0000950168-95-000681.txt : 19950818
0000950168-95-000681.hdr.sgml : 19950818
ACCESSION NUMBER: 0000950168-95-000681
CONFORMED SUBMISSION TYPE: 10QSB
PUBLIC DOCUMENT COUNT: 2
CONFORMED PERIOD OF REPORT: 19950630
FILED AS OF DATE: 19950811
SROS: NONE
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: ANGELES PARTNERS VIII
CENTRAL INDEX KEY: 0000276779
STANDARD INDUSTRIAL CLASSIFICATION: 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: 95561832
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
INSIGNIA APVIII 82139.1 10-QSB
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 June 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT
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)
June 30, 1995
Assets
Cash:
Unrestricted $ 146,322
Restricted--tenant security deposits 57,354
Accounts receivable 7,903
Escrows for taxes 102,688
Restricted escrows 98,000
Other assets 197,303
Investment properties:
Land $ 543,070
Buildings and related personal
property 13,462,549
14,005,619
Less accumulated depreciation (8,887,874) 5,117,745
$ 5,727,315
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 31,188
Tenant security deposits 57,537
Accrued taxes 992,995
Accrued interest 927,500
Other liabilities 133,504
Note payable to an affiliate 370,719
Mortgage notes payable, in default 16,170,371
Partners' Deficit
General partner $ (164,106)
Limited partners (11,985 units
issued and outstanding) (12,792,393) (12,956,499)
$ 5,727,315
See Accompanying Notes to Financial Statements
1
b) ANGELES PARTNERS VIII
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Revenues:
Rental income $ 885,102 $ 850,999 $1,768,470 $1,697,430
Other income 56,765 58,890 108,397 121,972
Total revenues 941,867 909,889 1,876,867 1,819,402
Expenses:
Operating 253,004 246,960 485,368 457,594
General and
administrative 27,911 27,853 55,123 46,107
Property management fees 46,683 45,366 92,929 90,905
Maintenance 102,830 138,715 176,752 231,790
Depreciation 147,488 148,804 293,588 296,013
Interest 466,784 423,382 935,298 838,083
Property taxes 89,671 159,034 231,807 282,884
Total expenses 1,134,371 1,190,114 2,270,865 2,243,376
Net loss $ (192,504) $ (280,225) $ (393,998) $ (423,974)
Net loss allocated to general
partner (1%) $ (1,925) $ (2,802) $ (3,940) $ (4,240)
Net loss allocated to limited
partners (99%) (190,579) (277,423) (390,058) (419,734)
$ (192,504) $ (280,225) $ (393,998) $ (423,974)
Net loss per limited
partnership unit $ (15.90) $ (23.15) $ (32.55) $ (35.02)
See Accompanying Notes to Financial Statements
2
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 loss for the six months
ended June 30, 1995 -- (3,940) (390,058) (393,998)
Partners' deficit
at June 30, 1995 11,985 $(164,106) $(12,792,393) $(12,956,499)
See Accompanying Notes to Financial Statements
3
d) ANGELES PARTNERS VIII
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
1995 1994
Cash flows from operating activities:
Net loss $(393,998) $(423,974)
Adjustments to reconcile net loss to cash
provided by operating activities:
Depreciation 293,588 296,013
Amortization of loan costs 41,165 57,830
Change in accounts:
Restricted cash (1,163) 635
Accounts receivable 1,949 9,062
Escrows for taxes (76,877) 23,245
Other assets -- 665
Accounts payable (86,892) 2,000
Tenant security deposit liabilities 24 (4,498)
Accrued property taxes 87,091 85,656
Accrued interest 254,689 126,822
Other liabilities (68,557) 93,850
Net cash provided by
operating activities 51,019 267,306
Cash flows from investing activities:
Property improvements and replacements (57,011) (81,371)
Deposits to restricted escrows (98,000) --
Net cash used in
investing activities (155,011) (81,371)
See Accompanying Notes to Financial Statements
4
ANGELES PARTNERS VIII
STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
Six Months Ended
June 30,
1995 1994
Cash flows from financing activities:
Payments on mortgage notes payable $ (68,208) $ (69,368)
Loan costs (103,000) --
Net cash used in financing
activities (171,208) (69,368)
Net (decrease) increase in cash (275,200) 116,567
Cash at beginning of period 421,522 252,641
Cash at end of period $ 146,322 $ 369,208
Supplemental disclosure of cash flow
information:
Cash paid for interest $ 639,444 $ 653,431
See Accompanying Notes to Financial Statements
5
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 its mortgage
notes payable. The Partnership's first mortgage in the amount of
$4,158,843 secured by Bercado Shores Apartments is in default due to
nonpayment of 1993 property taxes. The Partnership's 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 $9,411,527 due to certain cross-default
provisions in the first mortgage.
The Partnership is negotiating an amendment of the terms of the debt
agreement with AMIT for the second mortgage on Bercado Shores that is
currently in default, but the agreement is not yet memorialized. The
amendment, which should be finalized during the third quarter of 1995,
would have a lower interest rate and reduced payments. During the
second quarter of 1995, the Partnership was successful in an appeal of
the property taxes for Bercado Shores. While the current year property
taxes have been reduced based on the new assessed property value, it is
uncertain if the taxing authority will reimburse prior overpayments or
adjust previous billings. The property does not have cash reserves
necessary to pay past tax notices. 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.
