-----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, AN8TP/wZNXUZtkjHFKs3ZYmv0I4dWYV4fsMJqYLLp1vsfiHl4dIJruV+V6ja41gu RMKIKamiBTdZrTXpgdjbXw== 0000788955-95-000001.txt : 19951119 0000788955-95-000001.hdr.sgml : 19951119 ACCESSION NUMBER: 0000788955-95-000001 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: AMEX 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: 1934 Act SEC FILE NUMBER: 000-09136 FILM NUMBER: 95589355 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 Quarterly or Transitional Report (As last amended by 34-32231, eff. 6/3/93.) U.S. 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, 1995 [ ] 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, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (Zip Code) Issuer's telephone number (803) 239-1000 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 BALANCE SHEET (Unaudited)
September 30, 1995 Assets Cash: Unrestricted $ 243,544 Restricted--tenant security deposits 56,146 Accounts receivable 11,507 Tax refund receivable 224,231 Escrows for taxes 141,126 Restricted escrows 196,000 Other assets 94,697 Investment properties: Land $ 543,070 Buildings and related personal property 13,506,828 14,049,898 Less accumulated depreciation (9,022,325) 5,027,573 $ 5,994,824 Liabilities and Partners' Deficit Liabilities Accounts payable $ 36,904 Tenant security deposits 55,632 Accrued taxes 531,966 Accrued interest 1,062,862 Other liabilities 150,731 Note payable to an affiliate 370,719 Mortgage notes payable, $11,989,982 in default 16,135,077 Partners' Deficit General partner $ (158,032) Limited partners (11,985 units issued and outstanding) (12,191,035) (12,349,067) $ 5,994,824
[FN] See Accompanying Notes to Financial Statements b) ANGELES PARTNERS VIII STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994 Revenues: Rental income $ 892,396 $ 859,944 $2,660,866 $2,557,374 Other income 56,136 57,613 164,533 179,585 Tax recovery (Note D) 801,989 -- 801,989 -- Total revenues 1,750,521 917,557 3,627,388 2,736,959 Expenses: Operating 249,983 242,238 735,351 699,832 General and administrative 31,609 24,939 86,732 71,046 Property management fees 47,267 45,207 140,196 136,112 Maintenance 89,343 106,882 266,095 338,672 Depreciation 149,658 149,794 443,246 445,807 Interest 458,499 444,406 1,393,797 1,282,489 Property taxes 116,730 146,038 348,537 428,922 Total expenses 1,143,089 1,159,504 3,413,954 3,402,880 Loss on disposal of property -- (361) -- (361) Net income (loss) $ 607,432 $ (242,308) $ 213,434 $ (666,282) Net income (loss) allocated to general partner (1%) $ 6,074 $ (2,423) $ 2,134 $ (6,663) Net income (loss) allocated to limited partners (99%) 601,358 (239,885) 211,300 (659,619) $ 607,432 $ (242,308) $ 213,434 $ (666,282) Net income (loss) per limited partnership unit $ 50.18 $ (19.99) $ 17.63 $ (54.97)
[FN] See Accompanying Notes to Financial Statements c) ANGELES PARTNERS VIII STATEMENT OF CHANGES IN PARTNERS' DEFICIT (Unaudited)
Limited Partnership General Limited Units Partner Partners Total Original capital contributions 12,000 $ 121,000 $12,000,000 $12,121,000 Partners' deficit at December 31, 1994 11,985 $(160,166) $(12,402,335) $(12,562,501) Net income for the nine months ended September 30, 1995 -- 2,134 211,300 213,434 Partners' deficit at September 30, 1995 11,985 $(158,032) $(12,191,035) $(12,349,067)
[FN] See Accompanying Notes to Financial Statements d) ANGELES PARTNERS VIII STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended September 30, 1995 1994 Cash flows from operating activities: Net income (loss) $ 213,434 $(666,282) Adjustments to reconcile net income (loss) to cash provided by operating activities: Depreciation 443,246 445,807 Amortization of loan costs 45,770 86,744 Loss on disposal of property -- 361 Change in accounts: Restricted cash 45 (1,156) Accounts receivable (1,655) 3,734 Tax refund receivable (224,231) -- Escrows for taxes (115,315) 14,493 Other assets -- 668 Accounts payable (81,176) (46,188) Tenant security deposit liabilities (1,881) (2,317) Accrued property taxes (373,938) 231,694 Accrued interest 390,051 220,761 Other liabilities (51,330) 35,176 Net cash provided by operating activities 243,020 323,495 Cash flows from investing activities: Property improvements and replacements (116,496) (113,648) Deposits to restricted escrows (196,000) -- Net cash used in investing activities (312,496) (113,648) Cash flows from financing activities: Payments on mortgage notes payable (103,502) (101,573) Loan costs (5,000) -- Net cash used in financing activities (108,502) (101,573) Net (decrease) increase in cash (177,978) 108,274 Cash at beginning of period 421,522 252,641 Cash at end of period $ 243,544 $ 360,915 Supplemental disclosure of cash flow information: Cash paid for interest $ 957,976 $ 977,678
