-----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, MNEW/4HwwrAbbhzz2DTIhbWwmyfZp4B1NsoXo8FXh7WmUW2LaQGyLHnZfXg9I/uR m1Okjj9wJSL/IsDOtDlruQ== 0000711642-03-000439.txt : 20031114 0000711642-03-000439.hdr.sgml : 20031114 20031114083318 ACCESSION NUMBER: 0000711642-03-000439 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20030930 FILED AS OF DATE: 20031114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANGELES PARTNERS VII CENTRAL INDEX KEY: 0000310303 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 953215214 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-08851 FILM NUMBER: 031000381 BUSINESS ADDRESS: STREET 1: 1873 SOUTH BELLAIRE STREET STREET 2: 17TH FLOOR CITY: DENVER STATE: CO ZIP: 80222 BUSINESS PHONE: 3037578101 MAIL ADDRESS: STREET 1: 1873 SOUTH BELLAIRE STREET STREET 2: 17TH FLOOR CITY: DENVER STATE: CO ZIP: 80222 10QSB 1 ap7.txt AP7 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2003 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________to _________ Commission file number 0-8851 ANGELES PARTNERS VII (Exact name of registrant as specified in its charter) California 95-3215214 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 55 Beattie Place, PO Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 (Issuer's telephone number) PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ANGELES PARTNERS VII STATEMENT OF NET ASSETS IN LIQUIDATION (Unaudited) (in thousands) September 30, 2003
Assets Cash and cash equivalents $ 4,406 Receivables and deposits 119 Other assets 4 4,529 Liabilities Accounts payable 127 Other liabilities 33 Due to affiliate 113 Estimated costs during the period of liquidation 35 308 Net assets in liquidation $ 4,221 See Accompanying Notes to Financial Statements
ANGELES PARTNERS VII STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per unit data)
Three Months Ended Nine Months Ended September 30, September 30, 2003 2002 2003 2002 Revenues: Rental income $ 302 $ 275 $ 849 $ 934 Other income 17 30 66 73 Total revenues 319 305 915 1,007 Expenses: Operating 154 117 454 356 General and administrative 15 30 62 90 Depreciation 64 62 194 196 Interest 44 47 135 144 Property taxes 11 12 33 35 Loss on early extinguishment of debt 489 -- 489 -- Total expenses 777 268 1,367 821 (Loss) income from operations (458) 37 (452) 186 Gain on sale of investment property 6,170 -- 6,170 -- Net income $ 5,712 $ 37 $ 5,718 $ 186 Net income allocated to general partners (1%) $ 57 $ -- $ 57 $ 2 Net income allocated to limited partners (99%) 5,655 37 5,661 184 $ 5,712 $ 37 $ 5,718 $ 186 Per limited partnership unit: (Loss) income from operations (52.25) 4.27 (51.56) 21.23 Gain on sale of investment property 704.58 -- 704.58 -- $652.33 $ 4.27 $653.02 $ 21.23 Distributions per limited partnership unit $ 9.23 $ 10.96 $ 9.23 $ 21.80 See Accompanying Notes to Financial Statements
ANGELES PARTNERS VII STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIENCY)/NET ASSETS IN LIQUIDATION (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Units Partner Partners Total Original capital contributions 8,674 $ 88 $ 8,674 $ 8,762 Partners' capital (deficiency) at December 31, 2002 8,669 $ 193 $(1,596) $(1,403) Distributions to partners -- (1) (80) (81) Net income for the nine months ended September 30, 2003 -- 57 5,661 5,718 Partners' capital at September 30, 2003 8,669 $ 249 $ 3,985 4,234 Adjustment to liquidation basis (Note C) (13) Net assets in liquidation at September 30, 2003 $ 4,221 See Accompanying Notes to Financial Statements
ANGELES PARTNERS VII STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Nine Months Ended September 30, 2003 2002 Cash flows from operating activities: Net income $ 5,718 $ 186 Adjustments to reconcile net income to net cash provided by operating activities: Gain on sale of investment property (6,170) -- Depreciation 194 196 Amortization of loan costs 4 4 Loss on early extinguishment of debt 489 -- Change in accounts: Receivables and deposits (83) 10 Other assets 4 (6) Accounts payable 13 7 Tenant security deposit liabilities (15) 5 Accrued property taxes -- 34 Due to affiliates 113 -- Other liabilities (44) 35 Net cash provided by operating activities 223 471 Cash flows from investing activities: Net proceeds from sale of investment property 6,862 -- Property improvements and replacements (91) (49) Net withdrawals from (deposits to) restricted escrows 143 (67) Net cash provided by (used in) investing activities 6,914 (116) Cash flows from financing activities: Repayment of mortgage note payable (2,579) -- Distributions to partners (81) (191) Payments on mortgage note payable (136) (128) Net cash used in financing activities (2,796) (319) Net increase in cash and cash equivalents 4,341 36 Cash and cash equivalents at beginning of period 65 108 Cash and cash equivalents at end of period $ 4,406 $ 144 Supplemental disclosure of cash flow information: Cash paid for interest $ 146 $ 140 Supplemental disclosure of non-cash information: Proceeds received from the sale of investment property have been reduced by approximately $437,000 of prepayment penalties paid by the buyer. See Accompanying Notes to Financial Statements
