ITEM 1. BUSINESS. - --------------------------------------------------------------------------------
GENERAL
First Merchants Corporation (the "Corporation") was incorporated under Indiana law on September 20, 1982, as the bank holding company for First Merchants Bank, National Association ("First Merchants"), a national banking association incorporated on February 6, 1893. Prior to December 16, 1991, First Merchants' name was The Merchants National Bank of Muncie. On November 30, 1988, the Corporation acquired Pendleton Banking Company ("Pendleton"), a state chartered commercial bank organized in 1872. On July 31, 1991, the Corporation acquired First United Bank ("First United"), a state chartered commercial bank organized in 1882.
As of December 31, 1995, the Corporation had consolidated assets of $707.9 million, consolidated deposits of $588.2 million and stockholders' equity of $80.5 million.
The Corporation is headquartered in Muncie, Indiana, and is presently engaged in conducting commercial banking business through the 21 offices of its three banking subsidiaries. As of December 31, 1995, the Corporation and its subsidiaries had 379 full-time equivalent employees.
Through its subsidiaries, the Corporation offers a broad range of financial services, including: accepting time and transaction deposits; making consumer, commercial, agri-business and real estate mortgage loans; issuing credit cards; renting safe deposit facilities; providing personal and corporate trust services; and providing other corporate services, letters of credit and repurchase agreements.
ACQUISITION POLICY AND PENDING TRANSACTIONS
The Corporation anticipates that it will continue its policy of geographic expansion through consideration of acquisitions of additional financial institutions. Management of the Corporation periodically engages in reviewing and analyzing potential acquisitions. The Corporation is a party to a definitive agreement to merge with Union National Bancorp and thereby acquire its wholly-owned subsidiary, The Union County National Bank of Liberty. Union National Bancorp's principal executive offices are located in Liberty, Indiana. The Corporation is also a party to a definitive agreement to merge with Randolph County Bancorp and thereby acquire its wholly-owned subsidiary, The Randolph County Bank. Randolph County Bancorp's principal executive offices are located in Winchester, Indiana.
COMPETITION
The Corporation's banking subsidiaries are located in Delaware, Madison, and Henry counties, Indiana. In addition to the competition provided by the lending and deposit gathering subsidiaries of national manufacturers, retailers, insurance companies and investment brokers, the banking subsidiaries compete vigorously with other banks, thrift institutions, credit unions and finance companies located within their service areas.
SUPERVISION AND REGULATION
The Corporation is a bank holding company ("BHC") subject to regulation under the Bank Holding Company Act of 1956, as amended (the "Act"). The Act generally requires a BHC to obtain prior approval of the Federal Reserve Board (the "FRB") to acquire or hold more than a 5% voting interest in any bank. The Act restricts the non-banking activities of BHCs to those which are closely related to banking activities. As a result of the provisions in the Financial Institutional Reform, Recovery and Enforcement Act of 1989, BHCs may now own and operate savings and loan
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SUPERVISION AND REGULATION (CONTINUED)
associations or savings banks which, in the past, was prohibited. First Merchants is a national bank and is supervised, regulated and examined by the Comptroller of the Currency. Pendleton and First United are state banks and are supervised, regulated and examined by the Indiana Department of Financial Institutions (the "DFI"). In addition, First Merchants, as a member of the Federal Reserve System, is supervised and regulated by the Federal Reserve. In addition, Pendleton and First United, which are not members of the Federal Reserve System, are supervised and regulated by the Federal Deposit Insurance Corporation ("FDIC"). The deposits of First Merchants, Pendleton, and First United (the "Banks") are insured by the FDIC. Each regulator has the authority to issue cease-and-desist orders if it determines their activities represent an unsafe and unsound practice or violation of law.
Under the Act and under regulations of the FRB, the Corporation and its subsidiaries are prohibited from engaging in certain tie-in arrangements in connection with the extension of credit and are subject to limitations as to certain intercompany transactions.
Subject to certain limitations, an Indiana bank may establish branches de novo and may establish branches by acquisition in any location or locations within Indiana. Indiana law permits intrastate bank holding company acquisitions, subject to certain limitations. Effective July 1, 1992, Indiana bank holding companies were permitted to acquire banks, and banks and bank holding companies in Indiana were permitted to be acquired by bank holding companies, located in any state in the United States which permits reciprocal entry by Indiana bank holding companies. Prior to July 1, 1992, such interestate bank holding company acquisitions were permitted only on a regional, as opposed to national, basis. Neither the Corporation nor its subsidiaries presently contemplate engaging in any non-banking related business activities.
During 1991, Congress passed the Federal Deposit Insurance Corporation Improvement Act ("FDICIA"). In addition to addressing the insurance fund's financial needs, FDICIA expanded the power of the federal banking regulators. FDICIA introduced a new system of classifying financial institutions with respect to their capitalization. Effective in 1993, FDICIA also requires certain financial institutions, such as First Merchants, to have annual audits and requires management to issue supplemental reports attesting to an institution's compliance with laws and regulations and to the adequacy of its internal controls and procedures.
The Riegle Community Development and Regulatory Improvement Act of 1994 (Act) was signed into law in 1994. The Act contains seven titles pertaining to community development and home ownership protection, small business capital formation, paperwork reduction and regulatory improvement, money laundering and flood insurance. The Act grants the authority to several agencies to promulgate regulations under the Act. No regulations have yet been promulgated. The Corporation cannot predict with certainty the impact of the Act on the banking industry.
In September, 1994, the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (Interstate Act) was enacted into law. The Interstate Act authorized interstate acquisitions, mergers and bank branching and agency banking with affiliates in different states. The Interstate Act amends the Bank Holding Company Act to allow adequately capitalized and managed bank holding companies to acquire a bank located in another state beginning in September, 1995. The new act permits full interstate branching after June 1, 1997. After that date, BHCs may merge
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SUPERVISION AND REGULATION (CONTINUED)
existing bank subsidiaries into one bank, with banks also permitted to merge unaffiliated banks across state lines. States may permit interstate branching earlier than June 1, 1997, where both states involved with a bank merger expressly permit it by statute. The Interstate Act permits states to enact a law expressly prohibiting interstate mergers. Such laws must apply equally to all out-of-state banks and be passed before June 1, 1997.
The monetary policies of regulatory authorities, including the Federal Reserve Board, have a significant effect on the operating results of banks and bank holding companies. The nature of future monetary policies and the effect of such policies on the future business and earnings of the Corporation and its subsidiary banks cannot be predicted.
The Corporation is under the jurisdiction of the Securities and Exchange Commission and state securities commission for matters relating to the offering and sale of its securities and is subject to the Securities and Exchange Commission's rules and regulations relating to periodic reporting, reporting to stockholders, proxy solicitation, and insider trading.
The Corporation's income is principally derived from dividends paid on the common stock of its subsidiaries. The payment of these dividends are subject to certain regulatory restrictions.
CAPITAL REQUIREMENTS
The Corporation and its subsidiary banks must meet certain minimum capital requirements mandated by the FRB, the FDIC and DFI. These regulatory agencies require BHCs and banks to maintain certain minimum ratios of primary capital to total assets and total capital to total assets. As of January 1, 1991, the FRB required bank holding companies to maintain a minimum Tier 1 leverage ratio to 3 per cent capital to total assets; however, for all but the most highly rated institutions which do not anticipate significant growth, the minimum Tier 1 ratio is 3 per cent plus an additional cushion of 100 to 200 basis points. As of December 31, 1995, the Corporation's leverage ratio of capital to total assets was 11.13 per cent.
The FRB and FDIC each have approved the imposition of "risk-adjusted" capital ratios on BHCs and financial institutions. The Corporation and its subsidiaries had capital to assets ratios and risk-adjusted capital ratios at December 31, 1995, in excess of the applicable regulatory minimum requirements.
The following table summarizes the Corporation's risk-adjusted capital ratios under FRB guidelines at December 31, 1995:
- -------------------------------------------------------------------------------- STATISTICAL DATA The following tables set forth statistical data relating the Corporation and its subsidiaries.
DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY; INTEREST RATES AND INTEREST DIFFERENTIAL
The daily average balance sheet amounts, the related interest income or expense, and average rates earned or paid are presented in the following table.
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STATISTICAL DATA (Continued)
ANALYSIS OF CHANGES IN NET INTEREST INCOME
The following table presents net interest income components on a tax-equivalent basis and reflects changes between periods attributable to movement in either the average balance or average interest rate for both earning assets and interest-bearing liabilities. The volume differences were computed as the difference in volume between the current and prior year times the interest rate of the prior year, while the interest rate changes were computed as the difference in rate between the current and prior year times the volume of the prior year. Volume/rate variances have been allocated on the basis of the absolute relationship between volume variances and rate variances.
