWTH FUND XXII - FORM 10-Q - SEPTEMBER 30, 1994
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
This item should be read in conjunction with the Consolidated Financial
Statements and other Items contained elsewhere in this Report.
Liquidity and Capital Resources
The Fund holds investments in and operates residential real estate properties.
The Fund receives rental income from its properties and is responsible for
operating expenses, administrative expenses, capital improvements and debt
service payments. As of November 1, 1994, one of the eleven properties
originally purchased by the Fund was lost through foreclosure. All of the
Fund's properties, except for its Cooper s Pointe property, generated positive
cash flow from operations during the nine months ended September 30, 1994.
The Fund uses working capital reserves from any undistributed cash flow from
operations and refinancing proceeds as its primary source of liquidity. There
have been no distributions since 1988. It is not currently anticipated that the
Fund will make any distributions from operations in the near future.
Liquidity based upon cash and cash equivalents experienced a $109,000 decrease
at September 30, 1994, as compared to December 31, 1993. The Fund's $462,000 of
cash from operating activities and $778,000 of cash from investing activities
were more than offset by $1,349,000 of cash used in financing activities. Cash
provided by operating activities included $273,000 of financing costs paid. The
decrease in receivables and other assets and the increase in accrued expenses
and other liabilities, when comparing September 30, 1994 to September 30, 1993,
is primarily due to the timing of real estate tax payments and the prepayment of
insurance premiums. The increase in cash from investing activities included
$1,187,000 of proceeds from cash investments which was partially offset by
$389,000 of additions to real estate and a $20,000 increase in restricted cash.
As described in Item 1, Note 3, cash used in financing activities consisted of
an $805,000 partial repayment of the mortgage encumbering the Fund's Monterey
Village Apartments property, as well as $544,000 of notes payable principal
payments. All other increases (decreases) in certain assets and liabilities are
the result of the timing of receipt and payment of various operating activities.
Working capital reserves are currently in a money market account or repurchase
agreements secured by United States Treasury obligations. The Managing General
Partner believes that, if market conditions remain relatively stable, cash flow
from operations, when combined with working capital reserves, will be sufficient
to fund required capital improvements and regular debt service payments in 1994
and the foreseeable future. In 1995 through 1997, the Fund will have to arrange
refinancings or debt modifications. If necessary, the Fund could dispose of the
properties with significant balloon payments, in order to reduce future cash
requirements.
If the notes with January 1995 balloon payments are not refinanced or extended,
or the properties are not sold, the properties could be lost through
foreclosure. If Hampton Greens and Stoney Creek Apartments are lost through
foreclosure, the Fund would incur a loss of approximately $2,600,000 and
$2,500,000, respectively. The Fund has received a loan commitment to refinance
the properties.
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CENTURY PROPERTIES GROWTH FUND XXII - FORM 10-Q - SEPTEMBER 30, 1994
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Liquidity and Capital Resources (Continued)
As described in Note 4 to the consolidated financial statements, on October 17,
1994, DeForest Ventures I L.P. offered to purchase up to 40,595 outstanding
units of limited partnership interests of the Partnership, representing
approximately 49% of the units outstanding, at a purchase price of $80 per unit,
net to the seller in cash, without interest, upon the terms and conditions set
forth in the offer to purchase. The Managing General Partner believes that the
tender offer will not have a significant impact on future operations or
liquidity of the Fund.
At this time, it appears that the investment objective of capital growth will
not be attained and that investors will not receive a return of all of their
invested capital. The extent to which invested capital is returned to investors
is dependent upon the performance of the Fund's properties and the markets in
which such properties are located and on the sales price of the remaining
properties. In this regard, it is anticipated at this time that the remaining
properties will be held longer than originally expected. The ability to hold
and operate these properties is dependent on the Fund's ability to obtain
refinancing or debt modification as required.
Real Estate Market
The national real estate market has suffered from the effects of the real estate
recession including, but not limited to a downward trend in market values of
existing residential properties. In addition, the bail out of the savings and
loan associations and sales of foreclosed properties by auction reduced market
values and caused a further restriction on the ability to obtain credit. As a
result, the Fund's ability to refinance or sell its existing properties may be
restricted. These factors caused a decline in market property values and serve
to reduce market rental rates and/or sales prices. Compounding these
difficulties are relatively low interest rates, which encourage existing and
potential tenants to purchase homes. In addition, there has been a significant
decline nationally in new household formation. Despite the above, the rental
market appears to be experiencing a gradual strengthening and management
anticipates that increases in revenue will generally exceed increases in
expenses during 1994 and early 1995. Furthermore, management believes that the
emergence of new institutional purchasers, including real estate investment
trusts and insurance companies, should create a more favorable market value for
the Fund's properties in the future.