[FN] See Accompanying Notes to Financial Statements e) ANGELES PARTNERS VIII NOTES TO FINANCIAL STATEMENTS (Unaudited) Note A - Going Concern The accompanying financial statements have been prepared assuming the Partnership will continue as a going concern. 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 $4,145,095 secured by Bercado Shores Apartments was previously in default due to nonpayment of 1993 property taxes. However, these taxes have been paid and the first mortgage of Bercado Shores is no longer in default. (See discussion in Note D). The second mortgage to Angeles Mortgage Investment Trust ("AMIT"), a lending trust sponsored by an affiliate of the General Partner, in the amount of $1,350,000 secured by Bercado Shores Apartments, is in default due to nonpayment of interest. The Partnership's second mortgage to AMIT in the amount of $1,250,000 secured by Brittany Point Apartments is also in default due to nonpayment of interest. This default also creates a default in the first mortgage in the amount of $9,389,982 due to certain cross-default provisions in the first mortgage. In addition, the Brittany Point Apartments first mortgage matured in June 1995. A five year extension is currently being discussed with the existing lender which would lower the interest rate from 10.125% to 7.875%. At September 30, 1995, the negotiations were ongoing. To facilitate the refinancing, the property has been transferred to a lower tier partnership known as Brittany Point AP VIII, L.P. in which Angeles Partners VIII is the 99% limited partner. Although legal ownership of this asset was transferred to a new entity, Angeles Partners VIII retained control and substantially all economic benefits of the property. The Partnership is negotiating an amendment of the terms of the debt agreement with AMIT for the second mortgage on Bercado Shores that is in default, but the agreement is not yet memorialized. A workout proposal with AMIT on Brittany Point is currently being negotiated, as the property is unable to meet current debt service payments due to cash flow difficulties. Unless the above debt workouts are successfully negotiated, the Partnership expects to be unable to maintain or enhance the properties' operations and values. 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 these uncertainties. Note B - Basis of Presentation The accompanying unaudited financial statements 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 nine months ended September 30, 1995, are not necessarily indicative of the results that may be expected for the year ending December 31, 1995. 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, 1994. Certain reclassifications have been made to the 1994 information to conform to the 1995 presentation. 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 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 for the nine months ended September 30, 1995 and 1994: 1995 1994 Property management fees $140,196 $136,112 Reimbursement for services of affiliates 47,469 31,115 The Partnership insures 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. Note C - Transactions with Affiliated Parties - continued AMIT currently provides secondary financing on the Partnership's investment properties. Total indebtedness to AMIT of $2,600,000 was in default at September 30, 1995. Total interest expense on this financing was $363,329 and $239,035 at September 30, 1995, and September 30, 1994, respectively. Accrued interest was $954,579 and $382,470 at September 30, 1995, and September 30, 1994, 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. These Class B Shares entitle MAE GP to receive 1% of the distributions of net cash distributed by AMIT. These Class B Shares also entitle MAE GP to vote on the same basis as Class A Shares which allows MAE GP to vote approximately 37% of the total shares (unless and until converted to Class A Shares at which time the percentage of the vote controlled represented by the shares held by MAE GP would approximate 1% 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 annual meeting 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. However, MAE GP may choose to vote these shares as it deems appropriate in the future. 