STATISTICAL DATA (Continued)
INVESTMENT SECURITIES
The amortized cost, gross unrealized gains, gross unrealized losses and approximate market value of the investment securities at the dates indicated were:
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STATISTICAL DATA (Continued)
The Fair Value of Federal Reserve and Federal Home Loan Bank stock approximates cost.
The maturity distribution (dollars in thousands) and average yields for the securities portfolio at December 31, 1995 were:
Securities available for sale December 31, 1995:
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STATISTICAL DATA (Continued)
Securities held to maturity at December 31, 1995:
*Interest yields on state and municipal securities are presented on a fully taxable equivalent basis using a 35% rate.
Federal Reserve and Federal Home Loan Bank stock at December 31, 1995:
STATISTICAL DATA (Continued)
LOAN PORTFOLIO
Types of Loans - --------------
The loan portfolio at the dates indicated is presented below:
At December 31, 1995, the Corporation had Residential Real Estate Loans Held for Sale of $735,522.
MATURITIES AND SENSITIVITIES OF LOANS TO CHANGES IN INTEREST RATES
Presented in the table below are the maturities of loans (excluding commercial real estate, farmland, residential real estate and individuals' loans) outstanding as of December 31, 1995. Also presented are the amounts due after one year classified according to the sensitivity to changes in interest rates.
STATISTICAL DATA (Continued)
Nonaccruing loans are loans which are reclassified to a nonaccruing status when in management's judgment the collateral value and financial condition of the borrower do not justify accruing interest. Interest previously recorded but not deemed collectible is reversed and charged against current income. Interest income on these loans is then recognized when collected.
Restructured loans are loans for which the contractual interest rate has been reduced or other concessions are granted to the borrower because of a deterioration in the financial condition of the borrower resulting in the inability of the borrower to meet the original contractual terms of the loans.
Interest income of $55,601 for the year ended December 31, 1995, was recognized on the nonaccruing and restructured loans listed in the table above, whereas interest income of $59,168 would have been recognized under their original loan terms.
Potential problem loans:
Management has identified certain other loans totaling $3,122,000 as of December 31, 1995, not included in the risk elements table, which are current as to principal and interest, about which there are doubts as to the to the borrowers' ability to comply with present repayment terms.
STATISTICAL DATA (Continued)
SUMMARY OF LOAN LOSS EXPERIENCE
The following table summarizes the loan loss experience for the years indicated.
STATISTICAL DATA (Continued)
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES AT DECEMBER 31:
Presented below is an analysis of the composition of the allowance for loan losses and per cent of loans in each category to total loans:
STATISTICAL DATA (Continued)
LOAN LOSS CHARGEOFF PROCEDURES
The Banks have weekly meetings at which loan delinquencies, maturities and problems are reviewed. The Board of Directors receive and review reports on loans monthly.
The Executive Committee of First Merchants' Board meets bimonthly to approve or disapprove all new loans in excess of $1,000,000 and the Board reviews all commercial loans in excess of $50,000 which were made or renewed during the preceding month. Pendleton's and First United's loan committees, consisting of all loan officers and the president, meet as required to approve or disapprove any loan which is in excess of an individual loan officer's lending limit.
All chargeoffs are approved by the senior loan officer and are reported to the Banks' Boards. The Banks charge off loans when a determination is made that all or a portion of a loan is uncollectible or as a result of examinations by regulators and the independent auditors.
PROVISION FOR LOAN LOSSES
In banking, loan losses are one of the costs of doing business. Although the Banks' management emphasize the early detection and chargeoff of loan losses, it is inevitable that at any time certain losses exist in the portfolio which have not been specifically identified. Accordingly, the provision for loan losses is charged to earnings on an anticipatory basis, and recognized loan losses are deducted from the allowance so established. Over time, all net loan losses must be charged to earnings. During the year, an estimate of the loss experience for the year serves as a starting point in determining the appropriate level for the provision. However, the amount actually provided in any period may be greater or less than net loan losses, based on management's judgment as to the appropriate level of the allowance for loan losses. The determination of the provision in any period is based on management's continuing review and evaluation of the loan portfolio, and its judgment as to the impact of current economic conditions on the portfolio. The evaluation by management includes consideration of past loan loss experience, changes in the composition of the loan portfolio, and the current condition and amount of loans outstanding.
Impaired loans are measured by the present value of expected future cash flows, or the fair value of the collateral of the loans, if collateral dependent. Impaired loans totaled $3,122,000 at December 31, 1995. An allowance for losses at December 31, 1995, was not deemed necessary for impaired loans totaling $1,900,000, but an allowance of $559,000 was recorded for the remaining balance of impaired loans of $1,222,000. The average balance of impaired loans for 1995 was $1,682,000.
STATISTICAL DATA (Continued)
DEPOSITS
The following table shows the average amount of deposits and average rate of interest paid thereon for the years indicated.
As of December 31, 1995, certificates of deposit and other time deposits of $100,000 or more mature as follows:
STATISTICAL DATA (Continued)
SHORT-TERM BORROWINGS
Securities sold under repurchase agreements are borrowings maturing within one year and are secured by U. S. Treasury and Federal agency obligations.
Pertinent information with respect to short-term borrowings is summarized below:
ITEM 2.

ITEM 2. PROPERTIES.
The headquarters of the Corporation and First Merchants are located in a five- story building at 200 East Jackson Street, Muncie, Indiana. This building and eight branch buildings are owned by First Merchants; five remaining branches of First Merchants are located in leased premises. Ten automated cash dispensers are located in leased premises; one cash dispenser is located in premises that are provided free of charge. All of the Corporation's and First Merchants' facilities are located in Delaware and Madison Counties of Indiana.
The principal offices of Pendleton are located at 100 West State Street, Pendleton, Indiana. Pendleton also operates three branches. All of Pendleton's properties are owned by Pendleton and are located in Madison County, Indiana. One automated dispenser is located in leased premises.
The principal offices of First United are located at 790 West Mill Street, Middletown, Indiana. First United also operates two branches. All of First United's properties are owned by First United and are located in Henry County, Indiana.
None of the properties owned by the banks are subject to any major encumbrances. The net investment of the Corporation and subsidiaries in real estate and equipment at December 31, 1995 was $10,475,935.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS.
There is no pending legal proceeding, other than ordinary routine litigation incidental to the business of the Corporation or its subsidiaries, of a material nature to which the Corporation or its subsidiaries is a party or of which any of their properties are subject. Further, there is no material legal proceeding in which any director, officer, principal shareholder, or affiliate of the Corporation, or any associate of any such director, officer or principal shareholder, is a party, or has a material interest, adverse to the Corporation.
None of the routine legal proceedings, individually or in the aggregate, in which the Corporation or its affiliates are involved are expected to have a material adverse impact on the financial position or the results of operations of the Corporation.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted during the fourth quarter of 1995 to a vote of security holders, through the solicitation of proxies or otherwise.
SUPPLEMENTAL INFORMATION - EXECUTIVE OFFICERS OF THE REGISTRANT.
The names, ages, and positions with the Corporation and subsidiary banks of all executive officers of the Corporation are listed below.
SUPPLEMENTAL INFORMATION - EXECUTIVE OFFICERS OF THE REGISTRANT.
PART II
ITEM 5.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information required under this item is incorporated by reference to page 2 of the Corporation's 1995 Annual Report to Stockholders under the caption "Stockholder Information," Exhibit 13.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA.
The information required under this item is incorporated by reference to page 1 of the Corporation's 1995 Annual Report to Stockholders under the caption "Five- Year Summary of Selected Financial Data," Exhibit 13.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The information required under this item is incorporated by reference to page 2 through 7 of the Corporation's 1995 Annual Report to Stockholders under the caption "Management's Discussion and Analysis," Exhibit 13.
ITEM 8.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements and supplementary data required under this item are incorporated herein by reference to inside cover and pages 8 through 24 of the Corporation's 1995 Annual Report to Stockholders, Exhibit 13.
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
In connection with its audits for the two most recent fiscal years ended December 31, 1995, there have been no disagreements with the Corporation's independent certified public accountants on any matter of accounting principles or practices, financial statement disclosure or audit scope or procedure, nor have there been any changes in accountants.
PART III
ITEM 10.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required under this item relating to directors is incorporated by reference to the Corporation's 1996 Proxy Statement furnished to its stockholders in connection with an annual meeting to be held April 4, 1996 (the "1996 Proxy Statement"), under the caption "Election of Directors," which Proxy Statement has been filed with the Commission. The information required under this item relating to executive officers is set forth in Part I, "Supplemental Information - Executive Officers of the Registrant" of this annual report on Form 10-K.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION.