ANGELES PARTNERS VII NOTES TO FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation As of September 30, 2003, Angles Partners VII (the "Partnership" or "Registrant") adopted the liquidation basis of accounting due to the sale of its sole investment property during the third quarter of 2003. Upon final settlement of the Partnership's remaining liabilities, the Partnership is expected to terminate by March 31, 2004. As a result of the decision to liquidate the Partnership, the Partnership changed its basis of accounting for its financial statements at September 30, 2003, to the liquidation basis of accounting. Consequently, assets have been valued at estimated net realizable value and liabilities are presented at their estimated settlement amounts, including estimated costs associated with carrying out the liquidation of the Partnership. The valuation of assets and liabilities necessarily requires many estimates and assumptions and there are substantial uncertainties in carrying out the liquidation. The actual realization of assets and settlement of liabilities could be higher or lower than amounts indicated and is based upon estimates of Angeles Realty Corporation (the "General Partner") as of the date of the financial statements. Included in liabilities in the statement of net assets in liquidation as of September 30, 2003 is approximately $35,000 of costs that the General Partner estimates will be incurred during the period of liquidation based on the assumption that the liquidation process will be completed by March 31, 2004. Because the success in realization of assets and the settlement of liabilities is based on the General Partner's best estimates, the liquidation period may be shorter than projected or it may be extended beyond the projected period. Note B - 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 (i) certain payments to affiliates for services and (ii) reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. Affiliates of the General Partner were entitled to receive 5% of gross receipts from the Partnership's property prior to its sale as compensation for providing property management services. The Partnership paid to such affiliates approximately $47,000 and $50,000 for the nine months ended September 30, 2003 and 2002, respectively, which is included in operating expenses. An affiliate of the General Partner received reimbursement of accountable administrative expenses amounting to approximately $32,000 and $40,000 for the nine months ended September 30, 2003 and 2002, respectively, which is included in general and administrative expenses. The Partnership Agreement provides for a fee equal to 7.5% of "net cash flow from operations", as defined in the Partnership Agreement to be paid to the General Partner for executive and administrative management services. As of September 30, 2003, the Partnership owed the General Partner approximately $5,000 for services rendered in prior years related to the Partnership management fees, which is included in other liabilities. Pursuant to the Partnership Agreement and in connection with the sale of Cedarwood Apartments in September 2003, the General Partner is entitled to a commission of up to 3% for its assistance in the sale of the property. At September 30, 2003, approximately $113,000 was due to the General Partner and is shown as due to affiliate. The Partnership insured its property up to certain limits through coverage provided by AIMCO which is generally self-insured for a portion of losses and liabilities related to workers compensation, property casualty and vehicle liability. The Partnership insured its property above the AIMCO limits through insurance policies obtained by AIMCO from insurers unaffiliated with the General Partner. For both the nine months ended September 30, 2003 and 2002, the Partnership was charged by AIMCO and its affiliates approximately $21,000 for insurance coverage and fees associated with policy claims administration. Note C - Adjustment to Liquidation Basis of Accounting At September 30, 2003, in accordance with the liquidation basis of accounting, assets were adjusted to their estimated net realizable value and liabilities were adjusted to their estimated settlement amount. The net adjustment required to convert to the liquidation basis of accounting was an increase in net liabilities of approximately $13,000 which is included in the Statement of Changes in Partners' Capital (Deficiency)/Net Assets In Liquidation. Note D- Sale of Investment Property On September 30, 2003, the Partnership sold Cedarwood Apartments to an unrelated third party for net proceeds of approximately $6,862,000 after payment of closing costs and the prepayment penalty paid by the buyer. The Partnership used approximately $2,579,000 of the net proceeds to repay the mortgage encumbering the property. The Partnership realized a gain of approximately $6,170,000 