Results of Operations
Nine Months Ended September 30, 1994 vs. September 30, 1993
Operating results improved by $739,000 for the nine months ended September 30,
1994, as compared to 1993, due to increases in revenues of $826,000 and in
expenses of $87,000.
Revenues increased by $826,000 for the nine months ended September 30, 1994, as
compared to 1993, due to an increase of $852,000 in rental income, which was
slightly offset by a decrease of $26,000 in interest and other income. Revenues
increased primarily due to an increase in rental rates at Plantation Creek
Apartments and improved occupancy at all the Fund's properties, except for
Monterey Village Apartments and Four Winds Apartments. Occupancy at Promontory
Pointe remained constant. Interest and other income decreased due to a decline
in average working capital reserves available for investment.
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CENTURY PROPERTIES GROWTH FUND XXII - FORM 10-Q - SEPTEMBER 30, 1994
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Nine Months Ended September 30, 1994 vs. September 30, 1993 (Continued)
Expenses increased by $87,000 for the nine months ended September 30, 1994, as
compared to 1993, due to an increase of $411,000 in operating expenses, which
was only partially offset by decreases of $168,000 in interest expense, $32,000
in depreciation expense and $124,000 in general and administrative expenses.
Operating expenses increased due to maintenance and rent-up expenses at the
Fund's Autumn Run, Monterey Village, Plantation Creek, Promontory Point, Wood
Creek and Stony Creek Apartments, which were slightly offset by a decrease in
maintenance and rent-up expenses at the Fund's Cooper's Pointe Apartments.
Interest expense decreased primarily due to the partial repayment and lower
interest rate resulting from the January 1994 debt modification on the mortgage
encumbering the Fund's Monterey Village Apartments and the May 1993 reduction in
the interest rate on the Cooper's Pointe Apartments mortgage from 9 percent to
8 1/4 percent. Depreciation expense decreased due to the effect of assets
becoming fully depreciated which was only slightly offset by the under accrual
during the three months ended September 30, 1993. General and administrative
expenses declined due to the reduction in asset management costs effective July
1, 1994, which was partially offset by the increased costs associated with the
management transition.
Three Months Ended September 30, 1994 vs. September 30, 1993
Operating results improved by $336,000 for the three months ended September 30,
1994, as compared to 1993, due to increases in revenues of $298,000 along with a
decrease in expenses of $38,000.
Revenues increased by $298,000 for the three months ended September 30, 1994, as
compared to 1993, due to an increase of $310,000 in rental income, which was
slightly offset by a decrease of $12,000 in interest and other income. Revenues
increased primarily due to an increase in rental rates at Plantation Creek
Apartments and improved occupancy at all the Fund's properties, except for Four
Winds Apartments, Promontory Point Apartments and Hampton Greens Apartments.
Occupancy at Cooper s Pointe Apartments remained constant. Interest and other
income decreased due to a decline in average working capital reserves available
for investment.
Expenses decreased by $38,000 for the three months ended September 30, 1994, as
compared to 1993, due to an increase of $59,000 in operating expenses and
$50,000 in depreciation expense, which was more than offset by decreases of
$34,000 in interest expense and $113,000 in general and administrative expenses.
Operating expenses increased due to maintenance and rent-up expenses at the
Fund's Autumn Run, Monterey Village, Plantation Creek, Promontory Point, Wood
Creek and Stoney Creek Apartments, which were slightly offset by decreases in
maintenance and rent-up expenses at the Fund's Cooper's Pointe Apartments.
Depreciation expense increased due to an under accrual during the three months
ended September 30, 1993, which was partially offset by the effect of assets
becoming fully depreciated. Interest expense decreased primarily due to a
repayment and lower interest rate resulting from the January 1994 debt
modification on the mortgage encumbering the Fund's Monterey Village Apartments
property. General and administrative expenses declined due to the reduction in
asset management costs effective July 1, 1994.