The information required under this item is incorporated by reference to the Corporation's 1996 Proxy Statement, under the captions, "Compensation of Directors" and "Compensation of Executive Officers," which Proxy Statement has been filed with the Commission.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required under this item is incorporated by reference to the Corporation's 1996 Proxy Statement, under the caption, "Security Ownership of Certain Beneficial Owners and Management," which Proxy Statement has been filed with the Commission.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required under this item is incorporated by reference to the Corporation's 1996 Proxy Statement, under the caption "Interest of Management in Certain Transactions," which Proxy Statement has been filed with the Commission.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)3. Exhibits:
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (Continued)
(A) Incorporated by reference to Registrant's Registration Statement on Form S-4 (SEC File No. 33-110) ordered effective on September 30, 1988. (B) Incorporated by reference to Registrant's Registration Statement on Form S-8 (SEC File No. 33-28900) effective on May 24, 1989. (C) Incorporated by reference to Registrant's Registration Statement on Form S-8 (SEC File No. 33-28901) effective on May 24, 1989. (D) Incorporated by reference to Registrant's Form 10-K for year ended December 31, 1990. (E) Incorporated by reference to Registrant's Form 10-K for year ended December 31, 1993. (F) Incorporated by reference to Registrant's Form 10-K for year ended December 31, 1994.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed for the three months ended December 31, 1995.
Pursuant to the requirements of Section 13 or 15(d) 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, on this 12th day of March, 1996.
FIRST MERCHANTS CORPORATION
By /s/ Stefan S. Anderson ---------------------------------------- Stefan S. Anderson, Chairman
Pursuant to the requirements of the Securities Exchange Act of 1934, this report on Form 10-K has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
INDEX TO EXHIBITS
(A) Incorporated by reference to Registrant's Registration Statement on Form S-4 (SEC File No. 33-110) ordered effective on September 30, 1988. (B) Incorporated by reference to Registrant's Registration Statement on Form S-8 (SEC File No. 33-28900) effective on May 24, 1989. (C) Incorporated by reference to Registrant's Registration Statement on Form S-8 (SEC File No. 33-28901) effective on May 24, 1989. (D) Incorporated by reference to Registrant's Form 10-K for year ended December 31, 1990. (E) Incorporated by reference to Registrant's Form 10-K for year ended December 31, 1993. (F) Incorporated by reference to Registrant's Form 10-K for year ended December 31, 1994.
EXHIBIT 21--SUBSIDIARIES OF THE REGISTRANT
State of Name Incorporation ---- -------------
First Merchants Bank, National Association. . . . . . . . . U.S.
Pendleton Banking Company . . . . . . . . . . . . . . . . . Indiana
First United Bank . . . . . . . . . . . . . . . . . . . . . Indiana
EXHIBIT 23--CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference to Registration Statements on Form S-8, File Numbers 33-28900 and 33-28901, of our report dated January 19, 1996, except for Note 2 as to which the date is January 24, 1996 on the consolidated financial statements of First Merchants Corporation, which report is incorporated by reference in the Annual Report on Form 10-K of First Merchants Corporation.
/s/ Geo. S. Olive & Co. LLC
Indianapolis, Indiana March 18, 1996
EXHIBIT 99.1--FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR'S REPORT FOR FIRST MERCHANTS CORPORATION EMPLOYEE STOCK PURCHASE PLAN
The annual financial statements and independent auditor's report thereon for First Merchants Corporation Employee Stock Purchase Plan for the year ending June 30, 1996, will be filed as an amendment to the 1995 Annual Report on Form 10-K no later than October 28, 1996.


Item 1. Business.
Century Properties Fund XVIII (the "Registrant") was organized in July 1982 as a California limited partnership under the Uniform Limited Partnership Act of the California Corporations Code. Fox Partners, a California general partnership, is the general partner of the Registrant. The general partners of Fox Partners are Fox Capital Management Corporation (the "Managing General Partner"), a California corporation, Fox Realty Investors ("FRI"), a California general partnership, and Fox Partners 82, a California general partnership.
The Registrant's Registration Statement, filed pursuant to the Securities Act of 1933 (No. 2-78495), was declared effective by the Securities and Exchange Commission on November 5, 1982. The Registrant marketed its securities pursuant to its Prospectus dated November 5, 1982, as revised December 30, 1982, which was thereafter supplemented (hereinafter the "Prospectus"). The Prospectus was filed with the Securities and Exchange Commission pursuant to Rule 424(b) of the Securities Act of 1933.
The principal business of the Registrant is and has been to acquire, hold for investment and ultimately sell income-producing real property. The Registrant is a "closed" limited partnership real estate syndicate formed to acquire multi-family residential properties. For a further description of the business of the Registrant, see the sections entitled "Risk Factors" and "Investment Objectives and Policies" of the Prospectus.
From February 1983 through September 1983, the Registrant offered and sold $75,000,000 in Limited Partnership Units. The net proceeds of this offering were used to purchase twelve income-producing real properties. The Registrant's original property portfolio was geographically diversified with acquired properties located in seven states. The Registrant's acquisition activities were completed in June 1984, and since then the principal activity of the Registrant has been managing its portfolio. In the period from 1987 through February 1994 ten properties were sold or otherwise disposed of. See "Item 2, Properties" for a description of the Registrant's properties.
The Registrant is involved in only one industry segment, as described above. The business of the Registrant is not seasonal. The Registrant does not engage in any foreign operations or derive revenues from foreign sources.
Both the income and the expenses of operating the properties owned by the Registrant are subject to factors outside the Registrant's control, such as oversupply of similar rental facilities resulting from overbuilding, increases in unemployment or population shifts, changes in zoning laws or changes in patterns of needs of the users. Expenses, such as local real estate taxes and management expenses, are subject to change and cannot always be reflected in
rental increases due to market conditions or existing leases. The profitability and marketability of developed real property may be adversely affected by changes in general and local economic conditions and in prevailing interest rates, and favorable changes in such factors will not necessarily enhance the profitability or marketability of such property. Even under the most favorable market conditions, there is no guarantee that any property owned by the Registrant can be sold by it or, if sold, that such sale can be made upon favorable terms.
It is possible that legislation on the state or local level may be enacted in the states where the Registrant's properties are located which may include some form of rent control. There have been, and it is possible there may be other, Federal, state and local regulations enacted relating to the protection of the environment. The Managing General Partner is unable to predict the extent, if any, to which such new legislation or regulations might occur and the degree to which such existing or new legislation or regulations might adversely affect the properties still owned by the Registrant.
The Registrant monitors its properties for evidence of pollutants, toxins and other dangerous substances, including the presence of asbestos. In certain cases environmental testing has been performed, which resulted in no material adverse conditions or liabilities. In no case has the Registrant received notice that it is a potentially responsible party with respect to an environmental clean up site.
The Registrant maintains property and liability insurance on the properties and believes such coverage to be adequate.
At this time, it appears that the original investment objective of capital growth from the inception of the Registrant will not be attained and that investors will not receive a return of all their invested capital. The extent to which invested capital is returned to investors is dependent upon the success of the Registrant's strategy as set forth in "Item 7" as well as upon significant improvement in the performance of the Registrant's remaining properties and the markets in which such properties are located and on the sales price of the remaining properties. In this regard, the remaining properties have been held longer than originally expected.
Property Matters
Overlook Point Apartments - The Registrant modified its existing first mortgage on Overlook Point Apartments in February 1994. Principal of $7,166,000 and contingent interest of $1,213,000 were outstanding on the original loan which was due August 1995. The Registrant paid down $129,000 of accrued interest from its escrow accounts with the lender and secured a new loan for the balance of $8,250,000. The new loan requires monthly debt service payments of approximately $62,000, bears interest at 8.25% per annum and is being amortized over 30 years. The loan matures in 1999 with a balloon payment due of approximately $7,869,000. See "Item 8, Financial Statements and Supplementary Data - Note 5."
Plantation Ridge Apartments - Plantation Ridge Apartments was sold on February 15, 1994 for $15,353,000. After the buyer's assumption of the existing loan of $13,653,000 and expenses of sale of $210,000 (including sales
commissions of $154,000 paid to an outside broker), the proceeds to the Registrant were approximately $1,490,000. Net proceeds realized from the sale were used to fully repay $608,000 of demand notes, plus accrued interest of $230,000, due to NPI Realty and to further replenish working capital. See, "Item 8, Financial Statements and Supplementary Data - Note 7."