as a result of the sale. In addition, the Partnership recorded a loss on early extinguishment of debt of approximately $489,000 as a result of the prepayment penalty paid by the buyer and unamortized loan costs being written off. Note E - Legal Proceedings In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its General Partner and several of their affiliated partnerships and corporate entities. The action purported to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) that are named as nominal defendants, challenging, among other things, the acquisition of interests in certain General Partner entities by Insignia Financial Group, Inc. ("Insignia") and entities that were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; management of the partnerships by the Insignia affiliates; and the series of transactions which closed on October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary damages and equitable relief, including judicial dissolution of the Partnership. In addition, during the third quarter of 2001, a complaint (the "Heller action") was filed against the same defendants that are named in the Nuanes action, captioned Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed a first amended complaint. The Heller action was brought as a purported derivative action, and asserted claims for, among other things, breach of fiduciary duty, unfair competition, conversion, unjust enrichment, and judicial dissolution. On January 8, 2003, the parties filed a Stipulation of Settlement in proposed settlement of the Nuanes action and the Heller action. In general terms, the proposed settlement provides for certification for settlement purposes of a settlement class consisting of all limited partners in this Partnership and others (the "Partnerships") as of December 20, 2002, the dismissal with prejudice and release of claims in the Nuanes and Heller litigation, payment by AIMCO of $9.9 million (which shall be distributed to settlement class members after deduction of attorney fees and costs of class counsel and certain costs of settlement) and up to $1 million toward the cost of independent appraisals of the Partnerships' properties by a Court appointed appraiser. An affiliate of the General Partner has also agreed to make at least one round of tender offers to purchase all of the partnership interests in the Partnerships within one year of final approval, if it is granted, and to provide partners with the independent appraisals at the time of these tenders. The proposed settlement also provided for the limitation of the allowable costs which the General Partner or its affiliates will charge the Partnerships in connection with this litigation and imposes limits on the class counsel fees and costs in this litigation. On April 11, 2003, notice was distributed to limited partners providing the details of the proposed settlement. On June 13, 2003, the Court granted final approval of the settlement and entered judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector filed an appeal seeking to vacate and/or reverse the order approving the settlement and entering judgment thereto. The General Partner intends to file a respondent's brief in support of the order approving settlement and entering judgment thereto. The General Partner does not anticipate that any costs to the Partnership, whether legal or settlement costs, associated with these cases will be material to the Partnership's overall operations. The Partnership is unaware of any other pending or outstanding litigation matters that are not of a routine nature arising in the ordinary course of business. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The matters discussed in this report contain certain forward-looking statements, including, without limitation, statements regarding future financial performance and the effect of government regulations. Actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors including, without limitation: national and local economic conditions; the terms of governmental regulations that affect the Registrant and interpretations of those regulations; the competitive environment in which the Registrant operates; financing risks, including the risk that cash flows from operations may be insufficient to meet required payments of principal and interest; real estate risks, including variations of real estate values and the general economic climate in local markets and competition for tenants in such markets; litigation, including costs associated with prosecuting and defending claims and any adverse outcomes, and possible environmental liabilities. Readers should carefully review the Registrant's financial statements and the notes thereto, as well as the risk factors described in the documents the Registrant files from time to time with the Securities and Exchange Commission. As of September 30, 2003, Angles Partners VII (the "Partnership" or "Registrant") adopted the liquidation basis of accounting due to the sale of its sole investment property during the third