-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, O5rkuBHb5ySDYvL+WUIPNlSQfNUvcFauwJr6aEEYEuwXdp5Q24yfoslIs/MMg3RQ T3smhGLRkhrqenynyFOZ6g== 0000276779-97-000003.txt : 19971114 0000276779-97-000003.hdr.sgml : 19971114 ACCESSION NUMBER: 0000276779-97-000003 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971112 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANGELES PARTNERS VIII CENTRAL INDEX KEY: 0000276779 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 953264317 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-09136 FILM NUMBER: 97713833 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: P.O. BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10QSB 1 FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES Securities and Exchange Commission Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period.........to......... Commission file number 0-9136 ANGELES PARTNERS VIII (Exact name of small business issuer as specified in its charter) California 95-3264317 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) One Insignia Financial Plaza Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) ANGELES PARTNERS VIII CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) September 30, 1997 Assets Cash and cash equivalents: Unrestricted $ 455 Restricted--tenant security deposits 75 Accounts receivable 13 Escrows for taxes 199 Other assets 208 Investment properties: Land $ 543 Buildings and related personal property 14,582 15,125 Less accumulated depreciation (10,262) 4,863 $ 5,813 Liabilities and Partners' Deficit Liabilities Accounts payable $ 87 Tenant security deposit liabilities 75 Accrued taxes 617 Accrued interest 1,895 Other liabilities 231 Note payable to affiliate 371 Mortgage notes payable, $1,350 in default 16,647 Partners' Deficit General partner $ (175) Limited partners (12,000 units (13,935) (14,110) issued and 11,855 units outstanding) $ 5,813 See Accompanying Notes to Consolidated Financial Statements b) ANGELES PARTNERS VIII CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data) Three Months Ended Nine Months Ended September 30, September 30, 1997 1996 1997 1996 Revenues: Rental income $ 931 $ 884 $ 2,747 $ 2,590 Other income 61 40 155 129 Total revenues 992 924 2,902 2,719 Expenses: Operating 276 284 786 821 General and administrative 38 43 103 123 Maintenance 116 153 344 343 Depreciation 169 170 499 466 Interest 465 440 1,378 1,329 Property taxes 67 121 331 421 Total expenses 1,131 1,211 3,441 3,503 Net loss $ (139) $ (287) $ (539) $ (784) Net loss allocated to general partner (1%) $ (1) $ (3) $ (5) $ (8) Net loss allocated to limited partners (99%) (138) (284) (534) (776) $ (139) $ (287) $ (539) $ (784) Net loss per limited partnership unit $(11.64) $(23.70) $(45.04) $(64.75) See Accompanying Notes to Consolidated Financial Statements c) ANGELES PARTNERS VIII CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT (Unaudited) For the Nine Months Ended September 30, 1997 (in thousands, except unit data) Limited Partnership General Limited Units Partner Partners Total Original capital contributions 12,000 $ 121 $ 12,000 $ 12,121 Partners' deficit at December 31, 1996 11,855 $ (170) $(13,401) $(13,571) Net loss for the nine months ended September 30, 1997 -- (5) (534) (539) Partners' deficit at September 30, 1997 11,855 $ (175) $(13,935) $(14,110) See Accompanying Notes to Consolidated Financial Statements d) ANGELES PARTNERS VIII CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands, except unit data) Nine Months Ended September 30, 1997 1996 Cash flows from operating activities: Net loss $ (539) $ (784) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 499 466 Amortization of loan costs 42 38 Loss on disposition of investment property -- 15 Change in accounts: Restricted cash (13) (6) Accounts receivable (7) 5 Escrows for taxes (101) (226) Other assets (22) (7) Accounts payable (41) (16) Tenant security deposit liabilities 13 7 Accrued taxes 207 253 Accrued interest 410 423 Other liabilities 80 81 Net cash provided by operating activities 528 249 Cash flows from investing activities: Deposits to restricted escrows -- (404) Receipts from restricted escrows -- 600 Property improvements and replacements (170) (888) Receipt of insurance proceeds 65 -- Net cash used in investing activities (105) (692) Cash flows from financing activities: Payments on mortgage notes payable (161) (36) Repayment of mortgage notes payable -- (9,368) Proceeds from long-term borrowings -- 9,800 Loan costs paid -- (174) Net cash (used in) provided by financing activities (161) 222 Net increase (decrease) in cash and cash equivalents 262 (221) Cash and cash equivalents at beginning of period 193 330 Cash and cash equivalents at end of period $ 455 $ 109 Supplemental disclosure of cash flow information: Cash paid for interest $ 927 $ 868 Supplemental disclosure of non-cash activity: Accrual of cost associated with the receipt of insurance proceeds $ 65 $ -- See Accompanying Notes to Consolidated Financial Statements ANGELES PARTNERS VIII NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) September 30, 1997 NOTE A - GOING CONCERN The accompanying financial statements have been prepared assuming Angeles Partners VIII (the "Partnership") will continue as a going concern. The Partnership has incurred recurring operating losses and continues to suffer from poor liquidity. In addition, the Partnership is in default on a portion of its mortgage notes payable and does not generate sufficient cash flows to meet current debt-service requirements on its subordinated debt. The Partnership incurred an operating loss of approximately $539,000 for the nine months ended September 30, 1997, and Angeles Realty Corporation (the "General Partner") expects this trend to continue. The Partnership generated net cash from operations of approximately $528,000; however, interest expense of approximately $409,000 was accrued during the nine months ended September 30, 1997 on the note payable to an affiliate and the second mortgages securing the Partnership's investment properties. The Partnership's second mortgage to Angeles Mortgage Investment Trust ("AMIT") in the amount of $1,350,000 plus accrued interest, which is secured by Bercado Shores Apartments, has been in default since 1993 due to nonpayment of interest and the maturity of the note in 1995. This indebtedness is recourse to the Partnership and the estimated fair value of this property is less than the total of its first and second mortgages. Since the default in March of 1993, AMIT has not indicated its intent to pursue its available remedies under the mortgage agreement; however, this property remains subject to foreclosure under the terms of the second mortgage agreement. The Partnership has initiated discussions with AMIT and hopes to negotiate a work-out, however there can be no assurances that the Partnership's negotiations will prove successful. The Partnership's note payable and accrued interest of approximately $521,000 due to Angeles Acceptance Pool, L.P. ("AAP") matures in November of 1997. The Partnership is currently in negotiations with the lender and hopes to either extend this note or settle the liability at a reduced amount. There can be no assurance that these negotiations with the lenders will be successful. No other sources of additional financing are apparent and the General Partner currently has not developed alternative plans to remedy the liquidity problems the Partnership is currently experiencing. The General Partner anticipates that Brittany Point will generate sufficient cash flows for the next twelve months to meet its operating expenses, debt service requirements and to fund capital expenditures. The General Partner anticipates that Bercado Shores will generate sufficient cash flows for the next twelve months to cover its operating expenditures, however it is not expected to be able to completely fund desired capital expenditures or to pay its scheduled debt service on its second mortgage to AMIT. The Partnership's plan is to fund these items to the extent of available cash flow. The Partnership will fund its administrative expenses for the next twelve months by using cash on hand at September 30, 1997, and cash flow generated during 1997. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or amounts and classification of liabilities that may result from this uncertainty. NOTE B - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of the Partnership have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of the General Partner, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 1997, are not necessarily indicative of the results that may be expected for the year ended December 31, 1997. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-KSB for the year ended December 31, 1996. Principles of Consolidation In order to facilitate the refinancing of the first mortgage indebtedness secured by Brittany Point in January 1996, the property was transferred to a lower-tier partnership known as Brittany Point AP VIII, L.P. in which the Partnership effectively owns a 99.99% limited partnership interest. The financial statements include all of the accounts of the Partnership and its majority owned partnership. All significant interpartnership balances have been eliminated. NOTE C - TRANSACTIONS WITH AFFILIATED PARTIES The Partnership has no employees and is dependent on the General Partner and its affiliates for the management and administration of all Partnership activities. The Partnership Agreement provides for payments to affiliates of the General Partner for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following payments were made to the General Partner and affiliates in the nine months ended September 30, 1997 and 1996, respectively: 1997 1996 (in thousands) Property management fees $144 $135 Reimbursement for services of affiliates (including $6,600 and $14,655 of reimbursements for construction oversight costs) 82 99 For the period of January 1, 1996 to August 31, 1997, the Partnership insured its properties under a master policy through an agency and insurer unaffiliated with the General Partner. An affiliate of the General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the current year's master policy. The current agent assumed the financial obligations to the affiliate of the General Partner, who receives payments on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the General Partner by virtue of the agent's obligation is not significant. In November 1992, Angeles Acceptance Pool, L.P. ("AAP"), a Delaware limited partnership which now controls the working capital loan previously provided by Angeles Capital Investment, Inc. ("ACII"), was organized. Angeles Corporation ("Angeles") is the 99% limited partner of AAP and Angeles Acceptance Directives, Inc.