Employees
Services are performed for the Registrant at its remaining properties by on-site personnel all of whom are employees of NPI-AP Management, L.P., ("NPI-AP") an affiliate of the Managing General Partner, which directly manages the Registrant's remaining properties. All payroll and associated expenses of such on-site personnel are fully reimbursed by the Registrant to NPI-AP. Pursuant to a management agreement, NPI-AP provides certain property management services to the Registrant in addition to providing on-site management.
Change in Control
From March 1988 through December 1993, the Registrant's affairs were managed by Metric Management, Inc. ("MMI") or a predecessor. On December 16, 1993, the services agreement with MMI was modified and, as a result thereof, the Managing General Partner began directly providing real estate advisory and asset management services to the Registrant. As advisor, such affiliate provides all partnership accounting and administrative services, investment management, and supervisory services over property management and leasing.
On December 6, 1993, the shareholders of the Managing General Partner entered into a Voting Trust Agreement with NPI Equity Investments II, Inc. ("NPI Equity II") pursuant to which NPI Equity II was granted the right to vote 100% of the outstanding stock of the Managing General Partner. In addition, NPI Equity II became the managing partner of FRI. As a result, NPI Equity II indirectly became responsible for the operation and management of the business and affairs of the Registrant and the other investment partnerships originally sponsored by the Managing General Partner and/or FRI. The individuals who had served previously as partners of FRI and as officers and directors of the Managing General Partner contributed their general partnership interests in FRI to a newly formed limited partnership, Portfolio Realty Associates, L.P. ("PRA"), in exchange for limited partnership interests in PRA. The shareholders of the Managing General Partner and the prior partners of FRI, in their capacity as limited partners of PRA, continue to hold indirectly certain economic interests in the Registrant and such other investment limited partnerships, but have ceased to be responsible for the operation and management of the Registrant and such other partnerships.
On August 10, 1994, an affiliate of Apollo Real Estate Advisors, L.P. ("Apollo") obtained general and limited partnership interests in NPI-AP.
On October 12, 1994, Apollo acquired one-third of the stock of National Property Investors, Inc. ("NPI"), the parent corporation of NPI Equity II. Pursuant to the terms of the stock acquisition, Apollo was entitled to designate three of the seven directors of the Managing General Partner and NPI Equity II. In addition, the approval of certain major actions on behalf of the Registrant required the affirmative vote of at least five directors of the Managing General Partner.
On August 17, 1995, the stockholders of NPI entered into an agreement to sell to IFGP Corporation, a Delaware corporation, an affiliate of Insignia Financial Group, Inc., a Delaware corporation ("Insignia"), all of the issued and outstanding common stock of NPI, for an aggregate purchase price of $1,000,000. NPI is the sole shareholder of NPI Equity II, the general partner of FRI, and the entity which controls the Managing General Partner. 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, NPI Equity II and the Managing General Partner resigned and IFGP Corporation caused new officers and directors of each of those entities to be elected. See "Item 10, Directors and Executive Officers of the Registrant."
The Tender Offer
On October 12, 1994, affiliates of Apollo acquired (i) one-third of the stock of the respective general partners of DeForest Ventures I L.P. ("DeForest I") and DeForest Ventures II L.P. and (ii) an additional equity interest in NPI-AP (bringing its total equity interest in such entity to one-third). NPI-AP is a limited partner of DeForest I which was formed for the purpose of making tender offers for limited partnership units in the Registrant as well as 11 affiliated limited partnerships.
On January 19, 1996, DeForest I and certain of its affiliates sold all of its interest in the Registrant to Insignia NPI L.L.C. ("Insignia LLC"), an affiliate of Insignia. Pursuant to a Schedule 13-D filed by Insignia LLC with the Securities and Exchange Commission, Insignia LLC acquired 21,513 limited partnership units or approximately 28.7% of the total limited partnership units of the Registrant. (See "Item 12, Security Ownership of Certain Beneficial Owners and Management.")
Competition
The Registrant is affected by and subject to the general competitive conditions of the residential real estate industry. Many of the Registrant's properties which are or were located in oil industry related and other weakened markets have been adversely affected by economic conditions in these markets. In addition, each of the Registrant's properties competes in an area which normally contains numerous other multi-family residential properties which may be considered competitive.
Item 2.

Item 2. Properties.
A description of the multi-family residential properties in which the Registrant has an ownership interest is as follows. All of the Registrant's properties are owned in fee.
Date of Name and Location Purchase Size - ----------------- --------- --------- Overlook Point Apartments 07/83 304 units 4700 South Street
Salt Lake City, Utah
Oak Run Apartments 11/83 420 units 5801 Preston Oaks Road Dallas, Texas
See "Item 8, Financial Statements and Supplementary Data" for information regarding any encumbrances to which the properties of the Registrant are subject.
The following chart sets forth the occupancy rates at December 31, 1995, 1994, 1993, 1992 and 1991 for the Registrant's remaining properties:
OCCUPANCY SUMMARY
Average Occupancy Rate(%) for the Year Ended December 31, -------------------------------- 1995 1994 1993 1992 1991 ---- ---- ---- ---- ----
Overlook Point Apartments 96 95 95 95 94 Oak Run Apartments 98 97 94 93 91
Item 3.

Item 3. 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. ("Whiteside")
Bonnie L. Ruben and Sidney Finkel, on behalf of themselves and all others similarly situated, v. DeForest Ventures I L.P., DeForest Capital I Corporation, MRI Business Properties Fund, Ltd. II, MRI Business Properties Fund, Ltd. III, NPI Equity Investments II, Inc., Montgomery Realty Company-84, MRI Associates, Ltd. II, Montgomery Realty Company-85 and MRI Associates, Ltd. III, United States District Court, Northern District of Georgia, Atlanta Division("Ruben").
Roger L. Vernon, individually and on behalf of all similarly situated persons v. DeForest Ventures I L.P. et. al., Circuit Court of Cook County, County Departments, Chancery Division, Case No. 94CH0100592. ("Vernon")
James Andrews, et al., on behalf of themselves and all others similarly situated v. Fox Capital Management Corporation, et al., United States District Court, Northern District of Georgia, Atlanta Division, Case No. 1-94-CV-3351-JEC. ("Andrews")
In the fourth quarter of fiscal 1994, limited partners in certain limited partnerships affiliated with the Registrant, commenced actions in and against, among others, the Managing General Partner. The actions alleged, among other things, that the tender offers made by DeForest Ventures I L.P. ("DeForest I") and DeForest Ventures II L.P. ("DeForest II") in October 1994, constituted (a) breach of the fiduciary duty owed by the Managing General Partner to the limited
partners of the Registrant, and (b) a breach of, and an inducement to breach, the provisions of the Partnership Agreement of the Registrant. The actions, which had been brought as class actions on behalf of limited partners sought monetary damages in an unspecified amount and, in the Whiteside action, to enjoin the tender offers. The temporary restraining order sought in the Whiteside action was denied by the court on November 3, 1994, and on November 18, 1994, the court denied Whiteside a preliminary injunction.
On March 16, 1995, the United States Court for the Northern District of Georgia, Atlanta, Division, entered an order which granted preliminary approval to a settlement agreement (the "Settlement Agreement") in the Ruben and Andrews actions, conditionally certified two classes for purpose of settlement, and authorized the parties to give notice to the classes of the terms of the proposed settlement. Plaintiffs counsel in the Vernon and Whiteside action joined in the Settlement Agreement as well. The Settlement Agreement received final approval on May 19, 1995, and the actions were dismissed subject to satisfaction of the terms of the Settlement Agreement. The two certified classes constituted all limited partners of the Registrant and the eighteen other affiliated partnerships who either tendered their units in connection with the October tender offers or continued to hold their units in the Registrant and the other affiliated partnerships. Pursuant to the terms of the Settlement Agreement, which were described in the notice sent to the class members in March 1995, (and more fully described in the Amended Stipulation of Settlement submitted in the court on March 14, 1995) all claims which either were made or could have been asserted in any of the class actions would be dismissed with prejudice and/or released. In consideration for the dismissal and/or release of such claims, among other things, DeForest I paid to each unit holder who tendered their units in the Registrant an amount equal to 15% of the original tender offer price less attorney's fees and expenses. In addition, DeForest I commenced a second tender offer on June 2, 1995, for an aggregate number of units of the Registrant (including the units purchased in the initial tender) constituting up to 49% of the total number of units of the Registrant at a price equal to the initial tender price plus 15% less attorney's fees and expenses. Furthermore, under the terms of the Settlement Agreement, the Managing General Partner agreed, among other things, to provide the Registrant a credit line of $150,000 per property which would bear interest at the lesser of the prime rate plus 1% and the rate permitted under the partnership agreement of the Registrant. The second tender offer closed on June 30, 1995.
Item 4.

Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the period covered by this Report.
PART II
Item 5.

Item 5. Market for the Registrant's Equity and Related Security Holder Matters.
The Limited Partnership Unit holders are entitled to certain distributions as provided in the Partnership Agreement. As of March 1, 1996, cash distributions from operations for each unit holder have ranged from $47 to $58 for each $1,000 of original investment. No market for Limited Partnership Units exists, nor is any expected to develop.
No distributions from operations were made during the years ended December 31, 1995 and 1994. See "Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations" for a discussion of the Registrant's financial ability to make distributions.
As of March 1, 1996, the approximate number of holders of Limited Partnership Units was 5,371.
Item 6.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Liquidity and Capital Resources
The Registrant's remaining real estate properties consist of two residential apartment complexes located in Utah and Texas, which are currently leased to tenants subject to leases of up to one year. The Registrant receives rental income from its properties and is responsible for operating expenses, administrative expenses, capital improvements and debt service payments. Both of the Registrant's remaining properties generated positive cash flow for the year ended December 31, 1995. As of March 1, 1996, ten of the twelve properties originally purchased by the Registrant were sold or otherwise disposed.
The Registrant uses working capital reserves provided from any undistributed cash flow from operations, refinancing proceeds and sales proceeds as its primary source of liquidity. For the long term, it is anticipated that cash from operations will remain the Registrant's primary source of liquidity. Cash distributions from operations remained suspended during 1995. In order to preserve working capital reserves required for future capital improvements to properties and potential debt modifications, it is not currently anticipated that the Registrant will make any distributions from operations in the foreseeable future.
The level of liquidity based upon cash and cash equivalents experienced a $34,000 decrease at December 31, 1995, as compared to December 31, 1994. The Registrant's $541,000 of cash provided by operating activities was offset by $318,000 of improvements to real estate (investing activities) and $257,000 of mortgage principal payments (financing activities). Additions to real estate consisted of exterior renovations at the Registrant's Oak Run Apartments property and parking lot improvements at the Registrant's Overlook Point Apartments property. The Managing General Partner is currently evaluating the capital improvement requirements of the Registrant's properties. 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 invested 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 1996 and the foreseeable future. The Registrant has substantial balloon payments due in 1999 and 2000 of approximately $7,869,000 and $6,745,000, respectively. Although the Managing General Partner anticipates that these mortgages can be replaced, if the mortgages are not extended or refinanced, or the properties are not sold, the properties could be lost through foreclosure.
As required by the terms of the settlement of the actions brought against, among others, DeForest Ventures I L.P. ("DeForest I") relating to the tender offer made by DeForest I in October 1994, (the "First Tender Offer") for units of limited partnership interest in the Registrant and certain affiliated partnerships, DeForest I commenced a second tender offer (the "Second Tender Offer") on June 2, 1995, for units of limited partnership interest in the
Registrant. Pursuant to the Second Tender Offer, DeForest I acquired an additional 3,667 units of the Registrant which, when added to the units acquired during the First Tender Offer, represented approximately 29% of the total number of outstanding units of the Registrant.
Also in connection with the settlement, an affiliate of the Managing General Partner has made available to the Registrant a credit line of up to $150,000 per property owned by the Registrant. At the present time, the Registrant has no outstanding amounts due under this line of credit. Based on present plans, management does not anticipate the need to borrow in the near future. Other than cash and cash equivalents the line of credit is the Registrant's only unused source of liquidity.
On January 19, 1996, the stockholders of NPI, the sole shareholder of NPI Equity II, sold to IFGP Corporation all of the issued and outstanding stock of NPI. In addition, an affiliate of Insignia purchased the limited partnership units held by DeForest I and certain of its affiliates. IFGP Corporation caused new officers and directors of NPI Equity II and the Managing General Partner. The Managing General Partner does not believe these transactions will have a significant effect on the Registrant's liquidity or results of operations. See "Item 1 Business-Change in Control".
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 Registrant's properties and the markets in which such properties are located and on the sales price of the remaining properties. In this regard, the remaining properties have been held longer than originally expected. The ability to hold and operate these properties is dependent on the Registrant's ability to obtain refinancing or debt modification as required.
Real Estate Market
The business in which the Registrant is engaged is highly competitive, and the Registrant is not a significant factor in its industry. Each investment property is located in or near a major urban area and, accordingly, competes for rentals not only with similar properties in its immediate area but with hundreds of similar properties throughout the urban area. Such competition is primarily on the basis of location, rents, services and amenities. In addition, the Registrant competes with significant numbers of individuals and organizations (including similar partnerships, real estate investment trusts and financial institutions) with respect to the sale of improved real properties, primarily on the basis of the prices and terms of such transactions.
Results of Operations
1995 Compared to 1994
Operating results declined by $736,000 for the year ended December 31, 1995, as compared to 1994. The decline in operating results is due to the $1,246,000 gain on the disposition of Plantation Ridge Apartments recognized in 1994.
Revenues declined by $1,218,000 for the year ended December 31, 1995, as compared to 1994, due to the previously mentioned property disposition. With respect to the remaining properties, rental revenue increased by $366,000 due to an increase in rental rates, coupled with a slight increase in occupancy at both of the Registrant's remaining properties. In addition, interest income increased by $8,000 due to an increase in average working capital reserves available for investment and the effect of higher interest rates.
Expenses decreased by $482,000 for the year ended December 31, 1995, as compared to 1994, due to the disposition of Plantation Ridge Apartments in February 1994. With respect to the remaining properties, expenses increased by $12,000, due to an increase in interest expenses of $62,000 and depreciation expense of $6,000, which was partially offset by a decrease in operating expenses of $56,000. Operating expenses decreased primarily due to a decrease in repairs at the Registrant's Oak Run Apartments property which was partially offset by exterior painting at the Registrant's Overlook Point Apartments property. Interest expense increased due to higher interest rates on the variable rate mortgage encumbering the Registrant's Oak Run Apartments property, which was partially offset by the modification of the Registrant's Overlook Apartments at a lower interest rate in February 1994. In addition, general and administrative expenses declined by $45,000 due to a reduction in asset management costs effective July 1, 1994.
1994 Compared to 1993
Operating results, before the $6,501,000 extraordinary gain on extinguishment of debt, improved by $5,670,000 for the year ended December 31, 1994, as compared to 1993. The improvement in operating results is primarily due to the disposition of the following properties with negative operating results: Dover Village Apartments in March 1993, Reflections Apartments in May 1993 and Northgreen Apartments in August 1993. The $1,246,000 gain on disposition of Plantation Ridge Apartments in February 1994 and the net loss on sale of properties during 1993, substantially contributed to the improvement in operations.
Revenues declined by $4,972,000 for the year ended December 31, 1994, as compared to 1993, due to the previously mentioned property dispositions. With respect to the remaining properties, revenues increased by $317,000 due to an increase in rental income. Rental revenue increased due to increases in rental rates at Overlook Point and Oak Run Apartments, coupled with an increase in occupancy at Oak Run Apartments. Interest and other income remained constant.
Expenses decreased by $10,642,000 for the year ended December 31, 1994, as compared to 1993, due to the disposition of the previously mentioned properties. With respect to the remaining properties, expenses declined by $2,239,000 as the decrease in interest expense of $2,602,000 and general and administrative expenses of $74,000 were only partially offset by increases in operating expenses of $418,000 and depreciation expense of $19,000.
Interest expense declined primarily due to accrued contingent interest expense of $1,213,000 on the Registrant's Overlook Point Apartments and $688,000 of discount amortization written off on the Registrant's Oak Run Apartments as a result of modifications of the note payable in the prior comparative period. This was compounded by a reduced principal balance at the Registrant's
refinanced Oak Run Apartments, the modification of the Overlook Point Apartments at a lower interest rate and the satisfaction of the note payable to an affiliate of the general partner. The decrease in general and administrative expenses is primarily attributable to a reduction in asset management fees effective July 1994, which was only partially offset by costs associated with the management transition. The increase in operating expenses for the remaining properties is primarily due to increased spending on deferred maintenance at both of the Registrant's remaining properties. Depreciation expense increased due to the effect of fixed asset additions, primarily at the Registrant's Oak Run Apartment complex.
Item 8.

Item 8. Financial Statements and Supplementary Data.