quarter of 2003. Upon final settlement of the Partnership's remaining liabilities, the Partnership is expected to terminate by March 31, 2004. As a result of the decision to liquidate the Partnership, the Partnership changed its basis of accounting for its financial statements at September 30, 2003, to the liquidation basis of accounting. Consequently, assets have been valued at estimated net realizable value and liabilities are presented at their estimated settlement amounts, including estimated costs associated with carrying out the liquidation of the Partnership. The valuation of assets and liabilities necessarily requires many estimates and assumptions and there are substantial uncertainties in carrying out the liquidation. The actual realization of assets and settlement of liabilities could be higher or lower than amounts indicated and is based upon estimates of Angeles Realty Corporation (the "General Partner") as of the date of the financial statements. Included in liabilities in the statement of net assets in liquidation as of September 30, 2003 is approximately $35,000 of costs that the General Partner estimates will be incurred during the period of liquidation based on the assumption that the liquidation process will be completed by March 31, 2004. Because the success in realization of assets and the settlement of liabilities is based on the General Partner's best estimates, the liquidation period may be shorter than projected or it may be extended beyond the projected period. Results of Operations The Partnership's net income for the three and nine months ended September 30, 2003 was approximately $5,712,000 and $5,718,000, respectively, compared to net income of approximately $37,000 and $186,000 for the corresponding periods in 2002. The increase in net income for the three and nine month periods is due to the recognition of a gain on the sale of Cedarwood Apartments. On September 30, 2003, the Partnership sold Cedarwood Apartments to an unrelated third party for net proceeds of approximately $6,862,000 after payment of closing costs and the prepayment penalty paid by the buyer. The Partnership used approximately $2,579,000 of the net proceeds to repay the mortgage encumbering the property. The Partnership realized a gain of approximately $6,170,000 as a result of the sale. In addition, the Partnership recorded a loss on early extinguishment of debt of approximately $489,000 as a result of the prepayment penalty paid by the buyer and unamortized loan costs being written off. Excluding the gain on sale, the Partnership's loss from operations for the three and nine months ended September 30, 2003 was approximately $458,000 and $452,000, respectively, compared to income of approximately $37,000 and $186,000 for the corresponding periods in 2002. The decrease in income from operations for the three months ended September 30, 2003 is due to an increase in total expenses partially offset by an increase in total revenues. The decrease in income from operations for the nine months ended September 30, 2003 is due to a decrease in total revenues and an increase in total expenses. Total revenues increased for the three month period due to an increase in rental income. Rental income increased for the three month period due to decreases in rental concessions and bad debt expense at the Partnership's investment property. Total revenues for the nine month period decreased due to a decrease in rental income. The decrease in rental income was caused by a decrease in average occupancy at the Partnership's investment property. The increase in total expenses for the three and nine months ended September 30, 2003 is due to an increase in operating expenses and the loss on early extinguishment of debt (see "Note D" above) partially offset by a decrease in general and administrative expenses. Operating expenses increased due to increases in maintenance and property expenses. Maintenance expense increased due to increases in contract labor and property repairs. Property expense increased due to increases in payroll and related expenses at the Partnership's investment property. General and administrative expense decreased due to decreases in Partnership management fees which are calculated as a percentage of "Net Cash Flow From Operations", as defined in the Partnership Agreement and in reimbursements due to the General Partner. Costs associated with the quarterly and annual communications with investors and regulatory agencies and the annual audit required by the Partnership Agreement are also included in general and administrative expenses. Liquidity and Capital Resources At September 30, 2003, the Partnership had cash and cash equivalents of approximately $4,406,000 compared to approximately $144,000 at September 30, 2002. Cash and cash equivalents increased approximately $4,341,000 since December 31, 2002, due to approximately $6,914,000 and $223,000 of cash provided by investing and operating activities, respectively, partially offset by approximately $2,796,000 of cash