-----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, Mp2pjK03M3OIYxo1yWw2bGNj+UNEmbebFZ+MRd4vBMZxHPjfhMMj3E11KnbKQFEQ QTGyVuVRvQcurEEEpvIbGA== 0000313499-96-000004.txt : 19961113 0000313499-96-000004.hdr.sgml : 19961113 ACCESSION NUMBER: 0000313499-96-000004 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961112 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANGELES PARTNERS IX CENTRAL INDEX KEY: 0000313499 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 953417136 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-09704 FILM NUMBER: 96659371 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8642391513 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, 1996 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period.........to......... Commission file number 0-9704 ANGELES PARTNERS IX (Exact name of small business issuer as specified in its charter) California 95-3417137 (State or other jurisdiction of (I.R.S. 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 (864) 239-1000 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 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 IX CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) September 30, 1996 Assets Cash and cash equivalents: Unrestricted $ 1,476 Restricted--tenant security deposits 137 Accounts receivable 62 Escrow for taxes 272 Restricted escrows 316 Other assets 502 Investment properties: Land $ 3,083 Buildings and related personal property 32,520 35,603 Less accumulated depreciation (20,445) 15,158 $17,923 Liabilities and Partners' Deficit Liabilities Accounts payable $ 160 Tenant security deposits 138 Accrued taxes 389 Other liabilities 305 Mortgage notes payable 20,016 Partners' Deficit General partners $ (206) Limited partners (19,975 units issued and outstanding) (2,879) (3,085) $17,923 See Accompanying Notes to Consolidated Financial Statements b) ANGELES PARTNERS IX CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Ended Nine Months Ended September 30, September 30, 1996 1995 1996 1995 Revenues: Rental income $ 1,798 $ 1,696 $ 5,293 $ 5,048 Other income 99 109 282 278 Total revenues 1,897 1,805 5,575 5,326 Expenses: Operating 686 669 2,028 1,970 General and administrative 73 51 205 156 Maintenance 343 317 939 809 Depreciation 432 397 1,266 1,166 Interest 526 459 1,439 1,382 Property taxes 112 106 341 314 Total expenses 2,172 1,999 6,218 5,797 Loss before extraordinary item (275) (194) (643) (471) Extraordinary loss on extinguishment of debt (173) -- (173) -- Net loss $ (448) $ (194) $ (816) $ (471) Net loss allocated to general partners (1%) $ (4) $ (2) $ (8) $ (5) Net loss allocated to limited partners (99%) (444) (192) (808) (466) Net loss $ (448) $ (194) $ (816) $ (471) Per limited partnership unit: Loss before extraordinary item $(13.64) $ (9.63) $(31.87) $(23.35) Extraordinary Item (8.58) -- (8.58) -- Net loss $(22.22) $ (9.63) $(40.45) $(23.35) See Accompanying Notes to Consolidated Financial Statements
c) ANGELES PARTNERS IX CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Units Partners Partners Total Original capital contributions 20,000 $ 1 $20,000 $20,001 Partners' deficit at December 31, 1995 19,975 $ (198) $(2,071) $(2,269) Net loss for the nine months ended September 30, 1996 (8) (808) (816) Partners' deficit at September 30, 1996 19,975 $ (206) $(2,879) $(3,085) See Accompanying Notes to Consolidated Financial Statements
d) ANGELES PARTNERS IX CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Nine Months Ended September 30, 1996 1995 Cash flows from operating activities: Net loss $ (816) $ (471) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 1,266 1,166 Amortization of discounts and loan costs 169 106 Extraordinary loss on extinguishment of debt 173 -- Change in accounts: Restricted cash 36 (3) Accounts receivable (39) 4 Escrows for taxes (29) (41) Other assets 2 (5) Accounts payable (52) (229) Tenant security deposit liabilities (36) 6 Accrued taxes 150 93 Other liabilities 51 (3) Net cash provided by operating activities 875 623 Cash flows from financing activities: Property improvements and replacements (611) (568) Cash invested in short-term investments -- (25) Deposits to restricted escrows (15) (23) Receipts from restricted escrows 164 307 Net cash used in investing activities (462) (309) Cash flows from financing activities: Additions to mortgage notes payable 4,900 -- Repayment of mortgage notes payable (3,888) -- Prepayment penalty (122) -- Payments on mortgage notes payable (176) (176) Loan costs (102) -- Net cash provided by (used in) financing activities 612 (176) Net increase in cash 1,025 138 Cash and cash equivalents at beginning of period 451 306 Cash and cash equivalents at end of period $ 1,476 $ 444 Supplemental disclosure of cash flow information: Cash paid for interest $ 1,223 $1,277 See Accompanying Notes to Consolidated Financial Statements e) ANGELES PARTNERS IX NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated 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 Angeles Realty Corporation (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, 1996, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1996. For further information, refer to the financial statements and footnotes thereto included in Angeles Partners IX's (the "Partnership") annual report on Form 10-KSB for the fiscal year ended December 31, 1995. Certain reclassifications have been made to the 1995 information to conform to the 1996 presentation. NOTE B - TRANSACTION WITH AFFILIATES 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 amounts owed to the General Partner and affiliates were paid or accrued for the nine months ended September 30, 1996 and 1995: 1996 1995 (in thousands) Property management fees $277 $264 Reimbursement of services of affiliates 175 105 Included in "reimbursements of services of affiliates" for 1996 are approximately $23,000 in reimbursements for construction oversight costs. 