CENTURY PROPERTIES FUND XVIII (A Limited Partnership)
FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995
INDEX
To the Partners Century Properties Fund XVIII Atlanta, Georgia
Independent Auditors' Report
We have audited the accompanying balance sheets of Century Properties Fund XVIII (a limited partnership) (the "Partnership") as of December 31, 1995 and 1994, and the related statements of operations, partners' equity and cash flows for the years then ended. Our audits also included the additional information supplied pursuant to Item 14(a)(2). 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 audits 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 Century Properties Fund XVIII as of December 31, 1995 and 1994, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
Imowitz Koenig & Co., LLP
Certified Public Accountants New York, N.Y. January 22, 1996
INDEPENDENT AUDITORS' REPORT
Century Properties Fund XVIII:
We have audited the accompanying consolidated statements of operations, partners' equity and cash flows of Century Properties Fund XVIII (a limited partnership) (the "Partnership") and its wholly-owned subsidiaries for the year ended December 31, 1993. 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 audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the results of operations and cash flows of the Partnership and its wholly-owned subsidiaries for the year ended December 31, 1993 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
San Francisco, California March 18, 1994
CENTURY PROPERTIES FUND XVIII (A Limited Partnership)
BALANCE SHEETS
See notes to financial statements.
CENTURY PROPERTIES FUND XVIII (A Limited Partnership)
STATEMENTS OF OPERATIONS
See notes to financial statements.
CENTURY PROPERTIES FUND XVIII (A Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
See notes to financial statements.
CENTURY PROPERTIES FUND XVIII (A Limited Partnership)
STATEMENTS OF CASH FLOWS
See notes to financial statements.
CENTURY PROPERTIES FUND XVIII (A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Century Properties Fund XVIII (the "Partnership") is a limited partnership organized under the laws of the State of California to acquire, hold for investment, and ultimately sell income-producing real property. The Partnership currently owns two residential complexes located in Utah and Texas. The general partner of the Partnership is Fox Partners, a California general partnership, whose general partners are Fox Capital Management Corporation ("FCMC"), a California corporation, Fox Realty Investors ("FRI"), a California general partnership and Fox Partners 82, a California general partnership. The original capital contributions of $75,000,000 ($1,000 per unit) were made by the limited partners, including 100 limited partnership units purchased by FCMC.
On December 6, 1993, the shareholders of FCMC entered into a Voting Trust Agreement with NPI Equity Investments II, Inc. ("NPI Equity" or the "Managing General Partner") pursuant to which NPI Equity was granted the right to vote 100 percent of the outstanding stock of FCMC and NPI Equity became the managing general partner of FRI. As a result, NPI Equity 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 National Property Investors, Inc. ("NPI, Inc."). The shareholders of FCMC and the partners in FRI retain 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.
In October 1994 DeForest Ventures I L.P. ("DeForest I") made a tender offer for limited partnership interests in the partnership, as well as eleven affiliated limited partnerships. DeForest Ventures II, L.P. ("DeForest II") made tender offers for limited partnership interests in seven affiliated limited partnerships. Shareholders who controlled DeForest Capital I Corporation, the sole general partner of DeForest I, also controlled NPI, Inc. As of December 31, 1995, DeForest I had acquired approximately 29% of total limited partnership units of the Partnership (see Note 8).
On January 19, 1996, the stockholders of NPI, Inc. sold all of the issued and outstanding stock of NPI, Inc. to an affiliate of Insignia
Financial Group, Inc. ("Insignia"). In addition, an affiliate of Insignia acquired the limited partnership interests of the Partnership held by DeForest I and certain of its affiliates (see Note 8).
CENTURY PROPERTIES FUND XVIII (A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Fair Value of Financial Instruments
In 1995, the Partnership implemented Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosures about Fair Value of Financial Instruments," as amended by SFAS No. 119, "Disclosures about Derivative Financial Instruments and Fair Value of Financial Instruments," which requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate fair value. Fair value is defined in the SFAS as the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The Partnership believes that the carrying amount of its financial instruments (except for long term debt) approximates fair value due to the short term maturity of these instruments. The fair value of the Partnership's long term debt, after discounting the scheduled loan payments to maturity, approximates its carrying balance.
Real Estate
Real estate is stated at cost. Acquisition fees are capitalized as a cost of real estate. In 1995, the Partnership adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of ", which requires impairment losses to be recognized for long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows are not sufficient to recover the asset's carrying amount. The impairment loss is measured by comparing the fair value of the asset to its carrying amount. The adoption of the SFAS had no effect on the Partnership's financial statements.
Cash and Cash Equivalents
The Partnership considers all highly liquid investments with an original maturity of three months or less at the time of purchase to be cash equivalents.
Concentration of Credit Risk
The Partnership maintains cash balances at institutions insured up to $100,000 by the Federal Deposit Insurance Corporation. Balances in excess of $100,000 are usually invested in United States Treasury repurchase agreements, which are collateralized by United States Treasury obligations. Cash balances exceeded these insured levels during the year.
CENTURY PROPERTIES FUND XVIII (A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Depreciation
Depreciation is computed by the straight-line method over estimated useful lives currently ranging from 27.5 to 30 years for buildings and improvements and six to seven years for furnishings.
Deferred Financing Costs
Deferred financing costs are amortized over the lives of the related loans, or expensed, if financing is not obtained. At December 31, 1995 and 1994, accumulated amortization of deferred financing costs totaled $262,000 and $205,000, respectively.
Net Income (Loss) Per Limited Partnership Unit
The net income (loss) per limited partnership unit is computed by dividing net income (loss) allocated to the limited partners by 75,000 units outstanding.
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 amounts from 1994 and 1993 have been reclassified to conform to the 1995 presentation.
2. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES
In accordance with the Partnership Agreement, the Partnership may be charged by the general partner and affiliates for services provided to the Partnership. From March 1988 to December 1992 such amounts were assigned pursuant to a services agreement by the general partner and affiliates to Metric Realty Services, L.P. ("MRS"), which performed partnership management and other services for the Partnership.
On January 1, 1993, Metric Management, Inc., ("MMI"), successor to MRS, a company which is not affiliated with the general partners, commenced providing certain property and portfolio management services to the Partnership under a new services agreement. As provided in the new services agreement, effective January 1, 1993, no reimbursements were made to the general partners and affiliates after December 31, 1992. Subsequent to December 31, 1992, reimbursements were made to MMI. On December 16, 1993, the services agreement with MMI was modified and, as a result thereof, NPI Equity began directly providing cash management and other Partnership services on various dates commencing December 23, 1993. On March 1, 1994, an affiliate of NPI Equity commenced providing certain property management services.
CENTURY PROPERTIES FUND XVIII (A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES (Continued)
Related party expenses for the years ended December 31, 1995, 1994 and 1993 were as follows:
Property management fees are included in operating expenses. Reimbursed expenses are primarily included in general and administrative expenses. In addition, approximately $107,000 of insurance premiums which were paid to an affiliate of NPI Inc. under a master insurance policy arranged by such affiliate are included in operating expenses for the year ended December 31, 1995.
In accordance with the partnership agreement, the general partners received (1) a partnership management incentive equal to an allocation of nine percent of net and taxable income (loss) before gain on property dispositions and (2) a one percent continuing interest of net and taxable income (loss) before gain on property dispositions after the above allocation of the partnership management incentive. The general partners were also allocated ten percent of gain on property dispositions to the extent of its deficit capital account and cash available for distribution. Upon sale of all properties and termination of the Partnership, the general partners may be required to contribute certain funds to the Partnership in accordance with the partnership agreement.
3. REAL ESTATE
Real estate, at December 31, 1995 and 1994, is summarized as follows:
CENTURY PROPERTIES FUND XVIII (A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
4. NOTES PAYABLE
Individual rental properties are pledged as collateral for the related notes payable. Interest rates on the notes payable ranged from 8.25 to 9.00 percent during the year ended December 31, 1995. Principal payments at December 31, 1995 are required as follows:
1996 $ 264,000 1997 271,000 1998 278,000 1999 8,064,000 2000 6,909,000 Thereafter 3,341,000 ------------ Total $ 19,127,000 ============
The Partnership modified its note payable on Overlook Point Apartments in February 1994. Principal of $7,166,000 plus contingent interest of $1,213,000 was outstanding on the original loan which was due August 1995. The Partnership paid down $129,000 of the accrued interest from its escrow accounts with the lender and secured a new loan for the balance of $8,250,000. The new loan requires monthly payments of $62,000 at 8.25% interest and is being amortized over 30 years. The loan matures in 1999 with a balloon payment of approximately $7,869,000.