("AAD"), an affiliate of the General Partner, was, until April 14, 1995, the 1% general partner of AAP. On April 14, 1995, as part of a settlement of claims between affiliates of the General Partner and Angeles, AAD resigned as general partner of AAP and simultaneously received a .5% limited partner interest in AAP. An affiliate of Angeles now serves as the general partner of AAP. This working capital loan funded the Partnership's operating deficits in prior years. Total indebtedness, which is included in the accompanying consolidated balance sheet as a note payable to affiliate, was approximately $371,000 at September 30, 1997, and September 30, 1996, with monthly interest only payments at prime plus 0.75% (9.25% at September 30, 1997). Principal is to be paid the earlier of i) the availability of funds, ii) the sale of one or more properties owned by the Partnership, or iii) November 25, 1997. The Partnership is currently in negotiations with AAP, to extend the maturity or settle the liability at a reduced amount. There can be no assurance that these negotiations with AAP will be successful. Total interest expense for this loan was approximately $26,000 at September 30, 1997 and $25,000 at September 30, 1996. Interest of approximately $150,000 and $116,000 on this loan was accrued at September 30, 1997 and 1996, respectively. AMIT currently provides secondary financing on the Partnership's investment properties. Total indebtedness was approximately $2,920,000 at September 30, 1997, of which $1,350,000, secured by Bercado Shores, was in default at September 30, 1997. Total interest expense related to this debt was approximately $466,000 and $400,000 at September 30, 1997 and 1996, respectively. Accrued interest related to this debt was approximately $1,651,000 and $1,123,000 at September 30, 1997 and 1996, respectively. MAE GP Corporation ("MAE GP"), an affiliate of the General Partner, owns 1,675,113 Class B Shares of AMIT. The terms of the Class B Shares provide that they are convertible, in whole or in part, into Class A Shares on the basis of 1 Class A Share for every 49 Class B Shares (however, in connection with the settlement agreement described in the following paragraph, MAE GP has agreed not to convert the Class B Shares so long as AMIT's option is outstanding). These Class B Shares entitle MAE GP to receive 1% of the distributions of net cash distributed by AMIT (however, in connection with the settlement agreement described in the following paragraph, MAE GP has agreed to waive its right to receive dividends and distributions so long as AMIT's option is outstanding). These Class B Shares also entitle MAE GP to vote on the same basis as Class A Shares, providing MAE GP with approximately 39% of the total voting power of AMIT (unless and until converted to Class A Shares, in which case the percentage of the vote controlled represented by the shares held by MAE GP would approximate 1.3% of the vote). Between the date of acquisition of these shares (November 24, 1992) and March 31, 1995, MAE GP declined to vote these shares. Since that date, MAE GP voted its shares at the 1995 and 1996 annual meetings in connection with the election of trustees and other matters. MAE GP has not exerted and continues to decline to exert any management control over or participate in the management of AMIT. Subject to the terms of the proxy described below, MAE GP may choose to vote these shares as it deems appropriate in the future. In addition, Liquidity Assistance, L.L.C., an affiliate of Insignia Financial Group, Inc. ("Insignia"), which provides property management and partnership administration services to the Partnership, owns 96,800 Class A Shares of AMIT at September 30, 1997. These Class A Shares represent approximately 2.2% of the total voting power of AMIT. As part of a settlement of certain disputes with AMIT, MAE GP granted to AMIT an option to acquire the Class B shares owned by it. This option can be exercised at the end of 10 years or when all loans made by AMIT to partnerships affiliated with MAE GP as of November 9, 1994 (which is the date of execution of a definitive Settlement Agreement) have been paid in full, but in no event prior to November 9, 1997. In connection with such settlement, AMIT delivered to MAE GP cash in the