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. The AAP working capital loan funded the Partnership's operating deficits in prior years. Total indebtedness to AAP, which is included as a note payable, was $370,719 at September 30, 1995, and September 30, 1994, respectively, with monthly interest-only payments at prime plus 0.75% (8.75% at September 30, 1995). Principal is to be paid upon the earlier of i) the availability of funds, ii) the sale of one or more properties covered by the Partnership, or iii) November 25, 1997. Total interest expense for this loan was $26,723 and $21,239 at September 30, 1995, and September 30, 1994, respectively. Accrued interest was $81,253 and $43,563 at September 30, 1995, and September 30, 1994, respectively. Note C - Transactions with Affiliated Parties - continued As part of a settlement of certain disputes with AMIT, MAE GP granted to AMIT an option to acquire the Class B shares. 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. AMIT delivered to MAE GP cash in the sum of $250,000 at closing, which occurred April 14, 1995, as payment for the option. Upon exercise of the option, AMIT would remit to MAE GP an additional $94,000. Simultaneously with the execution of the option, MAE GP executed an irrevocable proxy in favor of AMIT, the result of which is MAE GP will be able 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 granted 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. Note D - Tax Recovery - Bercado Shores Apartments The Partnership has successfully appealed the property taxes for Bercado Shores. The current year property taxes have been reduced based on the newly assessed property value. The tax authority is reimbursing the property for prior overpayments of the 1990, 1991, and 1992 taxes totalling $545,394. The tax authority has applied $321,163 of the refund to pay the 1993 taxes. The net reimbursement to the property of $224,231 has been recorded as a tax refund receivable at September 30, 1995. This receivable was collected by the Partnership on October 5, 1995. The first mortgage in the amount of $4,145,095 was previously in default due to the nonpayment of the 1993 taxes. Since the property's property taxes are now current, the first mortgage is no longer in default. 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, 1995 and 1994: Average Occupancy 1995 1994 Bercado Shores Apartments Mishawka, Indiana 95% 93% Brittany Point Apartments Huntsville, Alabama 90% 87% The increase in occupancy at Brittany Point is attributed to increases in advertising efforts and leasing incentives offered since 1994. The Partnership realized net income of $213,434 for the nine months ended September 30, 1995, compared to a net loss of $666,282 for the nine months ended September 30, 1994. The Partnership realized net income of $607,432 for the three months ended September 30, 1995, compared to a net loss of $242,308 for the three months ended September 30, 1994. The tax recovery recognized in the three months ended September 30, 1995, is a result of the settlement of the tax appeal for the 1990, 1991, and 1992 property taxes for Bercado Shores (See further discussion in Note D of the Notes to Financial Statements). Total expenses were comparable for the three and nine months ended September 30, 1995 and 1994, due to increases in interest, operating and general and administrative expenses being offset by decreases in maintenance expense and property taxes. The increase in general and administrative expense for the nine months ended September 30, 1995, was due to increased legal expense resulting from the refinancing of the Brittany Point first mortgage, which should be finalized during the fourth quarter of 1995. The decrease in maintenance expense for the three and nine months ended September 30, 1995, was due primarily to decreased carpet cleaning expense and exterior lighting repairs of approximately $42,000 at Bercado Shores and decreased contract trash removal and other miscellaneous repairs of approximately $30,000 at Brittany Point. Property tax expense decreased for the three and nine months ended September 30, 1995, as a result of the successful tax appeal at Bercado Shores which reduced the property's assessed value. The loss on disposal in 1994 relates to the replacement of roofs at the properties. 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 held unrestricted cash of $243,544 at September 30, 1995, compared to unrestricted cash of $360,915 at September 30, 1994. Net cash provided by operating activities decreased for the nine months ended September 30, 1995, compared to the corresponding period of 1994 due to increased deposits to escrows for taxes and increased payments of accounts payable, accrued property taxes, and other liabilities partially by an increase in accrued interest. Net cash used in investing activities increased due to deposits to restricted escrows resulting from the pending refinancing of the Brittany Point mortgage. Net cash used in financing activities increased due to loan costs associated with the Brittany Point refinancing. No distributions were made by the Partnership during 1994 or during the nine months ended September 30, 1995. 