In October 1993, the Partnership obtained replacement financing on the Oak Run Apartments' $4,358,000 wrap note equity portion which was due in October 1993, as well as on the two underlying first loans in the amount of $2,147,000 and $2,950,000 which were scheduled to mature in October 2009 and September 1994, respectively. The new loan, in the amount of $7,200,000 was used to pay off the two first loans, including prepayment premiums of $51,000 and refinancing costs of $333,000 (including a $70,000 interest rate cap cost). The new loan has a variable interest rate of 4.25 percent over 30-day LIBOR not to exceed 11 percent for the first four years of the new loan and is scheduled to mature in September 2000. The pay rate is nine percent for the first two years, 9.5 percent for years three through five and ten percent for years six and seven. Any difference between the contract interest rate and the pay rate will be applied to the outstanding principal balance. The remaining proceeds of approximately $1,719,000 were used to pay down a portion of the wrap note equity portion. The remaining balance of the wrap note equity portion of $4,127,000 will only be paid to the lender as a participation in future cash flow and sales proceeds from the property. The Partnership paid the participant approximately $116,000 and $75,000 during 1995 and 1994, respectively, which was treated as a reduction in principal.
Amortization of deferred financing costs totaled $57,000, $78,000 and $121,000 for 1995, 1994 and 1993, respectively.
CENTURY PROPERTIES FUND XVIII (A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
5. NOTE PAYABLE TO AFFILIATES OF THE GENERAL PARTNER
In February 1994, the Partnership paid $608,000 of principal and $230,000 of accrued interest to an affiliate of the general partner. Interest charged on the note was $5,000 and $109,000 for the years ended December 31, 1994 and 1993, respectively.
6. DISPOSITION OF RENTAL PROPERTIES
In February 1994, the Partnership sold Plantation Ridge Apartments, located in Marietta, Georgia for $15,353,000. The existing loans of $13,653,000 were assumed by the buyer at the time of sale. After assumption of the existing loans and costs of the sale of $210,000, proceeds to the Partnership were $1,490,000. At the date of sale, the carrying amount of real estate was $13,897,000. For financial statement purposes, the Partnership recorded a $1,246,000 gain on sale of property for the year ended December 31, 1994.
In March 1993, the Partnership sold Dover Village Apartments, located in Orlando, Florida for $9,300,000. After payment of the first and second loan balances of $5,674,000 and $2,490,000, respectively, and costs of sale of $358,000 (including $186,000 real estate commissions paid to an outside broker), the net proceeds to the Partnership were $778,000. In addition, accrued but unpaid interest of $707,000 on the second loan was forgiven by the lender and was recognized in 1993 as an extraordinary item-gain on debt forgiveness. At the date of sale, the carrying amount of land and improvements, net of the $961,000 provision for impairment of value recognized in 1992, was $9,302,000. The loss on sale of $360,000 was recognized at the time of sale.
In May 1993, the Partnership sold Reflections Apartments, located in Aurora, Colorado, for $7,924,000. After payment of the existing loan balance of $5,111,000 and costs of sale of $285,000 (including $238,000 of real estate commissions paid to outside brokers), net proceeds to the Partnership were $2,528,000. At the date of sale, the carrying amount of land and improvements, net of the $551,000 provision for impairment of value recognized in 1991, was $5,861,000. The gain on sale of $1,778,000 was recognized at the time of sale.
In August 1993, the Partnership sold Northgreen Apartments, located in Oklahoma City, Oklahoma, for $8,763,000. In addition, the Partnership received a $137,000 property tax reimbursement from the buyer. After payment of a portion of the existing loan of $8,750,000 and costs of sale of $51,000, the net proceeds to the Partnership were $99,000. Principal and accrued interest outstanding on the existing loan at the time of sale was $14,545,000, of which $5,794,000 was forgiven by the lender at the time of sale. At the date of sale, the carrying amount of land and improvements was $11,138,000. The loss on sale was $2,289,000 and $5,794,000 (consisting of $3,350,000 in principal and $2,444,000 in accrued interest) was recognized as an extraordinary item-gain on debt
forgiveness in 1993.
CENTURY PROPERTIES FUND XVIII (A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
7. RECONCILIATION TO INCOME TAX METHOD OF ACCOUNTING
The differences between the accrual method of accounting for income tax reporting and the accrual method of accounting used in the financial statements are as follows:
CENTURY PROPERTIES FUND XVIII (A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
8. SUBSEQUENT EVENT
On January 19, 1996, the stockholders of NPI, Inc. sold all of the issued and outstanding stock of NPI, Inc. to an affiliate of Insignia. In addition, an affiliate of Insignia acquired the limited partnership interests of the Partnership held by DeForest I and certain of its affiliates (see Note 1). As a result of the transaction, the Managing General Partner of the Partnership is controlled by Insignia. Insignia affiliates now provide property and asset management services to the Partnership, maintain its books and records and oversee its operations.
SCHEDULE III
CENTURY PROPERTIES FUND XVIII (A Limited Partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1995
See accompanying notes.
SCHEDULE III
CENTURY PROPERTIES FUND XVIII (A Limited Partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1995
Item 9.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures.
Effective April 22, 1994, the Registrant dismissed its prior Independent Auditors, Deloitte & Touche, LLP ("Deloitte") and retained as its new Independent Auditors, Imowitz Koenig & Company, LLP. Deloitte's Independent Auditors' Report on the Registrant's financial statements for the calendar year ended December 31 1993 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to audit scope or accounting principles. The decision to change Independent Auditors was approved by the Managing General Partner's Directors. During calendar year ended 1993 and through April 22, 1994 there were no disagreements between the Registrant and Deloitte on any matter of accounting principles or practices, financial statement disclosure, or auditing scope of procedure which disagreements if not resolved to the satisfaction of Deloitte, would have caused it to make reference to the subject matter of the disagreements in connection with its reports.
Effective April 22, 1994, the Registrant engaged Imowitz Koenig & Company, LLP as its Independent Auditors. The Registrant did not consult Imowitz Koenig & Company, LLP regarding any of the matters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K prior to April 22, 1994.
PART III
Item 10.

Item 10. Directors and Executive Officers of the Registrant.
Neither the Registrant, nor Fox Partners ("Fox"), the general partner of the Registrant, has any officers or directors. Fox Capital Management Corporation (the "Managing General Partner"), the managing general partner of Fox, manages and controls substantially all of the Registrant's affairs and has general responsibility and ultimate authority in all matters affecting its business. NPI Equity Investments II, Inc., which controls the Managing General Partner, is a wholly-owned affiliate of National Property Investors, Inc., which in turn is owned by an affiliate of by Insignia (See "Item 1, Business - Change in Control"). Insignia is a full service real estate service organization performing property management, commercial and retail leasing, investor services, partnership administration, mortgage banking, and real estate investment banking services for various entities. Insignia commenced operations in December 1990 and is the largest manager of multifamily residential properties in the United States and is a significant manager of commercial property. It currently provides property and/or asset management services for over 2,000 properties. Insignia's properties consist of approximately 300,000 units of multifamily residential housing and approximately 64 million square feet of commercial space.
As of March 1, 1996, the names and positions held by the officers and directors of the Managing General Partner are as follows:
Has served as a Director and/or
Officer of the Managing Name Positions Held General Partner since - ---- -------------- ----------------------- William H. Jarrard, Jr. President and Director January 1996
Ronald Uretta Vice President and January 1996 Treasurer
John K. Lines, Esquire Vice President, January 1996 Secretary and Director
Thomas R. Shuler Director January 1996
Kelley M. Buechler Assistant Secretary January 1996
William H. Jarrard, Jr. age 49, has been President and a Director of the Managing General Partner since January 1996. Mr. Jarrard has been a Managing Director - Partnership Administration of Insignia since January 1991.
Ronald Uretta, age 40, has been Insignia's Chief Financial Officer and Treasurer since January 1992. Since September 1990, Mr. Uretta has also served as the Chief Financial Officer and Controller of Metropolitan Asset Group.
John K. Lines, Esquire, age 36, has been a Director and Vice President and Secretary of the Managing General Partner since January 1996, Insignia's General Counsel since June 1994, and General Counsel and Secretary since July 1994. From May 1993 until June 1994, Mr. Lines was the Assistant General Counsel and Vice President of Ocwen Financial Corporation, West Palm Beach, Florida. From October 1991 until May 1993, Mr. Lines was a Senior Attorney with Banc One Corporation, Columbus, Ohio. From May 1984 until October 1991, Mr. Lines was an attorney with Squire Sanders & Dempsey, Columbus, Ohio.
Thomas R. Shuler, age 50, has been Managing Director - Residential Property Management of Insignia since March 1991 and Executive Managing Director of Insignia and President of Insignia Management Services since July 1994.
Kelley M. Buechler, age 38, has been Assistant Secretary of the Managing General Partner since January 1996 and Assistant Secretary of Insignia since 1991.
No family relationships exist among any of the officers or directors of the Managing General Partner.
Each director and officer of the Managing General Partner will hold office until the next annual meeting of stockholders of the Managing General Partner and until his successor is elected and qualified.