sum of $250,000 at closing (which occurred April 14, 1995) as payment for the option. If and when the option is exercised, AMIT will be required to remit to MAE GP an additional $94,000. Simultaneously with the execution of the option and as part of the settlement, MAE GP executed an irrevocable proxy in favor of AMIT, the result of which is that MAE GP is permitted to vote the Class B Shares on all matters except those involving transactions between AMIT and MAE GP affiliated borrowers or the election of any MAE GP affiliate as an officer or trustee of AMIT. On those matters, MAE GP is obligated to deliver to the AMIT trustees, in their capacity as trustees of AMIT, proxies with regard to the Class B Shares instructing such trustees to vote said Class B Shares in accordance with the vote of the majority of the Class A Shares voting to be determined without consideration of the votes of "Excess Class A Shares" (as defined in Section 6.13 of the Declaration of Trust of AMIT). On April 3, 1997, Insignia and AMIT entered into a non-binding agreement in principle contemplating, among other things, a business combination of AMIT and Insignia Properties Trust, an entity owned 98% by Insignia and its affiliates ("IPT"). On July 18, 1997, IPT, Insignia and MAE G.P. entered into a definitive merger agreement pursuant to which (subject to shareholder approval and certain other conditions, including the receipt by AMIT of a fairness opinion from its investment bankers) AMIT would be merged with and into IPT, with each Class A Share and Class B Share being converted into 1.625 and 0.0332 common shares of IPT, respectively. The foregoing exchange ratios are subject to adjustment to account for dividends paid by AMIT from January 1, 1997, and dividends paid by IPT from February 1, 1997. It is anticipated that Insignia (and its affiliates) and MAE GP (and its affiliates) would own approximately 53.1% and 2.3%, respectively, of post-merger IPT when this transaction is consummated. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Partnership's investment properties consist of two apartment complexes. The following table sets forth the average occupancy of the properties for the nine months ended September 30, 1997 and 1996: Average Occupancy 1997 1996 Bercado Shores Apartments Mishawka, Indiana 92% 93% Brittany Point Apartments Huntsville, Alabama 94% 87% Occupancy at Brittany Point increased due to a stronger job market in the Huntsville area and due to major rehabilitation projects at the property from funds set aside in the 1996 refinancing. The Partnership realized net losses of approximately $139,000 and approximately $539,000 for the three and nine month periods ended September 30, 1997, compared to net losses of approximately $287,000 and approximately $784,000 for the three and nine month periods ended September 30, 1996. For the three and nine month periods ended September 30, 1997, net loss decreased primarily as a result of an increase in total revenues and a decrease in property tax expense as discussed below. Rental income increased as a result of rental rate increases at both of the Partnership's properties and an increase in occupancy at Brittany Point. The impact of these rental rate increases was partially negated by the occupancy decrease at Bercado Shores. Other income increased due to increases in lease cancellation fees at Brittany Point. Property taxes decreased due to the receipt of approximately $65,000 for a property tax appeal on Bercado Shores for 1995 and 1996 and a related reduction in the 1997 taxes as a result of the prior year appeal. Included in maintenance expense is approximately $56,000 of major repairs and maintenance comprised primarily of gutter and swimming pool repairs for the nine months ended September 30, 1997. For the nine months ended September 30, 1996, approximately $88,000 of major repairs and maintenance comprised primarily of major landscaping, swimming pool repairs, exterior painting and exterior building improvements are included in maintenance expense. As part of the ongoing business plan of the Partnership, the General Partner monitors the rental market environment of each of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the General Partner will be able to sustain such a plan. The Partnership's primary source of cash has been from property operations with such cash being utilized for the paydown of existing debt on the investment properties, capital expenditures and daily operational expenses. It is the Partnership's policy to commit capital resources as available for the continuing improvement and maintenance of its properties. The Partnership held unrestricted cash of approximately $455,000 at September 30, 1997, compared to unrestricted cash of approximately $109,000 at September 30, 1996. Net cash provided by operating activities increased for the nine months ended September 30, 1997, primarily due to a decrease in escrows for taxes and a decrease in the net loss, as discussed above. Net cash used in investing activities