used in financing activities. Cash provided by investing activities consisted of proceeds from the sale of Cedarwood Apartments and net withdrawals from restricted escrows maintained by the mortgage lender, partially offset by property improvements and replacements. Cash used in financing activities consisted of the repayment of the mortgage encumbering Cedarwood Apartments, distributions to partners, and principal payments on the mortgage. The Partnership invests its working capital reserves in interest bearing accounts. Cedarwood Apartments: During the nine months ended September 30, 2003, the Partnership completed approximately $91,000 of capital improvements at Cedarwood Apartments, consisting primarily of parking lot resurfacing, perimeter fencing, swimming pool improvements and appliance and floor covering replacements. These improvements were funded from operating cash flow and replacement reserves. Cedarwood Apartments was sold on September 30, 2003. The Partnership distributed the following amounts during the nine months ended September 30, 2003 and 2002 (in thousands, except per unit data):
Per Limited Per Limited Nine Months Ended Partnership Nine Months Ended Partnership September 30, 2003 Unit September 30, 2002 Unit Operations $ 81 $ 9.23 $ 191 $21.80
Subsequent to September 30, 2003, approximately $3,950,000 (approximately $3,555,000 or $410.08 per limited partnership unit) related to the sale of Cedarwood Apartments was distributed to the partners. Prior to the liquidation of the Partnership, any cash remaining after the settlement of the Partnership's liabilities will be distributed to the partners. Other In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 5,893 limited partnership units (the "Units") in the Partnership representing 67.98% of the outstanding Units at September 30, 2003. A number of these Units were acquired pursuant to tender offers made by AIMCO or its affiliates. Pursuant to the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters that include, but are not limited to, voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. As a result of its ownership of 67.98% of the outstanding Units, AIMCO and its affiliates are in a position to influence all voting decisions with respect to the Partnership. Although the General Partner owes fiduciary duties to the limited partners of the Partnership, the General Partner also owes fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of the General Partner, as general partner, to the Partnership and its limited partners may come into conflict with the duties of the General Partner to AIMCO, as its sole stockholder. Critical Accounting Policies and Estimates The financial statements are prepared in accordance with accounting principles generally accepted in the United States which require the Partnership to make estimates and assumptions. The Partnership believes that of its significant accounting policies, the following may involve a higher degree of judgment and complexity. Revenue Recognition The Partnership generally leased apartment units for twelve-month terms or less. Rental income attributable to leases was recognized monthly as it was earned and the Partnership reserved all balances outstanding over thirty days. The Partnership offered rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area. Any concessions given at the inception of the lease were amortized over the life of the lease. ITEM 3. CONTROLS AND PROCEDURES (a) Disclosure Controls and Procedures. The Partnership's management, with the participation of the principal executive officer and principal financial officer of the General Partner, who are the equivalent of the Partnership's principal executive officer and principal financial officer, respectively, has evaluated the effectiveness of the Partnership's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, the principal executive officer and principal financial officer of the General Partner, who are the equivalent of the Partnership's principal executive officer and principal financial officer, respectively, have concluded that, as of the end of such period, the Partnership's disclosure controls and procedures are effective. (b) Internal Control Over Financial Reporting. There have not been any changes in the Partnership's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Partnership's internal control over financial reporting. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its General Partner and several of their affiliated partnerships and corporate entities. The action purported to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) that are named as nominal defendants, challenging, among other things, the acquisition of interests in certain General Partner entities by Insignia Financial Group, Inc. ("Insignia") and entities that were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; management of the partnerships by the Insignia affiliates; and the series of transactions which closed on October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary damages and equitable relief, including judicial dissolution of the Partnership. In addition, during the third quarter of 2001, a complaint (the "Heller action") was filed against the same defendants that are named in the Nuanes action, captioned Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed a first amended complaint. The Heller action was brought as a purported derivative action, and asserted claims for, among other things, breach of fiduciary duty, unfair competition, conversion, unjust enrichment, and judicial dissolution. On January 8, 2003, the parties filed a Stipulation of Settlement in proposed settlement of the Nuanes action and the Heller action. In general terms, the proposed settlement provides for certification for settlement purposes of a settlement class consisting of all limited partners in this Partnership and others (the "Partnerships") as of December 20, 2002, the dismissal with prejudice and release of claims in the Nuanes and Heller litigation, payment by AIMCO of $9.9 million (which shall be distributed to settlement class members after deduction of attorney fees and costs of class counsel and certain costs of settlement) and up to $1 million toward the cost of independent appraisals of the Partnerships' properties by a Court appointed appraiser. An affiliate of the General Partner has also agreed to make at least one round of tender offers to purchase all of the partnership interests in the Partnerships within one year of final approval, if it is granted, and to provide partners with the independent appraisals at the time of these tenders. The proposed settlement also provided for the limitation of the allowable costs which the General Partner or its affiliates will charge the Partnerships in connection with this litigation and imposes limits on the class counsel fees and costs in this litigation. On April 11, 2003, notice was distributed to limited partners providing the details of the proposed settlement. On June 13, 2003, the Court granted final approval of the settlement and entered judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector filed an appeal seeking to vacate and/or reverse the order approving the settlement and entering judgment thereto. The General Partner intends to file a respondent's brief in support of the order approving settlement and entering judgment thereto. The General Partner does not anticipate that any costs to the Partnership, whether legal or settlement costs, associated with these cases will be material to the Partnership's overall operations. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit 3.1, Amended Certificate and Agreement of the Limited Partnership, filed as an exhibit to Form 10K dated October 31, 1978 and is incorporated herein by reference. Exhibit 31.1, Certification of equivalent of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Exhibit 31.2, Certification of equivalent of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Exhibit 32.1, Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. b) Reports on Form 8-K filed during the quarter ended September 30, 2003: Current Report on Form 8-K dated September 30, 2003 and filed on October 14, 2003, disclosing the sale of Cedarwood Apartments. 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 VII By: Angeles Realty Corporation General Partner By: /s/Patrick J. Foye Patrick J. Foye Executive Vice President By: /s/Paul J. McAuliffe Paul J. McAuliffe Executive Vice President and Chief Financial Officer Date: November 12, 2003 Exhibit 31.1 CERTIFICATION I, Patrick J. Foye, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Angeles Partners VII; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 12, 2003 /s/Patrick J. Foye Patrick J. Foye Executive Vice President of Angeles Realty Corporation, equivalent of the chief executive officer of the Partnership Exhibit 31.2 CERTIFICATION I, Paul J. McAuliffe, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Angeles Partners VII; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 12, 2003 /s/Paul J. McAuliffe Paul J. McAuliffe Executive Vice President and Chief Financial Officer of Angeles Realty Corporation, equivalent of the chief financial officer of the Partnership Exhibit 32.1 Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the Quarterly Report on Form 10-QSB of Angeles Partners VII (the "Partnership"), for the quarterly period ended September 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Patrick J. Foye, as the equivalent of the Chief Executive Officer of the Partnership, and Paul J. McAuliffe, as the equivalent of the Chief Financial Officer of the Partnership, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. /s/Patrick J. Foye Name: Patrick J. Foye Date: November 12, 2003 /s/Paul J. McAuliffe Name: Paul J. McAuliffe Date: November 12, 2003 This certification is furnished with this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Partnership for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. -----END PRIVACY-ENHANCED MESSAGE-----