Item 11.

Item 11. Executive Compensation
The Registrant is not required to and did not pay any compensation to the officers or directors of the Managing General Partner. The Managing General Partner does not presently pay any compensation to any of its officers or directors. (See "Item 13, Certain Relationships and Related Transactions.")
Item 12.

Item 12. Security Ownership of Certain Beneficial Owners and Management.
The Registrant is a limited partnership and has no officers or directors. The Managing General Partner has discretionary control over most of the decisions made by or for the Registrant in accordance with the terms of the Partnership Agreement. The Managing General Partner directly owns 100 limited partnership units in the Registrant.
The following table sets forth certain information regarding limited partnership units of the Registrant owned by each person who is known by the Registrant to own beneficially or exercise voting or dispositive control over more than 5% of the Registrant's limited partnership units, by each of the Managing General Partner's directors and by all directors and executive officers of the Managing General Partner as a group as of March 1, 1996.
Name and address of Amount and nature of Beneficial Owner Beneficial Ownership % of Class - ------------------- -------------------- ---------- Insignia NPI, L.L.C. (1) 21,513 29 All directors and executive officers as a group (5 persons) - - - ------------------
(1) The business address for Insignia NPI, L.L.C. is One Insignia Financial Plaza, Greenville, South Carolina 29602.
There are no arrangements known to the Registrant, the operation of which may, at a subsequent date, result in a change in control of the Registrant.
Item 13.

Item 13. Certain Relationships and Related Transactions.
In accordance with the Partnership Agreement, the Registrant may be charged by the general partner and affiliates for services provided to the Registrant. From March 1988 to December 1992 such amounts were assigned pursuant to a services agreement by the general partner and affiliates to Metric Realty Services, L.P. ("MRS"), which performed partnership management and other services for the Registrant.
On January 1, 1993, Metric Management, Inc., ("MMI"), successor to MRS, a company which is not affiliated with the general partners, commenced providing certain property and portfolio management services to the Registrant under a new services agreement. As provided in the new services agreement, effective January 1, 1993, no reimbursements were made to the general partners and affiliates after December 31, 1992. Subsequent to December 31, 1992, reimbursements were made to MMI. On December 16, 1993, the services agreement with MMI was modified and, as a result thereof, NPI Equity II began directly providing cash management and other the Registrant services on various dates commencing December 23, 1993. On March 1, 1994, an affiliate of NPI Equity II commenced providing certain property management services. Related party expenses for the years ended December 31, 1995, 1994 and 1993 were as follows:
1995 1994 1993 --------- --------- ---------
Property management fees $ 212,000 $ 177,000 $ - Reimbursement of operational expenses: Partnership accounting and investor services 162,000 173,000 - Professional services - 9,000 - --------- --------- ---------
Total $ 374,000 $ 364,000 $ - ========= ========= =========
Interest expense $ - $ 5,000 $ 109,000 ========= ========= =========
Property management fees are included in operating expenses. Reimbursed expenses are primarily included in general and administrative expenses. In addition, approximately $107,000 of insurance premiums which were paid to an affiliate of NPI Inc. under a master insurance policy arranged by such affiliate are included in operating expenses for the year ended December 31, 1995.
In accordance with the partnership agreement, the general partners received (1) a partnership management incentive equal to an allocation of nine percent of net and taxable income (loss) before gain on property dispositions and (2) a one percent continuing interest of net and taxable income (loss) before gain on property dispositions after the above allocation of the Partnership management incentive. The general partners were also allocated ten percent of gain on property dispositions to the extent of its deficit capital account and cash available for distribution. Upon sale of all properties and termination of the Registrant, the general partners may be required to contribute certain funds to the Registrant in accordance with the partnership agreement.
As a result of its ownership of 21,513 limited partnership units, Insignia NPI L.L.C. ("Insignia LLC") could be in a position to significantly influence all voting decisions with respect to the Registrant. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters. When voting on matters, Insignia LLC would in all likelihood vote the Units it acquired in a manner favorable to the interest of the Managing General Partner because of its affiliation with the Managing General Partner. However, Insignia LLC has agreed for the benefit of non-tendering unitholders, that it will vote its Units: (i) against any proposal to increase the fees and other compensation payable by the Registrant to the Managing General Partner and any of its affiliates; and (ii) with respect to any proposal made by the Managing General Partner or any of its affiliates, in proportion to votes cast by other unitholders. Except for the foregoing, no other limitations are imposed on Insignia LLC's right to vote each Unit acquired.
PART IV
Item 14.

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a)(1)(2) Financial Statements and Financial Statement Schedules:
See "Item 8" of this Form 10-K for Financial Statements of the Registrant, Notes thereto, and Financial Statement Schedules. (A Table of Contents to Financial Statements and Financial Statement Schedules is included in "Item 8" and incorporated herein by reference.)
(a)(3) Exhibits
2.1 NPI, Inc. Stock Purchase Agreement, dated as of August 17, 1995, incorporated by reference to the Registrant's Current Report on Form 8-K dated August 17, 1995.
2.2 Partnership Units Purchase Agreement dated as of August 17, 1995 incorporated by reference to Exhibit 2.1 to Form 8-K filed by Insignia Financial Group, Inc. ("Insignia) with the Securities and Exchange Commission on September 1, 1995.
2.3 Management Purchase Agreement dated as of August 17, 1995 incorporated by reference to Exhibit 2.2 to Form 8-K filed by Insignia with the Securities and Exchange Commission on September 1, 1995.
2.4 Limited Liability Company Agreement of Riverside Drive L.L.C., dated as of August 17, 1995 incorporated by reference to Exhibit 2.4 to Form 8-K filed by Insignia with the Securities and Exchange Commission on September 1, 1995.
2.5 Master Indemnity Agreement dated as of August 17, 1995 incorporated by reference to Exhibit 2.5 to Form 8-K filed by Insignia with the Securities and Exchange Commission on September 1, 1995.
3.4 Agreement of Limited Partnership, incorporated by reference to Exhibit A to the Prospectus of the Registrant dated October 7, 1977 and thereafter supplemented, included in the Registrant's Registration Statement on Form S-11 (Reg. No. No. 2-58978).
16. Letter dated April 27, 1994 from the Registrant's Former Independent Auditors incorporated by reference to the Registrant's Current Report on Form 8-K dated April 22, 1994.
(b) Reports on Form 8-K:
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 this 28 day of March, 1996.
CENTURY PROPERTIES FUND XVIII
By: Fox Partners Its General Partner
By: Fox Capital Management Corporation Its Managing General Partner
By: William H. Jarrard, Jr. William H. Jarrard, Jr. President
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.
Signature/Name Title Date - -------------- ----- ----
/s/ William H. Jarrard, Jr. President and March 28, 1996 - --------------------------- William H. Jarrard, Jr. Director
/s/ Ronald Uretta Principal Financial March 28, 1996 - ----------------- Ronald Uretta Officer and Principal Accounting Officer
/s/ John K. Lines Director March 28, 1996 - ----------------- John K. Lines
Exhibit Index
Exhibit Page - ------- ---- 2.1 NPI, Inc. Stock Purchase Agreement (1)
2.2 Partnership Units Purchase Agreement (2)
2.3 Management Purchase Agreement (3)
2.4 Limited Liability Company Agreement of (4) Riverside Drive L.L.C.
2.5 Master Indemnity Agreement (5)
3.4. Agreement of Limited Partnership (2)
16 Letter from the Registrant's former Independent (3) Auditor dated April 27, 1994
- ---------------
(1) Incorporated by reference to Exhibit 2 to the Registrant's Current Report on Form 8-K dated August 17, 1995.
(2) Incorporated by reference to Exhibit 2.1 to Form 8-K filed by Insignia Financial Group, Inc. with the Securities and Exchange Commission on September 1, 1995.
(3) Incorporated by reference to Exhibit 2.2 to Form 8-K filed by Insignia Financial Group, Inc. with the Securities and Exchange Commission on September 1, 1995.
(4) Incorporated by reference to Exhibit 2.4 to Form 8-K filed by Insignia Financial Group, Inc. with the Securities and Exchange Commission on September 1, 1995.
(5) Incorporated by reference to Exhibit 2.5 to Form 8-K filed by Insignia Financial Group, Inc. with the Securities and Exchange Commission on September 1, 1995.
(6) Incorporated by reference to Exhibit A to the Prospectus of the Registrant dated November 5, 1982, as revised December 30, 1982, and thereafter supplemented contained in the Registrant's Registration Statement on Form S-11 (Reg. No. 2-78495)
(7) Incorporated by reference to exhibit 10 to the Registrant's Current Report on Form 8-K dated April 22, 1994.