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 obligations is not significant. NOTE B - TRANSACTION WITH AFFILIATES (CONTINUED) Angeles Mortgage Investment Trust, ("AMIT"), a real estate investment trust, has provided secondary financing to the Partnership secured by the Partnership's investment property known as Panorama Terrace Apartments. Total interest expense for this loan was $21,000 for the nine months ended September 30, 1996, and $14,000 for the nine months ended September 30, 1995. 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 1.2% 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 1.2% 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 addition, Liquidity Assistance, LLC, ("LAC"), an affiliate of the General Partner and an affiliate of Insignia Financial Group, Inc., which provides property management and partnership administration services to the Partnership, currently owns 87,700 Class A Shares of AMIT. These Class A Shares entitle LAC to vote approximately 2% of the total shares. The number of Class A Shares of AMIT owned by LAC increased from 63,200 shares on September 30, 1996, to 87,700 shares as of October 22, 1996. The voting percentage also increased from 1.5% to 2% over the same time period. 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 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 these 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 C - MORTGAGE NOTE REFINANCING On July 1, 1996, the General Partner refinanced the mortgage debt secured by Village Green Apartments. The bridge loan, in the principal amount of $4,900,000, matured in September 1996. The Partnership exercised an option under the loan to extend the maturity date to November 15, 1996. The bridge loan may be extended to December 31, 1996, and provides for conversion to long-term permanent financing. The bridge loan is collateralized by a mortgage on Village Green Apartments and carried an interest rate of 8% through August 1, 1996, with interest at LIBOR plus 2.5% thereafter. The bridge loan was obtained to pay-off debt with a higher interest rate and is intended to be replaced by longer term mortgage debt when longer term financing is obtained, which is expected to occur in the fourth quarter of 1996. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS The Partnership's investment properties consist of five apartment complexes. The following table sets forth the average occupancy of the properties for the nine months ended September 30, 1996 and 1995: Average Occupancy Property 1996 1995 Pines of Northwest Crossing Apartments 92% 87% Houston, Texas (1) Panorama Terrace Apartments 94% 97% Birmingham, Alabama (2) Forest River Apartments 94% 96% Gadsden, Alabama Village Green Apartments 93% 95% Montgomery, Alabama Rosemont Crossing Apartments 90% 89% San Antonio, Texas (3) (1) Occupancy has increased due to concessions and an improvement in the economic environment in the immediate surrounding area. (2) Occupancy has decreased due to low interest rates, which have made home purchases attractive. (3) Occupancy is low due to an over supply of rental units in the local market. The Partnership's net losses for the three and nine months ended September 30, 1996, were approximately $448,000 and $816,000, respectively, versus net losses of approximately $194,000 and $471,000 for the three and nine months ended September 30, 1995, respectively. The Partnership experienced an increase in both revenues and expenses for the nine months ended September 30, 1996. Revenue increases are due to a significant increase in occupancy at Pines of Northwest Crossing Apartments and an increase in rental rates at all of the Partnership's properties. General and administrative expenses increased due to an increase in cost reimbursements for partnership accounting, investor relations and asset management services. Maintenance expense increased due to an increase in major landscaping and interior and exterior building improvements. Major landscaping increased due to efforts to enhance the image at Village Green Apartments and Pines of Northwest Crossing Apartments. Interior building improvements increased principally due to upgrades of plumbing fixtures at Village Green Apartments, Panorama Terrace Apartments and Forest River Apartments. Exterior building improvements increased largely due to exterior upgrades being undertaken at Panorama Terrace Apartments and the Pines of Northwest Crossing Apartments. The increase in real estate taxes is due to an increase in the real estate taxes at the Pines of Northwest Crossing Apartments due to an increase in the assessed value of the property. 