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CENTURY PROPERTIES GROWTH FUND XXII - FORM 10-Q - SEPTEMBER 30, 1994
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Properties
A description of the properties in which the Fund has an ownership interest
during the period covered by this Report, along with occupancy data, follows:
CENTURY PROPERTIES GROWTH FUND XXII
OCCUPANCY SUMMARY
Average
Occupancy
Rate (%)
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Nine Months Three Months
Ended Ended
Number of Date of September 30, September 30,
Name and Location Units Purchase 1994 1993 1994 1993
- - ----------------- ----- -------- ---- ---- ---- ----
Wood Creek Apartments 432 05/84 97 91 97 90
Mesa, Arizona
Plantation Creek Apartments 484 06/84 97 90 97 93
Atlanta, Georgia
Stoney Creek Apartments 364 06/85 93 91 95 92
Dallas, Texas
Four Winds Apartments 350 09/85 94 96 94 96
Overland Park, Kansas
Promontory Point Apartments 252 10/85 96 96 96 97
Austin, Texas
Cooper's Pointe Apartments 192 11/85 94 92 94 94
Charleston, South Carolina
Hampton Greens Apartments 309 12/85 95 94 95 96
Dallas, Texas
Monterey Village Apartments 224 04/86 92 94 96 91
Rancho Cucamonga, California
Autumn Run Apartments 320 06/86 97 89 98 96
Naperville, Illinois
Copper Mill Apartments 192 09/86 97 95 99 97
Richmond, Virginia
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CENTURY PROPERTIES GROWTH FUND XXII - FORM 10-Q - SEPTEMBER 30, 1994
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Lawrence M. Whiteside, on behalf of himself and all others similarly
situated, v. Fox Capital Management Corporation et. al., Superior Court
of the State of California, San Mateo County, Case No. 390018.
In November, 1994, Lawrence Whiteside, a limited partner of Century
Properties Fund XIX, a limited partnership affiliated with the
Partnership, commenced an action in the Superior Court of California,
County of San Mateo, against, among others, the Managing General
Partner and certain of its affiliates. The action alleges, among other
things, that the tender offer constitutes (a) a breach of the fiduciary
duty owed to the limited partners of the Partnership, and (b) a breach
of, or on inducement to breach, the provisions of the Partnership
Agreement of the Partnership. The action, which has been brought as a
class action on behalf of limited partners, seeks to the enjoin the
tender offer as well as monetary damages in an unspecified amount. The
Managing General Partner believes that the action is without merit.
On November 3rd the Superior Court denied plaintiff's motion for a
temporary restraining order with respect to the tender offer. A
hearing on a motion for a preliminary injunction is scheduled to be
heard on November 18th.
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits
1. Amended and Restated Note, made as of September 1, 1994, by
Century Properties Growth Fund XXIII (the "Partnership") in
favor of The Travelers Insurance Company ("Travelers") in the
principal amount of $3,679,026.14.
2. Amended and Restated Deed of Trust, dated as of September 1,
1994, between the Partnership and Travelers with respect to
Copper Mill Apartments.
3. Amended and Restated Note, made as of September 1, 1994,
by the Partnership in favor of Travelers in the principal
amount of $5,388,360.35.
4. Amended and Restated Mortgage, dated as of September 1, 1994
between the Partnership and Travelers with respect to Cooper's
Pointe.
b) On August 10, 1994, a Current Report on Form 8-K was filed with the
Securities and Exchange Commission to provide the following
disclosure:
On August 10, 1994, National Property Investors, Inc. ("NPI"), the
parent of NPI Equity Investments II, Inc. ("NPI Equity"), entered into
an agreement with an affiliate of Apollo Real Estate Advisors, L.P.
("Apollo") to sell to Apollo up to one-third of the stock of NPI.
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CENTURY PROPERTIES GROWTH FUND XXII - FORM 10-Q - SEPTEMBER 30, 1994
SIGNATURE
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 PROPERTIES GROWTH FUND XXII
By: FOX PARTNERS IV,
A California General Partnership,
its general partner
By: FOX CAPITAL MANAGEMENT CORPORATION,
A California Corporation,
its general partner
/S/ARTHUR N. QUELER
-------------------------------------------------
ARTHUR N. QUELER
Executive Vice President, Treasurer, Secretary and
Director (Principal Financial and Accounting
Officer)
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