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 $4,145,095 secured by Bercado Shores was previously in default due to nonpayment of 1993 taxes. The property is now current on payment of property taxes and the first mortgage is no longer in default (See discussion in Note D in the Notes to the Financial Statements). The second mortgage to Angeles Mortgage Investment Trust ("AMIT"), a lending trust sponsored by an affiliate of the General Partner, in the amount of $1,350,000, secured by the Bercado Shores Apartments, is in default due to nonpayment of interest. The Partnership's second mortgage to AMIT in the amount of $1,250,000 secured by Brittany Point Apartments is also in default due to nonpayment of interest. This default also creates a default in the first mortgage of $9,389,982 due to certain cross- default provisions in the first mortgage. Bercado Shores' cash flows from operations have historically been insufficient to pay necessary operating expenses and debt service. The Partnership is negotiating terms with AMIT for the second mortgage that is in default, but the agreement is not yet memorialized. A workout proposal with AMIT on the Brittany Point mortgage is currently being negotiated since the property is unable to meet the current debt service payments due to cash flow difficulties. 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. These Class B Shares entitle MAE GP to receive 1% of the distributions of net cash distributed by AMIT. These Class B Shares also entitle MAE GP to vote on the same basis as Class A Shares which allows MAE GP to vote approximately 37% of the total shares (unless and until converted to Class A Shares at which time the percentage of the vote controlled represented by the shares held by MAE GP would approximate 1% 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 annual meeting 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. However, MAE GP may choose to vote these shares as it deems appropriate in the future. As part of a settlement of certain disputes with AMIT, MAE GP granted to AMIT an option to acquire the Class B shares. 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. AMIT delivered to MAE GP cash in the sum of $250,000 at closing, which occurred April 14, 1995, as payment for the option. Upon exercise of the option, AMIT would remit to MAE GP an additional $94,000. Simultaneously with the execution of the option, MAE GP executed an irrevocable proxy in favor of AMIT, the result of which is MAE GP will be able 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 granted to the AMIT trustees, in their capacity as trustees of AMIT, irrevocable 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. As previously stated, the Partnership is in default on the second mortgages for both investment properties and the first mortgage for Brittany Point. The first mortgage indebtedness of $9,389,982 for Brittany Point matured in June 1995. A five year extension is currently being discussed with the existing lender which would lower the interest rate from 10.125% to 7.875%. At September 30, 1995, the negotiations were ongoing. To facilitate the refinancing, the property has been transferred to a lower tier partnership known as Brittany Point AP VIII, L.P. Angeles Partners VIII is the 99% limited partner in this lower tier partnership. Although legal ownership of this asset was transferred to a new entity, Angeles Partners VIII retained control and substantially all economic benefits of the property. 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 filed during the quarter ended September 30, 1995. 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 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. Controller and Principal Accounting Officer Date: November 13, 1995 EX-27 2
5 This schedule contains summary financial information extracted from Angeles Partners VIII Limited Partnership's 1995 Third Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000276779 ANGELES PARTNERS VIII LIMITED PARTNERSHIP 1 9-MOS DEC-31-1995 SEP-30-1995 243,544 0 235,738 0 0 967,251 14,049,898 (9,022,325) 5,994,824 1,838,094 16,505,796 0 0 0 (12,349,067) 5,994,824 0 3,627,388 0 0 3,413,954 0 1,393,797 0 0 0 0 0 0 (213,434) (17.63) 0
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