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. At September 30, 1996, the Partnership had unrestricted cash of approximately $1,476,000 as compared to approximately $444,000 at September 30, 1995. The increase in net cash provided by operating activities was due primarily to a reduction in the decrease in accounts payable and increases in accrued taxes and other liabilities. Net cash used in investing activities increased due to an increase in property improvements and replacements and a decrease in receipts from restricted escrows. Finally, net cash provided by financing activities increased due to net proceeds received from the refinancing of Village Green Apartments offset, in part, by the payment of associated loan costs and a prepayment penalty. The Partnership has plans to upgrade landscaping and improve the overall appearance of the partnership's properties using the approximately $1,000,000 of net proceeds from the refinancing of Village Green Apartments. These improvements include replacement of older appliances and worn floor coverings. Forest River Apartments intends to build a boardwalk along the river adjacent to the property. Village Green Apartments capital improvements will include repairs to the buildings exterior and balconies and replace electrical breaker boxes. The Pines at Northwest Crossing will be making repairs to the buildings exterior. Improvements to Rosemont Crossing include plans to replace patio doors, add additional exterior lighting and make repairs to the parking areas. The improvements at Panorama Terrace will include repairs to balconies and exterior lighting upgrades. The Partnership's primary source of cash is from the operations of its properties and from financing placed on such properties. Cash for these sources is utilized for property operations, capital improvements, and/or repayment of debt. The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the various properties to adequately maintain the physical assets and other operating needs of the Partnership. Such assets are currently thought to be sufficient for any near-term needs of the Partnership. The mortgage indebtedness of $20,016,000, net of discount, is amortized over varying periods with required balloon payments of $18,924,000 ranging from November 1996 to October 2003, at which time the properties will either be refinanced or sold. In July 1996, the General Partner refinanced the mortgage debt secured by Village Green Apartments. The bridge loan, in the principal amount of $4,900,000 matured in September 1996. The Partnership exercised an option to extend the maturity date to November 1996. The bridge loan may be extended to December 31, 1996, and provides for conversion to long-term permanent financing. The bridge loan is collateralized by a mortgage on Village Green Apartments and carried an interest rate of 8% through August 1, 1996, with interest at LIBOR plus 2.5% thereafter. The bridge loan was obtained to pay-off debt with a higher interest rate and a portion of the excess funds (of approximately $1,000,000) will be used for capital improvement projects, principally at Village Green Apartments, Pines of Northwest Crossing Apartments and Panorama Terrace Apartments. The bridge loan is intended to be replaced by longer term mortgage debt when longer term financing is obtained, which is expected to occur in the fourth quarter of 1996. Future cash distributions will depend on the levels of cash generated from operations, property sales and the availability of cash reserves. No cash distributions were paid in the nine months ended September 30, 1996, or the nine months ended September 30, 1995. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Partnership filed a Proof of Claim in the bankruptcy proceeding of Angeles Corporation ("Angeles") concerning the Partnership's indebtedness to Angeles Acceptance Pool, L.P. ("AAP"). The Proof of Claim alleges that instead of causing the Partnership to pay AAP on account of such debt, Angeles, either itself or through an affiliate, caused the Partnership to make payment to another Angeles affiliate. To the extent that such action results in the Partnership not receiving credit for the payments so made, the Partnership will have been damaged in an amount equal to the misappropriated payments. On August 9, 1995, AAP acknowledged constructive receipt of such payment and, therefore, the General Partner withdrew the Partnership's claim. The Registrant is unaware of any pending or outstanding litigation that is not of a routine nature. The General Partner of the Registrant believes that all such pending or outstanding litigation will be resolved without a material adverse effect upon the business, financial condition, or operations of the Partnership. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: Exhibit 27, Financial Data Schedule. (b) No reports on Form 8-K were filed during the quarter ended September 30, 1996. 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 IX 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, 1996 EX-27 2
5 This schedule contains summary financial information extracted from Angeles Partners IX 1996 Third Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000313499 ANGELES INCOME PROPERTIES LTD. IX 1,000 9-MOS DEC-31-1996 SEP-30-1996 1,476 0 62 0 0 0 35,603 20,445 17,923 0 20,016 0 0 0 (3,085) 17,923 0 5,575 0 0 6,218 0 1,439 (816) 0 (816) 0 0 0 (816) (40.45) 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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