The workout would reduce the interest rate and payments and should be
finalized during the third quarter of 1995.
Unless the above debt workouts and past tax notice adjustments 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.
6
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 six month period ended June 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 first
six months of 1995 and 1994:
1995 1994
Property management fees $92,929 $90,905
Reimbursement for services of affiliates 32,401 14,970
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.
7
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 June 30, 1995. Total interest expense on this financing was
$236,771 and $152,889 at June 30, 1995, and June 30, 1994, respectively.
Accrued interest was $828,022 and $296,324 at June 30, 1995, and June
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 33% 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 June 30, 1995, and June 30, 1994,
respectively, with monthly interest only payments at prime plus 0.75%
(9.75% at June 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 $17,918 and $13,516 at June 30, 1995, and June
30, 1994, respectively.
8
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.
9
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 six months ended June 30, 1995 and 1994:
Average
Occupancy
1995 1994
Bercado Shores Apartments
Mishawka, Indiana 95% 94%
Brittany Point Apartments
Huntsville, Alabama 91% 87%
The increase in occupancy at Brittany Point was attributable
to increases in advertising efforts and leasing incentives offered since
1994.
The Partnership realized a net loss of $393,998 for the six
months ended June 30, 1995, compared to a net loss of $423,974 for the
six months ended June 30, 1994. The Partnership realized a net loss of
$192,504 for the three months ended June 30, 1995, as compared to a net
loss of $280,225 for the three months ended June 30, 1994. Rental income
increased for the six months ended June 30, 1995, as a result of
occupancy and rental rate increases at both investment properties. The
decrease in other income for the six months ended June 30, 1995, was due
to decreases in pet fees, lease cancellation fees and deposit
forfeitures at Bercado Shores and decreases in cleaning and damage fees
at Brittany Point.
The decrease in maintenance expense for the three and six
months ended June 30, 1995, was primarily due to decreased carpet
cleaning at Bercado Shores partially offset by increases in grounds
contracts and decreased contract trash removal and other miscellaneous
repairs at Brittany Point. Property tax expense decreased for the three
and six months ended June 30, 1995, as a result of the successful tax
appeal at Bercado Shores during the second quarter of 1995 which reduced
the property's assessed value. Interest expense increased for the three
and six months ended June 30, 1995, due to increases in default interest
for the second mortgage debt at both Bercado Shores and Brittany Point
since 1994.
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.
10
The Partnership held unrestricted cash of $146,322 for the six
months ended June 30, 1995, as compared to unrestricted cash of $369,208
for the six months ended June 30, 1994. Net cash provided by operating
activities decreased for the six months ended June 30, 1995, compared to
the corresponding period of 1994 due to increased deposits to escrows
for taxes and increased payments of accounts payable and other
liabilities which were partially offset by an increase in accrued
interest. Net cash used in investing activities increased primarily due
to deposits to restricted escrows resulting from the proposed
refinancing for Brittany Point. Net cash used in financing activities
increased due to loan costs associated with the proposed refinancing for
Brittany Point.
No distributions were made by the Partnership during 1994 or
during the six months ended June 30, 1995.
Since 1992, the nominal cash generated by the properties has
been insufficient to pay the delinquent property taxes, capital
expenditures, and scheduled debt service. The Partnership has incurred
recurring operating losses and is in default on its mortgage notes
payable. The Partnership's first mortgage in the amount of $4,158,843
secured by Bercado Shores Apartments is in default due to nonpayment of
1993 property taxes. The Partnership's 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 $9,411,527 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 currently in default, but the agreement is not yet memorialized.
The agreement, which should be finalized during third quarter of 1995,
would have a lower interest rate and reduced payments. During the second
quarter of 1995, the Partnership was successful in an appeal of the
property taxes for Bercado Shores. While the current year property
taxes have been reduced based on the new assessed property value, it is
uncertain if the taxing authority will reimburse prior overpayments or
adjust previous billings. The property does not have cash reserves
necessary to pay past tax notices. A workout proposal with AMIT on the
Brittany Point mortgage is currently being negotiated, as the property
is unable to meet the current debt service payments due to cash flow
difficulties. The workout would reduce the interest rate and payments.
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 33% 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).
11
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.
The mortgage indebtedness of $9,411,527 for Brittany Point
matured in June 1995. A five year extension is currently being discussed
with the existing lender. At June 30, 1995, the negotiations were
ongoing. As previously stated, the Partnership is in default on both
first and second mortgages for both investment properties.
12
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 June 30, 1995.
13
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.
Controller and Principal
Accounting Officer
Date: August 11, 1995
15
EX-27
2
EXHIBIT 27
5
1
6-MOS
DEC-31-1995
JUN-30-1995
146,322
0
7,903
0
0
609,570
14,005,619
8,887,874
5,727,315
2,142,724
16,170,371
0
0
0
(12,956,499)
5,727,315
0
1,876,867
0
0
2,270,865
0
935,298
0
0
0
0
0
0
(393,998)
(32.55)
0