decreased primarily due to a decrease in property improvements and replacements. Net cash used in financing activities increased due to the absence of refinancing activities in the nine months ended September 30, 1997. No distributions were made by the Partnership during the first nine months of 1997 or 1996. Since 1992, the nominal cash generated by the properties has been insufficient to pay the capital expenditures and scheduled debt service. The Partnership has incurred recurring operating losses and is in default on a portion of its mortgage notes payable. The Partnership's first mortgage in the amount of approximately $4,047,000 secured by Bercado Shores Apartments was previously in default due to nonpayment of 1993 property taxes. The property is now current on payment of property taxes and the first mortgage is no longer in default. However, the second mortgage to AMIT in the amount of $1,350,000, secured by the Bercado Shores Apartments, has been in default since March 1993 due to nonpayment of interest. Since the default in March of 1993, the lender has not indicated its intent to pursue its available remedies under the mortgage agreement, however, the Partnership's properties remain subject to foreclosure under the terms of the second mortgage agreement. The General Partner anticipates sufficient cash flow to be generated by the property over the next twelve months to meet all non-debt-related operating expenses. The Partnership has initiated discussions with AMIT and hopes to negotiate a work-out, however, there can be no assurance that the Partnership's negotiations will prove successful. The first mortgage indebtedness of approximately $9,368,000 secured by Brittany Point matured in June 1995. This first mortgage was refinanced on January 18, 1996, with the existing lender for a principal amount of $9,800,000, a stated interest rate of 7.875% and a maturity date of February 1, 2001. To facilitate the refinancing, the property was transferred to a lower-tier partnership known as Brittany Point AP VIII, L.P. in which the Partnership effectively owns a 99.99% limited partner interest. Although legal ownership of this asset was transferred to a new entity, the Partnership retained control and substantially all economic benefits of the property. Also, a workout proposal with AMIT on the second mortgage of Brittany Point was finalized during the first quarter of 1996 so that the second mortgage is no longer in default. The workout proposal with AMIT provided for the accrual of interest through February 28, 1997, after which cash flow payments were to be made through June 30, 1997. Commencing July 1, 1997, interest payments were to be made at the accrual rate of interest through the maturity of the note on December 31, 2000. In November 1992, Angeles Acceptance Pool, L.P. ("AAP"), a Delaware limited partnership which now controls the working capital loan previously provided by Angeles Capital Investment, Inc. ("ACII"), was organized. Angeles Corporation ("Angeles") is the 99% limited partner of AAP and Angeles Acceptance Directives, Inc.("AAD"), an affiliate of the General Partner, was, until April 14, 1995, the 1% general partner of AAP. On April 14, 1995, as part of a settlement of claims between affiliates of the General Partner and Angeles, AAD resigned as general partner of AAP and simultaneously received a .5% limited partner interest in AAP. An affiliate of Angeles now serves as the general partner of AAP. This working capital loan funded the Partnership's operating deficits in prior years. Total indebtedness, which is included as a note payable, was approximately $371,000 at September 30, 1997, and September 30, 1996, with monthly interest only payments at prime plus 0.75% (9.25% for September 30, 1997). Principal is to be paid the earlier of i) the availability of funds, ii) the sale of one or more properties owned by the Partnership, or iii) November 25, 1997. The Partnership is currently in negotiations with AAP to extend the maturity or settle the liability at a reduced amount. There can be no assurance that these negotiations with AAP will be successful. Total interest expense for this loan was approximately $26,000 and $25,000 at September 30, 1997 and 1996. Interest of approximately $150,000 and $116,000 on this loan was accrued at September 30, 1997 and 1996, respectively. AMIT currently provides secondary financing on the Partnership's investment properties. Total indebtedness was approximately $2,920,000 at September 30, 1997, of which $1,350,000, secured by Bercado Shores, was in default at September 30, 1997. Total interest expense related to this debt was approximately $466,000 and $400,000 at September 30, 1997 and 1996, respectively. Accrued interest related to this debt was approximately $1,651,000 and $1,123,000 at September 30, 1997 and 1996, respectively. MAE GP Corporation ("MAE GP"), an affiliate of the General Partner, owns 1,675,113 Class B Shares of AMIT. MAE GP has the option to convert these Class B Shares, in whole or in part, into Class A Shares on the basis of 1 Class A Share for every 49 Class B Shares (however, in connection with the settlement agreement described in the following paragraph, MAE GP has agreed not to convert the Class B Shares so long as AMIT's option is outstanding). These Class B Shares entitle MAE GP to receive 1% of the distributions of net cash distributed by AMIT (however, in connection with the settlement agreement described in the following paragraph, MAE GP has agreed to waive its right to receive dividends and distributions so long as AMIT's option is outstanding). These Class B Shares also entitle MAE GP to vote on the same basis as Class A Shares, providing MAE GP with approximately 39% of the total voting power of AMIT (unless and until converted to Class A Shares, in which case the percentage of the vote controlled represented by the shares held by MAE GP would approximate 1.3% of the vote). Between the date of acquisition of these shares (November 24, 1992) and March 31, 1995, MAE GP declined to vote these shares. Since that date, MAE GP voted its shares at the 1995 and 1996 annual meetings in connection with the election of trustees and other matters. MAE GP has not exerted and continues to decline to exert any management control over or participate in the management of AMIT. Subject to the terms of the proxy described below, MAE GP may choose to vote these shares as it deems appropriate in the future. In addition, Liquidity Assistance, LLC, an affiliate of Insignia Financial Group, Inc. ("Insignia"), which provides property management and partnership administration services to the Partnership, owns 96,800 Class A Shares of AMIT at September 30, 1997. These Class A Shares represent approximately 2.2% of the voting power of AMIT. As part of a settlement of certain disputes with AMIT, MAE GP granted to AMIT an option to acquire the Class B shares owned by it. This option can be exercised at the end of 10 years or when all loans made by AMIT to partnerships affiliated with MAE GP as of November 9, 1994, (which is the date of execution of a definitive Settlement Agreement) have been paid in full, but in no event prior to November 9, 1997. In connection with such settlement, AMIT delivered to MAE GP cash in the sum of $250,000 at closing (which occurred April 14, 1995) as payment for the option. If and when the option is exercised, AMIT will be required to remit to MAE GP an additional $94,000. Simultaneously with the execution of the option and as part of the settlement, MAE GP executed an irrevocable proxy in favor of AMIT, the result of which is that MAE GP is permitted to vote the Class B Shares on all matters except those involving transactions between AMIT and MAE GP affiliated borrowers or the election of any MAE GP affiliate as an officer or trustee of AMIT. On those matters, MAE GP is obligated to deliver to the AMIT trustees, in their capacity as trustees of AMIT, proxies with regard to the Class B Shares instructing such trustees to vote said Class B Shares in accordance with the vote of the majority of the Class A Shares voting to be determined without consideration of the votes of "Excess Class A Shares" (as defined in Section 6.13 of the Declaration of Trust of AMIT). On April 3, 1997, Insignia and AMIT entered into a non-binding agreement in principle contemplating, among other things, a business combination of AMIT and Insignia Properties Trust, an entity owned 98% by Insignia and its affiliates ("IPT"). On July 18, 1997, IPT, Insignia and MAE GP entered into a definitive merger agreement pursuant to which (subject to shareholder approval and certain other conditions, including the receipt by AMIT of a fairness opinion from its investment bankers) AMIT would be merged with and into IPT, with each Class A Share and Class B Share being converted into 1.625 and 0.0332 common shares of IPT, respectively. The foregoing exchange ratios are subject to adjustment to account for dividends paid by AMIT from January 1, 1997, and dividends paid by IPT from February 1, 1997. It is anticipated that Insignia (and its affiliates) and MAE GP (and its affiliates) would own approximately 53.1% and 2.3%, respectively, of post-merger IPT when this transaction is consummated. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: None. SIGNATURES In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ANGELES PARTNERS VIII LIMITED PARTNERSHIP By: Angeles Realty Corporation General Partner By: /s/Carroll D. Vinson Carroll D. Vinson President By: /s/Robert D. Long, Jr. Robert D. Long, Jr. Vice President/CAO Date: November 12, 1997 EX-27 2
5 This schedule contains summary financial information extracted from Angeles Partners VII 1997 Third Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000276779 ANGELES PARTNERS VIII 1,000 9-MOS DEC-31-1997 SEP-30-1997 455 0 13 0 0 0 15,125 (10,262) 5,813 0 16,647 0 0 0 (14,110) 5,813 0 2,902 0 0 3,441 0 1,378 0 0 0 0 0 0 (539) (45.04) 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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